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Friday, August 28, 2015

NLRB Cripples Temporary Staffing Companies

By: Thomas Eden

Yesterday the National Labor Relations Board (NLRB) issued its most significant decision in 35 years when it expansively broadened the definition of who is a joint-employer to include temporary staffing companies. In Browning-Ferris Industries of California 362 NLRB No. 186 (August 27, 2015), the NLRB held that two or more otherwise unrelated employers may be found to be a joint-employer of the same employees under the  National Labor Relations Act (NLRA) “if they share or codetermine those matters governing the essential terms and conditions of employment.”

The International Brotherhood of Teamsters, Local 350 located in California filed a representation petition seeking to represent sorters, housekeepers, and screen cleaners employed by Leadpoint, a subcontractor of waste recycler Browning-Ferris performing sorting, screen cleaning, and housekeeping work. The Union contended that Browning-Ferris was a joint employer with Leadpoint. An election was held to determine whether Leadpoint’s employees wanted to be represented by Local 350, but the ballots were impounded after the election because the Union filed a request for review by the NLRB on the joint employer issue. The NLRB granted the petition for review and issued its decision yesterday in favor of Local 350.

Before yesterday, the NLRB’s joint employer doctrine was only applied when one employer could “meaningfully affect matters relating to the employment relationship, such as hiring, firing, discipline, supervision and direction” of the staffing company. That is no longer the law according to the NLRB as of today. Now a Company must be must be prepared to defend against union organizing drives and unfair labor practice charges filed not only by their own employees, but against similar claims naming their temporary staffing service, subcontractors, franchisees and other entities who contract with them.

Every sector of the economy is potentially affected by this decision. The most obvious include:
Any business that regularly uses a management company to staff and operate its business;
General contractors;
Any manufacturer that uses a staffing agency to obtain additional or temporary help; and
Any franchisor that contracts with others using a franchise agreements.

Common Sense Counsel: While a U.S. Circuit Court of Appeals challenge is ready to be filed, there is no simple solution to deal with this decision. The appeal for manufacturers to use temporary staffing is greatly diminished by this decision. Fully expect the EEOC, OFCCP, DOL, etc., to eventually adopt this same joint-employer Obama Administrative approach. However, you can be proactive by taking these steps:
Critically have all your service agreements reviewed;
Make sure they have their own employment policies and employee handbooks;
Look at how the work performed by your employees is different from, or the same as, the work performed by the staffing employees;
Look at pay, working conditions, type of work, etc, to see if they are the same or uniquely different; and
Include an expansive indemnification clause in your contract.

Tommy Eden is a partner working out of the Constangy, Smith & Prophete, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at and follow on twitter tommyeden3