Who Are You Calling a Joint Employer? Recent Expansion of the Joint Employer Test

Transcription

1 Who Are You Calling a Joint Employer? Recent Expansion of the Joint Employer Test Presented by: Janet A. Hendrick Phone: (214) jhendrick@ Follow me on

2 Overview NLRB Browning-Ferris Can we expect change under the new administration? DOL Administrator s Interpretation No EEOC EEOC v. S&B Fourth Circuit Salinas v. Commercial Interiors Hall v. DirectTV

3 Joint v. Single Employer Courts (and the Board) often confuse or conflate the two Joint employer 2 or more separate entities that exercise sufficient control over same employees otests vary by jurisdiction, statutory scheme Single employer 2 nominally separate entities that are substantially integrated o Integrated enterprise test

4 Horizontal Joint Employment Two or more employers separately employ an employee and are sufficiently related to one another with respect to the employee Focuses on relationship between the employers No joint employment if the employers are acting entirely independently of each other and are completely disassociated with respect to an employee who works for both of them.

5 Horizontal Joint Employment Operations that may be shared among joint employers:

6 Example of Horizontal Joint Employment An employee is employed at two locations of the same restaurant brand. The two locations are operated by separate legal entities (Employers A and B). The same individual is the majority owner of both Employer A and Employer B. The managers at each restaurant share the employee between the locations and jointly coordinate the scheduling of the employee s hours. The two employers use the same payroll processor to pay the employee, and they share supervisory authority over the employee. These facts are indicative of joint employment between Employers A and B.

7 Vertical Joint Employment Employee of one employer is economically dependent on another employer with respect to work being done Focuses on employee s relationship with the potential joint employer Example: client of staffing agency

8 Vertical Joint Employment The hotel may be a joint employer of the employee if some of the following are true:

9 Example of Vertical Joint Employment A laborer is employed by ABC Drywall Company, which is an independent subcontractor on a construction project. ABC Drywall was engaged by the General Contractor to provide drywall labor for the project. ABC Drywall hired and pays the laborer. The General Contractor provides all of the training for the project. The General Contractor also provides the necessary equipment and materials, provides workers compensation insurance, and is responsible for the health and safety of the laborer (and all of the workers on the project). The General Contractor reserves the right to remove the laborer from the project, controls the laborer s schedule, and provides assignments on site, and both ABC Drywall and the General Contractor supervise the laborer. The laborer has been continuously working on the General Contractor s construction projects, whether through ABC Drywall or another intermediary. These facts are indicative of joint employment of the laborer by the General Contractor.

10 Joint Employer Implications Bargaining obligations Liability for another employer s NLRA violations Liability for another employer s violations of federal and state labor and employment laws, such as Title VII, OSHA, and the FLSA Liability for another employer s contractual commitments, including those involving provision of benefits Trigger of statutory coverage (e.g., Title VII, FMLA) Tax, workers compensation, unemployment insurance obligations

11 Who is at Risk? Franchise owners and franchisees Employers that subcontract labor through other businesses Employers that use staffing agencies Affiliated companies

12 Browning-Ferris Industries (2015) BFI (largely unionized) contracted with third-party staffing agency Leadpoint (non-union) to supply workers for cleaning and sorting refuse Contract identified Leadpoint as sole employer and limited assignment duration to six months at a time Employees were separately supervised Teamsters petitioned for representation of Leadpoint employees, named BFI as joint employer Regional Director followed precedent, declined to find BFI joint employer August 2015: in 3-2 decision, Board ruled that BFI should be considered a joint employer of employees supplied by Leadpoint

13 The Majority s Decision in BFI Rejecting 30 years of precedent, NLRB held it will no longer require actual direct control over employment terms and conditions -- indirect control and/or reserved authority (even if unexercised) can be enough Noted diversity of workplace arrangements in today s economy, their expansion, and frequency with which staffing and subcontracting arrangements exist. Estimate such workers compose over 4% of workforce, (approximately 6 million workers) reason enough to revisit the standard A transformed economy

14 BFI Dissent (Miscimarra & Johnson) No bargaining table is big enough to seat all of the entities that will be potential joint employers under the majority s new standards. The number of contractual relationships now potentially encompassed within the majority s new standard appears to be virtually unlimited. insurance companies franchisors banks or other lenders consumers or small businesses who dictate times, manner, and methods of performance of contractors any company that negotiates quality requirements or grants access to facilities and then regulates contractor access to property

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17 Possible Risk Factors Retaining right to reject contractor employees Establishing qualifications over contractor s workforce Imposing minimum testing or related requirements Setting maximum wage scales for contractor employees Precluding contractor from establishing work shifts Imposing proprietary safety/training requirements Directly supervising contractor employees

18 Change at the NLRB Present Acting Chair Philip Miscimarra (R) Lauren McFerran (D) Mark Gaston Pearce (D) Vacant Vacant GC Richard Griffin (11/17) Once filled, will have first pro-business majority since 2007 Short list Marvin Kaplan William Emanuel Douglas Seaton Peter Kirsanow

19 The DOL Weighs In January 2016: Wage & Hour Division issued new guidance on joint employer relationships under FLSA The expansive definition of employ as including to suffer or permit to work rejected the common law control standard and ensures that the scope of employment relationships and joint employment under the FLSA and MSPA is as broad as possible.

