Maybe That Is My Employee: The New Definition of Joint Employer and What It Means for Your Company. Wednesday, March 30, 2016

Transcription

1 Maybe That Is My Employee: The New Definition of Joint Employer and What It Means for Your Company Wednesday, March 30, 2016

2 Speakers Moderator Erin Kuzz Sherrard Kuzz Toronto, Ontario 2

3 3

4 If you lose your audio for any reason, or prefer to listen by phone, click the phone icon just above the chat box. Please submit your questions via the Q and A box on the bottom right side of your screen and send them to all presenters (click send below) to make it easier to respond. We will answer questions verbally but also in writing. If your question is not answered during the webinar, we will do our best to answer it afterwards. 4

5 Speakers J. Bruce Cross Cross, Gunter, Witherspoon & Galchus Little Rock, AR Katherine I. (Katy) Rand Pierce Atwood Portland, ME 5

6 Speakers Randall J. Snapp Crowe & Dunlevy Oklahoma City, OK Christopher M. Trebilcock Miller, Canfield, Paddock & Stone Detroit, MI 6

7 What Does Browning-Ferris Have To Do with Me? The New Age of Joint Employment Christopher M. Trebilcock Miller, Canfield, Paddock & Stone 7

8 Decisions that define the coverage of the employer-employee relationship under the [National] Labor [Relations] and Social Security acts are persuasive in the consideration of a similar coverage under the Fair Labor Standards Act. Rutherford Food Corp. v. McComb, 331 U.S. 722, 723 (1947) 8

9 Gotta Get Back in Time! 9

10 The Union Influence Beyond the NLRB NLRB and Joint Employment Pre-8/27/ : Greyhound Corp., 153 NLRB : NLRB v. Browning-Ferris Industries of Penn., 691 F.2d 1117 (3rd Cir.) 1984: TLI, Inc., 271 NLRB 798, 772 F.2d 894 3rd Cir.) 1985: Laerco Transportation, 269 NLRB

11 30 Years of Stare Decisis? Airborne Express, 338 NLRB 597 (2002) AM Property Holding, Corp., 350 NLRB 998 (2007) 11

12 Back to the Future 12

13 The Run-Up to Browning-Ferris November 4, 2008 March 23, 2010 June 28, 2012 November 6, 2012 Late November 2012 April 29, 2013 July 22, 2013 August 16,

14 Browning-Ferris of California 14

15 Browning-Ferris 3 questions NLRB addressed: Under current joint-employment standard, is Leadpoint sole employer? Should the Board keep this standard or adopt a new one, and what considerations should influence the Board? If new, what is the standard and what are the factors? 15

16 New standard: Browning-Ferris Both entities are employers within the meaning of the common law. Both entities share or co-determine those matters concerning the essential terms and conditions of employment. Key factor: whether control was exercised indirectly through an intermediary or whether reserved authority is present. Control does not need to be exercised directly and immediately. 16

17 Coordinated Effort in D.C.? February

18 Three Primary Conclusions Subcontractors face competition to keep costs down to win contracts leading to wage and hour violations. Contracting services, with little attention to safety obligations, increases workplace injuries. Income inequality because integrated companies better share the wealth. 18

19 Coordinated Effort in D.C.? April 30, 2014 May 5, 2014 July 29, 2014 March 30, 2015 July 7, 2015 July 15, 2015 August 27, 2015 September 30, 2015 January 20,

20 What Are the Implications? NLRB standards being adopted by other agencies, including DOL. One employer liable for acts of the other. Both employers need independent counsel. Inconsistent approach across country when considering state law and civil rights law. 20

21 What Does David Weil Think? 21

22 Practical Considerations Immediately perform an audit Develop a standardized intake process. Train all individuals with hiring or contracting authority. Stay current, proceed cautiously. 22

23 What Does David Weil Think? 23

24 What Does Doc Brown Think? 24

25 What the Department of Labor s Recent Guidance Means for Joint Employers Under the FLSA Katy Rand Pierce Atwood 25

26 Joint Employment in the FLSA Context Intended to prevent employers from setting up shell operations Consequences include: Aggregation of hours worked Joint and several liability o Liability for FLSA violations committed exclusively by another employer 26

27 FLSA Regulations A worker may be an employee to two or more employers at the same time where: Employers agree to share employees; One employer acts in the interest of another; Two employers share control of the employee; One employer controls the other. 29 C.F.R

