Keeping Up with the Changing Landscape of Joint Employer

NLRB Tightens its Joint Employer Standard

In 1984 the NLRB issued a decision known as TLI, Inc. that set the standard of when it would find two or more companies to be joint employers. There, joint-employment would only be found when both entities actually exercised direct or immediate control over the employment of the same workers. For example, a warehouse employer would be deemed a joint-employer of a staffing agency’s workers only if it actually controlled decisions like “hiring, firing, discipline, supervision, and direction” of the staffing company’s workers in a direct or immediate manner.

Browning Ferris and its staffing company contained a customary disclaimer and also vested the staffing agency with nearly all firing, firing, and control over its supplied workers. Despite that language, the NLRB found that Browning Ferris and the staffing agency were joint employers over the supplied employees.

The NLRB found that the contract in Browning Ferris (2015) allowed the employer to reserve control over certain terms and conditions of the supplied workers’ employment, such as a reserved right to reject a temporary hire and set the hours of the workforce as a whole. Though minimal, this was enough for the NLRB to find the companies to be joint-employers. Thus, the NLRB’s new standard is that reserved control of terms and conditions of employment can be sufficient for finding joint-employment – as opposed to the prior test which required actual control.

DOL Issues Administrative Interpretation on Joint Employment

On the heels of the NLRB’s revised joint-employer standard, the DOL’s Wage and Hour Division issued a new “Administrator’s Interpretation No. 2016-1”) on January 20, 2016 that revised its test for joint-employer status under the federal employment laws within its control, most notably the Fair Labor Standards Act (FLSA). Following the NLRB’s lead, the DOL made it easier for joint-employment relationships to be found.

The Interpretation announced that the DOL will use an “economic realities test” that does not focus solely on the control that a possible joint-employer has over an employee but rather centers on whether an employee is “economically dependent” on the potential joint-employer. A number of factors are considered by the DOL under this new test, including the amount of control the employer has over the working conditions and the work performed by the employees; the duration of the relationship between the company and employees at issue; the nature of the work being performed and its importance to the company; the location where the work is being performed, i.e. whether it is on the company’s premises; and others.

Of course the finding of joint-employment by the DOL imposes significant risks on companies. For example, assume employees from a staffing agency work at company ABC 20 hours per week, at Company XYZ 20 hours per week, and at the staffing agency itself 10 hours per week. Individually, none of the hours result in overtime compensation to the worker. But if ABC, XYZ, and the staffing agency are joint employers, they may all be liable for overtime payment to the employee despite the worker working at most 20 hours per week for a specific company.

Matt Austin is a lawyer based in the Columbus, Ohio office of Roetzel & Andress, LPA who limits his practice to representing employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 723-2010 or email him at maustin@ralaw.com.

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