September 28, 2015

Yes, NLRB’s “Joint Employer” Ruling Will Affect You – Find Out How

As Connecting the Dots noted when it reported the National Labor Relations Board’s (NLRB) decision in August to expand its definition of “joint employer,” this change will have a major impact on employers, including for businesses that contract for vital services, including human resources and information technology. 

Last week Edward J. Hansen, a partner in the business technology and complex sourcing practice at McCarter and English, told CIO magazine, “The biggest takeaway from the ruling right now is that outsourcing customers must not get complacent about their employment-related terms and indemnities. Whether or not this decision holds up on appeal, it demonstrates the reason these terms are included in contracts.” 

As such, MSCI once again urges its members to review materials from the online briefing the National Association of Manufacturers (NAM) held earlier this month. If you missed that briefing, you can listen to the archived webcast on NAM’s website. The presentation used in the webinar is available here while NAM’s summary of the NLRB ruling is available here

As a reminder, on August 27, 2015, a divided NLRB ruled 3-2 that Browning-Ferris Industries was the “joint employer” of workers supplied by a third-party. The ruling rejected more than 30 years of precedent and held that joint employer status would not be found unless the alleged joint employer actually exercised direct control over the employees’ terms and conditions of employment. As NAM has said, this change fundamentally alters the law applicable to many business-to-business relationships. Therefore, the ruling has significant ramifications for the franchisees, temporary staffing, and contracting business models.