28 Setting the Stage 28

29 DOL Administrator s Interpretation No Issued January 20, 2016 Not a regulation (no notice and comment) Not an opinion letter (law applied to a set of facts) An interpretation of law by the current Administrator 29

30 Fair Labor Standards Act Definitions Employee = any individual employed by an employer Employer = any person acting directly or indirectly in the interest of an employer Employ = suffer or permit to work 30

31 Horizontal Joint Employment Employee works for two or more employers Employers are sufficiently associated or related Analysis focuses on the relationship between employers 31

32 Potential Horizontal Joint Employment Scenarios Server works for two different restaurants operated by same entity Nurse works for two entities with the same healthcare system Farmworker picks apples at two separate orchards, which share employees 32

33 Horizontal Joint Employment Factors Ownership: Does one employer own part or all of the other? Common owners? Overlapping leadership Shared control over operations Inter-mingled operations 33

34 Horizontal Joint Employment Factors Supervision of work by one employer at the other Shared supervisory authority over employee Employees treated as a pool available to both Sharing of clients or customers Agreements 34

35 Application of Horizontal Factors List non-exclusive No requirement that most factors be met Some factors have extremely broad reach 35

36 Vertical Joint Employment Typically arises Where there s an intermediary employer, or Contracting out of employer functions (e.g., hiring or payroll) Economic dependence on potential joint employer Inquiry focuses on relationship between employee and potential joint employer 36

37 Potential Vertical Joint Employment Examples Temporary agency employs workers provided to manufacturing facility Construction worker working directly for subcontractor, which provides services to general Warehouse workers overseen by an intermediary company 37

38 Vertical Joint Employment Factors Intermediary employer employee or independent contractor? Economic realities Direction, control, supervision of work Control over employment conditions Duration (permanency) of relationship Repetitive / rote nature of work Integral to business Performed on premises Performance of administrative employment-related functions 38

39 Known and Unknown DOL will aggressively enforce DOL will interpret joint employment expansively DOL will attempt to persuade courts To what extent will courts find the AI persuasive? 39

40 Assess business-to-business relationships Can you realistically avoid, or Do you need to embrace? If embracing: Key Take-Aways Plan for risk allocation (e.g., through indemnification agreements) Restrict employee sharing or implement protocols to ensure compliance Vet business partners. 40

41 Joint Employer Concerns for Franchisors Randall J. Snapp Crowe & Dunlevy 41

42 Joint Employer Concerns for Franchisors The National Labor Relations Board recently expanded joint employment liability under federal labor law in Browning-Ferris Industries of California, Inc., 362 N.L.R.B. No. 186, 204 LRRM 1154 (2015). This expansion of joint-employer liability may extend to and have a profound impact in the Franchisor/Franchisee relationship. 42

43 NLRB General Counsel Comments to International Franchise Association (IFA) Representatives NLRB General Counsel, Richard F. Griffin, recently participated in an IFA question-and-answer event at IFA s annual convention. Griffin did not alleviate franchisors concerns regarding the impact of Browning-Ferris on franchisor/franchisee relationships. In fact, according to IFA representatives, Griffin confirmed IFA members beliefs that Browning-Ferris poses a significant threat to the franchising industry. 43

44 NLRB Action Against McDonald s USA The NLRB is currently pursuing alleged unfair labor practices charges against McDonald s USA, LLC utilizing a joint employer theory (McDonald s USA, LLC, NLRB ALJ, No. 2-CA-93893). Trial has begun regarding unfair labor practices filed against McDonald s USA, as franchisor, and various franchisees of McDonalds in six NLRB regions. 44

45 NLRB Action Against McDonald s USA NLRB attorney claims that the ULP charges arose from a series of one-day strikes promoting a union $15 minimum wage campaign which has been opposed by McDonald s USA and its franchisees. Trial is expected to last several months, perhaps to the end of the year. 45

46 The NLRB Position The NLRB is arguing that McDonald s USA exercises a very specific level of control over its franchisees employees, including control over wages, hours, training, terms of employment, and working conditions. Potential franchisees are subject to and must pass McDonald s USA s Hamburger University training program before being awarded a franchise. Franchisees are subject to scrutiny by McDonald s USA analysts. 46

