On Sept. 7, the National Labor Relations Board published a proposed new rule designed to make it easier for businesses that use contract services to be held liable as joint employers based on mere indirect control of the employees performing the service.
The proposed rule incorporates the indirect control standard set forth in the NLRB’s 2015 ruling in Browning-Ferris Industries of California Inc., which overturned decades of precedent requiring direct control to establish joint employment. As with the BFI ruling, the NLRB’s proposed rule, if adopted and upheld by the courts, is unlikely to have a significant effect on the use of staffing services or staffing agency–client relations.
The new broader joint employer standard should have little practical effect, because joint employment has always been an inherent aspect of the staffing firm–client relationship. Staffing clients had long been held to be joint employers under pre-BFI rules that defined joint employment more narrowly—with no adverse effect. Thus, a broader definition should make little difference.
Nor should a broader joint employer standard result in more temporary employees joining unions. Unions always have had the legal right to organize temporary workers and bargain with them as part of their own, or a client’s, bargaining unit. The tests for including temporary employees in client units have varied over the years depending on the political party in power. But traditional short-term temporary workers have historically shown little interest in union membership and paying dues, which the new joint employer rule would not change.
Although the proposed NLRB rule is unlikely to affect the staffing industry in a significant way, ASA and other business groups will oppose the proposal as inconsistent with basic principles of employment law and decades of historical precedent. Given the priorities of the current administration, the proposed rule almost certainly will be adopted notwithstanding the comments or public criticisms from the business community, including ASA.
Any final NLRB rule almost certainly will be challenged in court, which ASA will support. In a 2018 ruling, a three-judge panel of the U.S. Circuit Court of Appeals for the District of Columbia upheld the key elements of the NLRB’s decision in Browning-Ferris, but the final determination of whether the BFI standard is valid ultimately may be decided by the U.S. Supreme Court. Even if the standard withstands legal scrutiny, a subsequent Republican-led NLRB could overturn it and restore the historical requirement of direct control to establish joint employment. The NLRB is notorious for its flip-flopping decisions, based on the party in the White House.
Staffing agencies should expect that some law firms will publish articles predicting dire consequences for the staffing industry if the proposed rule is adopted—just as they did in 2015 when the NLRB issued its ruling in the Browning-Ferris case. None of those consequences materialized, and ASA believes none will occur this time around.
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