NLRB’s Latest Joint Employer Decision Is Problematic for Temporary Staffing Firms and Their Clients

Almost a year after rewriting its decades-old joint employer test in Browning-Ferris Industries of California, Inc., the National Labor Relations Board has finally issued a Board decision providing some guidance on what constitutes a joint employer relationship. To the surprise of no one given the facts of the case, the Board found that a joint employer relationship existed in Retro Environmental, Inc., 364 NLRB No. 70 (2016). Nevertheless, the Board’s Retro decision is alarming because the Board signals that the basic facts of a common and prevalent relationship between temporary staffing firms (supplier employers) and their clients (user employers) will create a joint employer relationship.

In Retro, the union filed a petition to represent demolition and asbestos workers jointly employed by Retro, the user employer, and Green JobWorks, a temporary staffing agency. The two companies had worked together on multiple projects for at least five years and were operating consistent to an expired contract. The Board summarized the facts of the relationship as follows:

When Retro needs temporary labor, [it] contacts Green JobWorks and requests a certain number of laborers. Green JobWorks recruits and hires employees. … Green JobWorks prescreens and drug tests each applicant, provides safety training, ensures that asbestos abatement laborers have current EPA AHERA certification and have passed a physical exam, and represents that all employees are qualified to perform the services. Additionally, Green JobWorks perform background checks and administers safety and general knowledge tests to applicants for demolition positions. Green JobWorks maintains a database of employees and assigns employees to project sites based on Retro’s needs. Green JobWorks determines the rate of pay for each position and issues employee paychecks. Green JobWorks also provides the employees with personal protective equipment.

At the project site, Retro’s superintendent determines the sequence of work, oversees the work, and directs the day-to-day activities of both Retro’s solely employed employees and those employees leased to Retro by Green JobWorks. Retro’s foreman provides more detailed instructions. Retro determines the start and end times of breaks, and Retro is responsible for keeping track of the employees hours. Retro also provides the necessary equipment to perform the assigned work on site.

Green JobWorks’ field supervisor is on site some days (he visits all project sites). He ensures that employees are present, handles concerns regarding particular employees, communicates with teh office, and manages injuries and near misses. Green JobWorks is responsible for disciplining and terminating employees. However, if Retro is unsatisfied with an individual’s performance, it can request a replacement, and Green JobWorks President…testified that Green JobWorks would acquiesce to Retro’s request. (At the time of the hearing, Retro had not exercised this right in the previous 6 months.) Green Jobworks may consult with Retro when reassigning employees to other sites.

Although the Regional Director found a colorable claim of a joint employer relationship, the Regional Director dismissed the petition because he found that a union election would serve no purpose given that there was an imminent cessation of operations between the two employers (the two projects they were working on were coming to an end, and Retro had no future projects or bids that involved Green JobWorks).

Disagreeing with the Regional Director’s imminent cessation finding (it found no evidence that they would not do business together again), the Board majority addressed the joint employer issue. The Board’s finding that Retro and Green JobWorks are joint employers was not unexpected as the facts could have justified such a finding under the Board’s old joint employer standard. What was unexpected, however, was the Board majority’s assertion, in response to Member Miscimarra’s dissent, that only three basic facts–facts that are fairly standard to many relationships involving temporary staffing firms–are needed to create a joint employer relationship.

Specifically, Member Miscimarra asserted that even if Retro and Green JobWorks do continue to work together on future projects, “it is entirely speculative whether they will constitute a joint employer of employees who might be supplied by Green JobWorks” because the “‘specific factual circumstances’ of any future projects are unknown.” In response, the majority opined:

even if the Employers’ relationships were altered on future projects, certain key aspects of their relationship will likely remain stable. For example, while Green JobWorks, as the supplier employer, will retain primary responsibility for hiring, assigning employees to project sites, and firing, Retro will assuredly continue to dictate the number of workers to be supplied by Green JobWorks, continue to impose conditions on Green JobWorks’ hiring to ensure that the workers supplied are adequately trained and qualified, and continue to retain the right to request a replacement if it is unsatisfied with a Green JobWorks-supplied employee. Therefore, given the distinct functions and areas of responsibility of each of the Employers, it is highly doubtful that the Employers’ relationship on future projects could change in such a manner that would render them no longer joint employers of the employees in the petitioned-for unit.

(emphasis added). In other words, the Board majority asserts that how much and to what extent the user employer supervises and directs the temporary employees is irrelevant to finding a joint employer relationship if the user employer simply: 1) states that it needs “x” number of employees with “y” qualifications and certifications and 2) has some ability to ask for a replacement if a particular temporary employee underperforms. Given that all three of those facts likely exist in many, if not most, relationships between supplier and user employers, the Board’s Retro decision certainly portends that the current Board takes the position that most temporary staffing firms and their clients are joint employers. As such, temporary staffing firms and their clients wondering how best to direct their resources–i.e., taking measures to mitigate against a joint employer finding or focusing on the practical implications (see #2-4) of a joint employer finding–may finally have their answer.

Source: Labor Relations Today