47 Specific Policies Targeted by the NLRB The NLRB trial attorney specifically targeted training materials and software, which allegedly impose exacting standards on restaurant operations. The NLRB also targeted training materials, which advise on staffing assignments, hiring practices, employee evaluations, and employee promotions. 47

48 Specific Policies Targeted by the NLRB McDonald s USA collects and analyzes data regarding franchisee operations and issues a report based on such analysis. The NLRB concluded that the control exercised by McDonald s USA over the franchisees operations establishes a joint employee relationship between McDonald s USA and the franchisees. 48

49 McDonald s USA Response McDonald s USA and franchising industry representatives believe the NLRB s position is inconsistent with historical court decisions, which find that franchisees control the working relationships of their employees. McDonald s USA argued that its training materials and processes only offer advice and monitoring, and that McDonald s does not exercise control over the direct employer/employee relationship. McDonald s USA noted that there was no evidence that it had any involvement in the conduct that was alleged to constitute unfair labor practices. 49

50 The Ongoing Threat to Franchisors Franchisors should monitor the McDonald s USA trial in order to more fully understand the NLRB s position and arguments, and the ultimate outcome of the trial. Franchisors should also review their franchise materials to determine if they impose a significant or material level of control over the duties, conduct, and performance of franchisees employees. 50

51 The Ongoing Threat to Franchisors Franchisors should screen and monitor Franchisees to determine compliance with employment laws and regulators. Franchisors should consider indemnification provisions in franchise agreements. 51

52 The Impact of Browning-Ferris: A Silver Lining J. Bruce Cross Cross, Gunter, Witherspoon & Galchus 52

53 Joint Employment: Impact of BFI Effectively means all temp/contract workers will be deemed joint employees, unless complete control is given up by user company. Indirect control is enough to find joint employment. One unionized workforce creates organizing rights for non-unionized employer s workforce. New bargaining units are possible now. Unfair Labor Practice charges may now be filed against user company! 53

54 Significant Potential for Liability by General Contractors and Second-Tier Subcontractors Flow-down contract provisions impaired (are OFCCP requirements enough?!) Risk quality of work vs. too much control over job site/work of sub-contractor/independents Increased administrative costs Extension to DOL/unemployment/workers compensation/etc 54

55 Joint Employment: Impact of BFI The NRLB has indicated that it will apply the new standard to those relationships. Thus, a company s use of consultants or contractors is at risk. Examples: IT consultants (other specialists) Sub-contractors Independent contractors Staffing agencies 55

56 So, is there any pathway to avoid being determined to be a joint employer under the NLRA? 56

57 Green Jobworks, LLC/ACCECO, LLC A Silver Lining? NLRB Case No. 05-RC (Oct. 21, 2015) Parties: o General Contractors (multiple) o ACCECO - asbestos removal subcontractor to GCs o Green Jobworks ( GJW ) (staffing company) 57

58 Green Jobworks, LLC/ACCECO, LLC A Silver Lining? Background o o o o GJW provides temporary construction laborers to ACCECO on multiple (15-20) demolition/asbestos removal jobs. ACCECO takes jobs from General Contractors, provides own workers, and supplements with GJW workers as needed. GJW and ACCECO entered into a Master Labor Services Agreement ( MLSA ) establishing each party s rights and responsibilities. Union filed Petition for an election including both companies workers at all ongoing job sites. Union cited Browning-Ferris decision as main support. 58

59 Green Jobworks, LLC/ACCECO, LLC A Silver Lining? Authority by parties GJW: o Advertises for, screens, and hires own workers. Contacts labor pool when opening becomes available, gives wage information, and gives worker option to accept/reject assignment. o Sets wage rates by contracts, exclusively evaluates workers for pay increases, provides benefits (health, PTO, etc.). o Provides Lead Employees at each job site to ensure attendance, payroll, etc who resolve problems for contractor (ACCECO) or General Contractor. 59

60 Green Jobworks, LLC/ACCECO, LLC A Silver Lining? ACCECO: Employs own workforce, provides benefits to only its workers, sets pay rates (through contact with GCs), supervises workers at job site (subject to GCs instructions and site supervisors). Uses GJW workers to supplement its workforce on large jobs. Provides request for laborers. Sometimes requested GJW workers by name. 60

