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NLRB Rules in Favor of Teamsters in 'Joint Employer' Case
The National Labor Relations Board has provided unions with a variety of favorable rulings during the Obama years, but perhaps none as dramatic as the one last Thursday. On August 27, the NLRB, in a 3-2 vote, concluded that Browning-Ferris Industries (BFI) of California Inc. qualifies as a “joint employer” alongside another firm, Leadpoint Business Services, with which it had contracted to handle labor operations at an area recycling plant. As such, both companies must negotiate with a Teamsters affiliate should the results of a representation vote last spring reveal a union victory. The ruling could force many large employers to the bargaining table over labor issues which they have little or no direct control, while sharply raising business costs for contractors, franchisees and temp agencies. And it isn’t just the Teamsters who are rejoicing.
Union Corruption Update analyzed this case at length in July 2014 in the context of the changing U.S. labor market. Increasingly, the article noted, employers consist of third-party contractors, franchisees and self-employed individuals. In certain industries, such as fast food and administrative services, major employers now usually farm out personnel functions to outside firms. A recent report by software maker Intuit projected that by 2020 more than 40 percent of the nation’s workforce will consist of subcontractors, freelancers and temporary workers. Such arrangements are potentially advantageous to management and labor. Employers can reduce labor costs by hiring someone else to set standards for wages, benefits, recruitment, training, safety and discipline. And employees can achieve more flexibility in planning their careers and work schedules.
Unions, by contrast, do not make out well under this arrangement. That’s why they’ve been trying for years to prevent companies from outsourcing their employment. Labor officials see this practice as an evasion of collective bargaining responsibility. As they see things, if a Burger King franchisee sets wages and benefits for its employees, then Burger King Corporation as well as the franchisee must be included in any negotiations. An alternative explanation is that large employers have far deeper pockets than any of their franchisees, contractors or staffing consultants, and thus may be willing to make more concessions. By persuading the NLRB to broaden its definition of a “joint” or “dual” employer, unions can generate more members, money and bargaining power.
For some three decades, the National Labor Relations Board had been reluctant to redefine dual employer status. In a pair of precedent-setting 1984 cases, TLI Inc. (271 NLRB 798) and Laerco Transportation (269 NLRB 324), the NLRB ruled that a company must exercise “direct and immediate” control over the workplace for the company to be considered a dual employer. Several times the board subsequently has upheld this precedent. But under the Obama administration, with its built-in 3-to-2 Democratic Party (i.e., pro-union) majority, unions saw a possibility for a broader definition. What was needed was a union to test the waters.
Sanitary Truck Drivers and Helpers Local 350, a San Francisco-Oakland area affiliate of the International Brotherhood of Teamsters, saw such an opportunity. The Daly City, Calif.-based union for years had been trying to organize employees at the Newby Island recycling plant in nearby Milpitas. Browning-Ferris Industries of California owned the plant. In addition to employing about 60 workers at the facility, mainly equipment operators, BFI has been contracting with Leadpoint Business Services to employ 240 temporary workers for entry-level positions such as sorters, screen cleaners and housekeepers. Browning-Ferris does not have direct and immediate supervisory control over the latter group of workers. It does not set wages or benefits nor does it establish safety, training, disciplinary and other rules. Those responsibilities belong to Leadpoint. The union didn’t like that.
In an effort to bring BFI to the bargaining table, Local 350 filed suit with the NLRB Oakland Regional Office. In August 2013, Regional Director George Velastegui ordered a representation election. The election was held in April 2014. Including BFI in the negotiations, however, would require more than an election victory. It would require an NLRB redefinition of labor law. The effort at first was unsuccessful. Based on the evidence, Velastegui declared that BFI and Leadpoint were not dual employers. As such, later that month, on April 25, he ordered all ballots impounded.
