NLRB’s ‘joint employer’ decision could hurt manufacturers
In August, the National Labor Relations Board (NLRB) ruled that companies using temporary workers are considered “joint employers” of those workers and share responsibility with staffing agencies for liabilities regarding them. In addition, unionized temporary workers have the right to bargain with the parent company as well as the agency. The ruling reverses decades of precedent defining who an employer is under the National Labor Relations Act.
It could have a major impact on manufacturers, which use temporary workers more than you might think. According to the Census Bureau, manufacturers paid $32 billion to temporary workers in 2013, or 5.3 percent of their total payroll. In comparison, manufacturers spent $27 billion on temps in 2011, or 4.8 percent of total payroll.
It’s hard to say how many temps are employed in actual production, since the Labor Department doesn’t count them as part of the manufacturing workforce. However, an April 2015 study by the Commerce Department estimates that temps fill 8 to 10 percent of production jobs in manufacturing.
The NLRB ruling involved a Browning-Ferris Industries recycling facility in California with about 60 unionized permanent employees, who mostly work off site, and 240 temporary employees, who work on-site sorting material. The Teamsters union argued that Browning-Ferris should be considered an employer of the temps and subject to bargaining along with their staffing agency, Leadpoint Business Services.
In a reversal of previous rulings, the NLRB agreed. Since 1984, the board had maintained that companies were only responsible for employees who were under their direct control. Without the power to set hours, wages or job responsibilities, companies could not be held responsible for the labor practices of the contractors.
Now, the board has had second thoughts. Indeed, the board said its previous definition of “joint employer” was “increasingly out of step” with “changing economic circumstances, particularly the recent dramatic growth in contingent employment relationships.”
The board therefore decided to go back to its pre-1984 definition: Companies need not exercise their control to be considered joint employers—they need only have the authority to make decisions over those employees.
“Today’s decision is a loss for manufacturers, employers and employees,” says Linda Kelly, senior vice president and general counsel for the National Association of Manufacturers. “The joint employer definition has worked for more than three decades with…no evidence that workers have been denied their rights.”
Manufacturers that rely heavily on temps would be well-advised to review their contracts with staffing agencies. They may even want to replace temps with permanent hires. If such manufacturers are now considered joint employers, they could be held jointly liable for unfair labor practices. They could also find themselves bargaining with a union even as they’re negotiating with a staffing agency for its services.