61 Green Jobworks, LLC/ACCECO, LLC A Silver Lining? Master Labor Services Agreement GJW retained the exclusive responsibilities as to its workers regarding: Recruiting, hiring, assigning, orienting, disciplining, and discharging workers; Providing legal disclosures (posters, notices, etc ); Setting and paying wages/ot/benefits, withholding taxes and deductions, and other HR processes (insurance, I-9s, etc.); 61

62 Green Jobworks, LLC/ACCECO, LLC A Silver Lining? Supervising workers and tracking attendance (used photograph of sign-in sheet from Lead Employee); Providing workers compensation benefits; Contributing to unemployment benefits; Complying with all employment laws; Provide all required safety equipment. GJW could pay extra compensation at its discretion MLSA included a non-solicitation of employees between GJW and ACCECO. 62

63 Green Jobworks, LLC/ACCECO, LLC A Silver Lining? Citing Browning-Ferris, the NLRB ruled that GJW and ACCECO were not joint employers under the NLRA. Holding: The two companies are separate business entities with an independent relationship that is embodied in the MLSA. Further, there is insufficient evidence that.either company influences the decisions of the other with regard to essential terms and conditions of employment. 63

64 Green Jobworks, LLC/ACCECO, LLC A Silver Lining? Few instances where GJW workers were sent home deemed to be decision by GC, not ACCECO! Other instance of requesting specific employees not enough because GJW had final discretion Persuaded by lack of ACCECO s authority to immediately dismiss a contract worker on job site (as in BFI) Wages set entirely by GJW (with no limit/cap/input from ACCECO) Presence of Lead Employee was significant! 64

65 Best Practices Contracts and policies Retaining authority Indemnification 65

66 Review Contracts Review your current contracts with vendors, suppliers, temporary labor providers, etc Identify areas where possible control over outside workforce could arise. Franchisors need to review Franchise Agreements. Construction companies need to review terms regarding subcontractors workforce on job site. Minimize indirect control/eliminate direct control (especially if not likely to be used). 66

67 Review Contracts Consider whether you need written agreements (pros and cons) for your specific purposes? Pros: quality control assurances, clear terms/expectations, binding Cons: unintended control, need for definite terms, need for review for each project/service/etc, avoid uniformity 67

68 Review procedures for third-party services, business partners, etc Who approves final product/service/etc How long are workers on site? Any shared employees? Who sets workers rate/method of pay? Authority to discipline? Etc. Review Policies and Practices 68

69 Review Policies and Practices Review handbooks, policies, posters, etc. Review correspondence where no written contract exists (could be construed as contract)! 69

70 Consider whether your company needs to retain ultimate authority to control workforce to meet your needs. IF SO: Retaining Authority o Treat workforce like employees, because they probably will be regardless! o Ensure compliance to avoid liability. o Put maximum language of control into agreements and protect yourself from liability. 70

71 Retaining Authority IF NOT: o Put all responsibility on other entity/employer require supervision by them. Clearly state that your company will not control workers or have the authority to control workers. o MUST have a written agreement! EXPLICTLY SET TERMS!! 71

72 Indemnification Identify who the actual employer is for the workers at issue before work is performed. Regardless of amount of authority retained, review your indemnification provisions in agreements with third-party contractors, staffing agencies, vendors, etc 72

73 Cont d State that both parties will comply with all federal and state laws. Any party providing workers should indemnify the party using the workers for any liabilities arising from their practices (wages, safety, discrimination, etc.). Refusal to indemnify could signal risk. 73

74 Contact Our Speakers for More Information J. Bruce Cross Cross, Gunter, Witherspoon & Galchus Little Rock, AR Erin Kuzz Sherrard Kuzz Toronto, Ontario Katy Rand Pierce Atwood Portland, ME Randall J. Snapp Crowe & Dunlevy Oklahoma, OK Christopher M. Trebilcock Miller, Canfield, Paddock & Stone Detroit, MI 74

75 Please Complete our Survey Please complete the survey that should appear on your computer screen when you disconnect from the webinar. To listen to this webinar again or to any past ELA webinars, please visit our website at: The ELA is not authorized to give continuing education credit for its webinars; however, a Certificate of Attendance and supporting materials are posted on the ELA website (click this webinar s title; the link to the Certificate is on the landing page). Attendees seeking continuing education credit should submit these materials directly to the appropriate organization. 75