The union appealed to the NLRB headquarters. They were confident the board would overturn the regional director’s decision. For one thing, the board, as custom would have it, had a 3-2 majority reflecting the political party in power. In addition, NLRB General Counsel Richard Griffin in July 2014 submitted an amicus brief recommending that the board apply a broader standard for defining a joint employer in the course of his office's investigation of numerous reports of unfair labor practices at various McDonald's restaurants. That December, NLRB adopted that standard in filing 13 complaints against McDonald’s Corp. and corresponding franchisees; these cases are set for hearings this fall. The general counsel’s opinion, while not directly related to the Leadpoint, had the potential to work in favor of the Teamsters. And it did.
Last Thursday, August 27, the NLRB ruled 3-2, along party lines, that BFI of California Inc. had exercised sufficient control over the hiring, firing, scheduling and other aspects of personnel management to qualify as a dual employer. Voting in favor of dual status were Chairman Mark Gaston Pearce and Members Kent Hirozawa and Lauren McFerran, each a Democrat; voting against dual status were Members Philip Miscimarra and Harry Johnson, each a Republican. The majority reasoned that while BFI’s control over employment at the Newby Island recycling plant was not “direct and immediate,” it constituted control all the same. The NLRB issued the following statement:
The revised standard is designed to better effectuate the purposes of the Act in the current economic landscape. With more than 2.87 million of the nation’s workers employed through temporary agencies in August 2014, the Board held that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances…
In its decision, the Board found that BFI was a joint employer with Leadpoint, the company that supplied employees to BFI to perform various work functions for BFI, including cleaning and sorting of recycled products. In finding that BFI was a joint employer with Leadpoint, the Board relied on indirect and direct control that BFI possessed over essential terms and conditions of employment of the employees supplied by Leadpoint as well as BFI’s reserved authority to control such terms and conditions.
Pursuant to this decision, the NLRB ordered the counting of the impounded ballots within 14 days and (given a majority worker vote in favor of union representation) the certification of Local 350 as a collective bargaining agent.
Under the new NLRB standard – which board majority insists is a revival of the pre-1984 standard contained in a 1982 decision by the Third Circuit Court of Appeals (also involving Browning-Ferris) – the test for determining joint employer status is whether a major employer has the potential, or reserved authority, to exercise control over the workplace. In other words, even if the employer chooses not to exercise its potential, the potential remains present. Measuring reserved authority must take into account factors such as who holds the power in a business relationship and which unions have the best ability to negotiate. Moreover, the Teamsters local introduced evidence that BFI helped enforce workplace discipline. The union cited an instance in which BFI complained about Leadpoint employees drinking whiskey on the job and one Leadpoint employee in particular destroying a BFI paperwork box. Those were pretty weak legs to stand on. Why shouldn’t BFI have reacted negatively toward such behavior? Hard liquor and heavy machinery aren’t exactly a good mix when it comes to a safe workplace. And property destruction, the last time one checked, is a crime.
Even if the evidence were more substantial, the case for the new standard would be shaky. The two Republicans on the board, Miscimarra and Johnson, spared few words in their 28-page dissent. For one thing, they argued that the NLRB exceeded its statutory authority. “The Board is not Congress,” they wrote. “It can only exercise the authority Congress has given it. In this instance, our colleagues have announced a new test of joint-employer status based on policy and economic interests that Congress has expressly prohibited the Board from considering.” In addition, noted the pair, the new standard may have some highly unintended consequences. “Under the majority's test,” their dissent read, “the homeowner hiring a plumbing company for batheroom renovations could well have all of that indirect control over a company employee! We suppose that our colleagues do not intend that every business relationship necessarily entails joint employer status, but the facts relied upon here demonstrate the expansive, near-limitless nature of the majority's new standard.”
Unions and allied groups, needless to say, are buoyed by the NLRB ruling, especially in the fast food industry, where restaurants are mostly franchise-owned. Ron Herrera, director of the Teamsters Solid Waste and Recycling Division, remarked:
Source: http://nlpc.org/stories/2015/09/02/nlrb-rules-favor-teamsters-joint-employer-case
