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October 13, 2014

The National Labor Relations Board Is “Gunning” For You

In an article on the National Law Review website, Todd Sarver, a labor and employment lawyer with the firm Steptoe & Johnson, outlines how recent decisions by the National Labor Relations Board (NLRB) to expand the definition of “employee” will eventually affect all U.S. employers. Whether an employer outsources certain functions like cleaning or security, is a franchisor, employs contractors, uses a staffing agency, has affiliate corporate entities or a vertically integrated operation, Sarver says the NLRB “is gunning for” them. Specifically, Sarver says the current NLRB majority has a “renewed interest in re-defining current standards for determining joint employer liability” and for making “it easier to find employers responsible (and liable)” for violations of the National Labor Relations Act by “another employer’s employees.” 

These decisions include a ruling by the NLRB general counsel that said McDonald’s is liable for violations by its franchised outlets and a ruling by a regional NLRB commission that said Federal Express drivers are employees of the company, not independent contractors. The issue of joint employment is also at issue in a case involving California’s Browning-Ferris Industries, which employs sub-contractors. According to CPA Practice Advisor, “If the NLRB determines that Browning-Ferris jointly employs the workers, it would mark a dramatic change in the ways that employers and their subcontractors have operated for years.” In this case, Steptoe & Johnson’s Sarver explains the NLRB has said it wants to make joint employer determinations “by examining direct, indirect, and ‘potential’ control of one employer over the employees of another employer.” Specifically, the NLRB said it would look at “the ‘economic realities or dependence’ of the employers as opposed to the immediate, direct control the current test examines.” Sarver says these “economic realities” could include sales data, inventory and labor costs, future labor needs, setting employee work schedules and wages, involvement in the application process and productivity. Sarver argues this case, and the others cited above, show a clear attempt by the NLRB to expand its jurisdiction and increase the number of unionized workers. Sarver advises the NLRB’s actions are “something all employers should be paying attention to” and that “This is particularly true since other agencies – like the Department of Labor, to name just one example – may likewise consider trying to pursue a lessened standard as applied to the laws they enforce.” 

What can employers do now to prepare? Sarver says they should “review existing contracts to ensure that they properly and effectively describe the business relationship, and re-examine the day-to-day realities of the relationship as it relates to the level of separation between the entities.”