NLRB Expands Who May be Considered a “Joint Employer”

National Labor Relations Board Building SignLate last week the NLRB issued its long awaited decision in Browning-Ferris Industries – drastically expanding who may be considered a “joint employer” under the National Labor Relations Act (NLRA).

In Browning-Ferris, the company (“BFI”) had contracted with a labor services company – Leadpoint – to provide workers for BFI’s recycling plant.  The Leadpoint employees were hired and supervised by Leadpoint supervisors.  Their schedules were set by Leadpoint schedulers.  Any discipline was determined by Leadpoint managers.  However, under its contract with Leadpoint, BFI set requirements for candidates and retained the right to refuse or discontinue use of any employee.  Also, because of how the facility worked, BFI set the hours for the various shifts (though Leadpoint determined which workers would work each shift).

The Teamsters decided to organize the Leadpoint workers at the BFI facility.  However, instead of filing their petition for representation solely with regard to Leadpoint, the Teamsters filed their petition also naming BFI as the employees’ employer, on the theory that Leadpoint and BFI were joint employers and, as a result, that BFI could be required to negotiate the union.

The Board agreed with the Teamsters, holding that BFI was a “joint employer” of the Leadpoint employees.  As a result, the union was permitted to move forward with its petition.

In its decision, the NLRB rejected the prior test for joint employment – which required that an entity not only possess the authority to control employees’ terms and conditions of employment but also exercise that authority in a meaningful manner – and set a new rule:  that indirect or reserved authority, even if not exercised, can be sufficient to establish a joint employment relationship.

This ruling is particularly important for companies that work with subcontractors or staffing firms, or are themselves contractors or staffing firms.  Contracts governing staffing and subcontractor relationships regularly include provisions setting minimum standards for the individuals performing the services, the right to refuse workers or discontinue their use, and other requirements relating to the individuals who are performing the services.  There are strong business reasons to include these provisions, but, in light of the Board’s ruling in Browning-Ferris, companies need to be aware that the provisions which keep control over these aspects of the relationship also open the possibility that the company receiving the services will be deemed a joint employer under the NLRA.  Companies entering into these relationships should carefully weigh the benefits of control against the risk of being deemed to be a joint employer and reflect their desired balance in their contract, practice and procedures.

Webinar- Back to School: Employment Law Update

school-suppliesAs fall approaches and students head back to school, The Employment Lawyers are taking a look back and a look ahead at issues in labor and employment law. Join us for an informational webinar to review developments over the past year and discuss tips to keep your workplace practices current in the coming year.

Thursday, September 17, 2015
12:00 pm – 1:30 pm (CDT)
CLICK HERE TO REGISTER

TOPICS

  • Proposed changes to overtime regulations that will make more employees overtime-eligible
  • New standards in accommodating religious practices and pregnancy
  • The NLRB’s “quickie” election rules and what they mean for union organizing efforts
  • Raising the standard to establish that a worker is properly classified as an independent contractor
  • The EEOC’s new position on wellness programs and disability discrimination
  • Expanding employee retaliation and whistleblower claims
  • New state and local laws that impact minimum wage, paid sick leave and accommodation requirements

And more…

CLE Credit Available | This program has been submitted to the HR Certification Institute for review.

QUESTIONS

Contact Annie Darmofal at 312.476.7626 or adarmofal@lplegal.com

Hiring Preference to Veterans Permitted Under New Illinois Law

pillarsPrivate Illinois employers may now give preference to veterans in their hiring practices.

Governor Bruce Rauner has signed the Veterans Preference in Private Employment Act, which allows private employers to voluntarily implement hiring policies that give preference to individuals who have served in the military, whether on active or reserve duty, including the Illinois National Guard.

Employers wanting to take advantage of this new law  will need to have a written policy and reference it on job applications.  The policy must also be publicly displayed in the employer’s workplace or on the employer’s website.

EEOC Affirms: Sexual Orientation Is Prohibited Under Title VII

EEOC LOGOThe EEOC has confirmed its position that Title VII prohibits discrimination against employees based on sexual orientation.  The EEOC’s statement followed on its prior determination that Title VII protects individuals against discrimination based on transgender status, gender identity, and an employee’s transitioning between genders. According to the EEOC, sexual orientation bias is “associational discrimination on the basis of sex.” Thus, employees who work for an employer with 15 or more employees can file a charge of sex discrimination with the EEOC if the employee has been discriminated against because of sexual orientation or gender identity or expression.

