During the Obama Administration in 2015, under the Joint Employment Standard, the National Labor Relations Board (NLRB) determined that companies were joint employers if both exercised direct and immediate control over essential employment terms. As a result, the NLRB ruled that Browning-Ferris Industries of California was a joint employer for workers employed by staffing firm Leadpoint Business Services at Browning-Ferris’s recycling site.
Reason for the Reversal
In December 2017, under the Trump Administration, the NLRB reversed the Joint Employment Standard due to a case involving two construction companies. Hy-Brand Industrial Contractors fired five employees and Brandt Construction fired two employees after they stopped work due to concerns over wages, benefits, and safety. An administrative law judge ruled that Hy-Brand and Brandt were joint employers. Although the NLRB agreed with the judge, it disagreed with how he reached his decision. For this reason, the NLRB began a discussion about the 2015 Joint Employment Standard. They concluded by rewriting the test for determining whether multiple companies are joint employers under the National Labor Relations Act (NLRA).
How the Reversal Affects Joint Employment
In pending and future cases, companies will be considered joint employers if one company directly and immediately exercises control over essential employment terms of another company’s employees. Therefore, when you work with a staffing agency, you must be extremely clear on your relationships with their employees, especially if you exercise control over the agency’s employees. If you are considered a joint employer, you may become liable for paying wages, employment taxes, unemployment insurance, and other expenses.
Questions to Consider About Joint Employment
As an employer who works with staffing agencies, you need to determine whether joint employment exists with the agency. For example, does one company own all or part of the other? Are there overlapping officers, directors, executives or managers? Do the companies share control over hiring, firing, payroll, advertising, overhead costs or other operations? Are operations intermingled, such as having one administrative operation for both companies? Does one company supervise the work of the other? Do the companies treat the employees as a pool of employees available to both of them? Do the companies share clients or customers? Are there agreements between the companies?
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