20 DOL Guidance The traditional employment relationship of one employer employing one employee is less prevalent. WHD encounters these employment scenarios in all industries, including the construction, agricultural, janitorial, warehouse and logistics, staffing, and hospitality industries. The growing variety and number of business models and labor arrangements have made joint employment more common.

21 EEOC Filed amicus brief in Browning-Ferris appeal in support of NLRB the client is an employer of the worker if it supplies the work space, equipment, and supplies, and if it has the right to control the details of the work to be performed, to make or change assignments, and to terminate the relationship.... EEOC Enforcement Guidance: Application of EEO Laws to Contingent Workers Placed by Temporary Employment Agencies and Other Staffing Firms (Dec. 3, 1997), 1997 WL , at *5-6 Definitions of employer in Title VII and NLRA are nearly identical

22 EEOC EEOC v. S&B Industry, d/b/a Fox Conn S&B, 2016 WL (N.D. Tex. Dec. 8, 2016)(Fitzwater, J.) Court denied S&B s MSJ that it was not an employer despite evidence that: All personnel provided by agency were agency s employees Direction and control were rights of agency Applicants were agency s employees Agency o Supervised on site o directed assignments, orientation, rates of pay, benefits o maintained payroll and personnel records o issued paychecks o maintained insurance coverage o hired/fired A reasonable jury could find that S&B had the right to control [the applicants ] conduct.

23 Fourth Circuit s Remarkable 2017 Decisions Court created controversial new standard for joint employment in context of FLSA Salinas v. Commercial Interiors (1/25/17) Hall v. DirectTV (1/25/17) Trial court dismissed both cases against putative joint employers Fourth Circuit (NC, SC, MD, VA, WV): We will create our own test for determining whether two entities are joint employers for purposes of FLSA, to be broadly interpreted, not in a narrow, grudging manner Fundamental question: whether the two entities are not completely disassociated

24 Fourth Circuit s Joint Employment Factors 1. Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to direct, control, or supervise the worker, whether by direct or indirect means; 2. Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to directly or indirectly hire or fire the worker or modify the terms or conditions of the worker s employment; 3. The degree of permanency and duration of the relationship between the putative joint employers; 4. Whether, through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by, or is under common control with the other putative joint employer; 5. Whether the work is performed on a premises owned or controlled by one or more of the putative joint employers, independently or in connection with one another; and 6. Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll, providing workers compensation insurance, paying payroll taxes, or providing the facilities, equipment tools, or materials necessary to complete the work. What should not be considered Whether the relationship between the two entities represented a reasonable business decision. Whether the business arrangement reflected a bad faith effort to avoid compliance with wage and hour laws or is carried out in good faith.

25 Texas Fires Back: S.B. 652 Amended several provisions of the Texas Labor Code Effective September 2015 Franchisor is not considered employer of franchisee or franchisee s employees for purposes of claims relating to employment discrimination, payment of wages, the Texas Minimum Wage Act or the Texas Workers Compensation Act, unless the franchisor has been found by a court of competent jurisdiction in this state to have exercised a type or degree of control over the franchisee or the franchisee s employees not customarily exercised by a franchisor for the purpose of protecting the franchisor s trademarks and brand.

26 Steps to Minimize Joint Employment Liability 1. Decide whether risk of joint employer status is necessary to core business goals 2. Review and revise documents to clarify extent of control (franchise agreements, subcontractor agreements, master services agreements, etc.) 3. Review handbooks and internal policies for potential impact 4. Evaluate whether potential to exercise control over any employment term exists 5. Avoid excess (any?) detail in directing contractor s work 6. Refrain from unnecessary insinuation into hiring, disciplinary, and wage-based decisions

27 6. If reserved rights are not being exercised, consider eliminating any reference to them 7. Memorialize that the parties do not intend to be joint employers or have joint liability for employees at issue 8. Memorialize which entity has the authority to establish/modify terms and conditions of employment of employees at issue 9. Memorialize that the direct employer is responsible for complying with applicable state/federal employment laws with regard to employees at issue 10. Include indemnification provisions to assign responsibility for liability consistent with parties intentions

28 Summary of Steps Review/revise key documents Eliminate/limit putative employer s control over HR matters for employees at issue Eliminate/limit putative employer s day-to-day supervision and control over employees at issue Promote/clarify the direct employer-employee relationship avoid confusion from day 1

29 Takeaways: Direct or actual control is no longer required Reservation of right to control may be enough Clarity will have to come from future rulings and determinations NLRB retains vast discretion to interpret the new standard

30 Thank You Presented by: Janet A. Hendrick Phone: (214) Follow me on