Given the increased attention government agencies and politicians are bringing to bear on employment relationships along with recent government decisions, now is a good time for ISRI members, whether unionized or not, to review their relationships with contract workers, temporary staffing agencies, and independent contractors, in order to limit legal headaches in the future.
In recent years, unions and politicians alike have increasingly questioned the use of temporary workers, contract employees, and independent contractors. For example, the new wave ride-share company Uber has been in the news recently over whether its drivers are employees of the company or independent contractors, and McDonald’s has been challenged on the amount its franchises pay employees. Even Democratic presidential hopeful Hillary Clinton has stated that the “on demand or so called ‘gig’ economy is creating exciting opportunities and unleashing innovation, but it’s also raising hard questions about workplace protections and what a good job will look like in the future.”
Recently, the National Labor Relations Board (NLRB) majority drew upon these concerns, pointing out the increased use of contract labor, and observing that the Board’s prior test was “increasingly out of step with changing economic circumstances, particularly the recent dramatic growth in contingent employment relationships.” In short, NLRB has changed the test for determining who an “employer” of a particular worker is, opening up ReMA members or any employer who uses contract workers or temporary employees to increased organizing and labor dispute concerns, whether or not those employers are unionized.
Specifically, the majority changed the test for determining who an “employer” of a particular worker is, opening up employers who use contract workers or temporary employees to increased organizing and labor dispute concerns, whether or not those employers are unionizedthe majority changed the test for determining who an “employer” of a particular worker is, opening up employers who use contract workers or temporary employees to increased organizing and labor dispute concerns, whether or not those employers are unionizedthe majority changed the test for determining who an “employer” of a particular worker is, opening up employers who use contract workers or temporary employees to increased organizing and labor dispute concerns, whether or not those employers are unionized The August 2015 NLRB decision in the Browning-Ferris Industries (BFI) case changed the federal “joint employer” standard, making it easier for temporary and contract workers to unionize. The 3-2 decision determining BFI was a joint employer was split down party lines, with the NLRB stating that they applied “long-established principles to find that two or more entities are joint employers of a single workforce if (1) they are both employers within the meaning of the common law; and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the Board will – among other factors — consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so.”
The NLRB decision follows the Department of Labor’s Wage and Hour division’s guidance, issued in July, which will make it more difficult for employers to classify workers as independent contractors. Both entities cited changing workforce conditions and the growing number of temporary workers (2.87 million) and independent contractors as reasons for their decisions. Given the heightened attention surrounding this issue, it is likely that legislation will spread to more states in 2016 sessions.
In related state level action, in 2014 California Governor Brown (D) signed a bill (CA AB 1897) that holds companies responsible for the employment conditions of its contracted, temporary workers employed through staffing agencies. The law requires client employers to share legal responsibility with labor contractors for any wage violations, on-the-job injuries, workers’ compensation coverage, and tax contributions. Businesses are concerned that the law will leave companies liable for situations out of their control and experts anticipate significant litigation burdens on companies. Massachusetts passed a similar law (MA Chapter 225) that targeted staffing agencies in 2012.
ISRI will continue to monitor these developments. Members are encouraged to closely monitor their state legislative and regulatory activity using the ReMA MultiState State Policy Tracking System available to all ReMA members on the ISRI.org website. For questions about labor standards, contact Danielle Waterfield, or to learn more about ReMA state policy resources, contact Justin Short.