Notwithstanding the EEOC’s position, there is still no federal law that explicitly protects individuals from employment discrimination based on sexual orientation and gender identity. However, 22 states (including Illinois), Washington, D.C., and Puerto Rico, have state-based employment nondiscrimination laws that cover sexual orientation and/or gender identity that apply to both private and public sector employers.

With so much recent attention, employers should be particularly attentive to issues relating to sexual orientation and gender identity. We suggest updating any employment policies and practices to include prohibitions on discrimination and harassment based on sexual orientation and gender identity to help protect employers against EEOC and state-law challenges.

NLRB “Ambush Election Rules“ Upheld

vote-unionA challenge to the NLRB’s “ambush election rules” has failed.  A federal court sitting in the District of Columbia ruled that the U.S. Chamber of Commerce and other business groups challenging the new election rules – which, as discussed in our prior blog post,  speed up the union election process – failed to prove that the rules violate any laws. The court rejected the groups’ contentions that the rules constitute “sweeping changes to the election process” and impinge on employers’ constitutional rights.

With the new rules seemingly here to stay, employers need to be prepared and ready to go.

Reminder: Review Your Record-Keeping Procedures

laptop-file-cabinet (2)Employment laws regularly include record keeping requirements.  And while these requirements are rarely front and center, they can rear their head and open companies to legal action.  This month the EEOC filed suit in Philadelphia against a nationwide provider of janitorial and facilities management services for failing to maintain records and other information relating to how its employee selection procedures impact equal employment opportunities.

Under Title VII, covered employers must maintain records that disclose the impact that their selection procedures have on employment opportunities of individuals identifiable by race, sex, or ethnic group. In this lawsuit, EEOC claims that the company failed to make and keep records of applicants’ criminal background checks and criminal history assessments, information that they use to make ultimate hiring decisions.  According to the EEOC, these records are necessary to show the impact that the company’s selection procedures have on individuals identifiable by race, sex, or ethnic group.  The EEOC is seeking an injunction requiring the company to make and keep these records.  This case is an important reminder for employers to ensure that they are properly making and keeping the records required by applicable federal, state, and local statutes and regulations.

Given the EEOC’s focus on records regarding criminal history and background checks, companies should also confirm compliance with federal, state and local laws regarding background checks, and how and when they are conducted and used.  As we have previously discussed in this blog, a growing number of state and local governments have enacted “Ban-the-Box” legislation, putting restrictions on when criminal history information may be gathered.  Companies that haven’t recently reviewed policies and procedures relating to retention of employee and applicant information, or that haven’t carefully considered whether their use of background checks is legally compliant, should do so.

The Steep Consequences of Misclassification

Two recent developments are a good reminder that companies who have independent contractors are under increased scrutiny and face a high bar in establishing that independent contractors are properly typingclassified as such — and not employees.

On July 15th, the Department of Labor issued a guidance saying that most workers qualify as employees under the Fair Labor Standards Act (FLSA) regardless of what the worker and the company may have agreed to. The guidance doesn’t announce a new test for independent contractor status. Instead, it starts with the “economic realities” test for independent contrator status that courts regularly use and a reads it together with a broad view of the FLSA’s definition of employ to reach a conclusion that most independent contractors are misclassified and should, instead, be treated as employees.

The DOL’s guidance was close on the heels of a decision by the Seventh Circuit Court of Appeals, which reversed the lower court and ruled that FedEx delivery drivers are employees under Kansas state law, not independent contractors.  In making its decision, the 7th Circuit certified the question of whether the drivers were employees under the Kansas Wage Payment Act to the Kansas Supreme Court.  The Kansas Supreme Court, applying a 20-factor test, found that the drivers were employees because FedEx, among other things, assigns drivers their routes; requires them to check in with FedEx managers at the start of their day; regulates their appearance; and decides whether to hire a driver after the driver submits resumes and references like any other employee.

So what are the consequences of misclassification?  Companies that misclassify employees as independent contractors face penalties for failing to pay employment taxes, for failing to withhold taxes from pay, for failing to comply with wage and hour requirements (such as overtime), for failing to contribute to unemployment compensation, and for failing to comply with other employment-related laws.  In addition, the Affordable Care Act opens companies that misclassify workers to significant penalties — both based on failure to offer coverage to the required portion of the workforce and where a misclassified worker obtains coverage on an exchange.

In light of these developments, we strongly recommend that any company that has independent contractors work with counsel to determine if these workers are properly classified.  A thorough review now could save you lots of money, time, and aggravation later.

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