On August 27, 2015, the majority of a divided National Labor Relations Board (NLRB or Board) adopted a new standard for determining joint-employer status under the National Labor Relations Act. The Board’s decision will have wide-ranging consequences for employers, and the two dissenting Republican Board members warned that it will “subject countless entities to unprecedented new joint-bargaining obligations…to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity.” In addition, the Board’s decision, when coupled with additional case developments expected from the NLRB, will open new avenues for labor unions to organize workforces. Winston & Strawn Labor and Employment Practice Partners Derek Barella and Joe Torres presented an eLunch addressing: 1. the Board’s new joint-employer standard; 2. possible implications for unionized and non-union employers; and 3. considerations for possible responsive strategies.

1. The NLRB’s New Joint-Employer Test:
What You Need to Know Regarding its Likely Impact
Presented by: Derek Barella
Joseph Torres
September 3, 2015

2. Today’s eLunch Presenters
Derek Barella
Partner
Chicago
DBarella@winston.com
+1 (312) 558-8002
Joseph Torres
Partner
Chicago
Jtorres@winston.com
+1 (312) 558-7334
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3. Agenda
• Historical areas of concern
• Likely joint employer scenarios
• Browning-Ferris – the new test
• Browning-Ferris – key facts
• Implications of joint employer status
• Possible responsive strategies
• Concluding thoughts on NLRB’s agenda
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4. Historical Areas of Concern
• Liability
• Exposure to alleged wrongdoing of a third-party
• Not limited to the ULP context
• Organizing
• Risk of union organizing a third-party’s employees who work in your facility
• Either as a discrete “jointly-employed” unit or a broader “mixed” unit
• At times, the mixed-unit scenario was barred by the “consent” rule
• Secondary pressure
• Generally, primary employer protected
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5. Joint Employer Status
• Potentially arises in variety of contexts:
• User/supplier
• Lessor/lessee
• Contractor/subcontractor
• Franchisor/franchisee
• Parent/subsidiary
• Predecessor/successor
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6. The Historical Test
• When do two employers “share or codetermine” essential terms
and conditions of employment?
• Actual control must be shown
• Hypothetical, unexercised control not enough
• TLI, Inc., 271 NLRB 798 (1984)
• Contract gives user employer sole and exclusive responsibility for
“maintaining operational control, direction, and supervision over drivers”
• User employer instructs drivers regarding deliveries, files incident reports
with supplier, maintains driver logs and records
• Board holds contract language not sufficient absent evidence user employer
“affected terms and conditions of employment”
• Board concludes actual supervision/direction was “limited” and “routine”
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7. The New Test
• No longer limited to actual control
• Indirect control can be enough
• E.g., third-party firm raises wages based on contractual increases
• E.g., scheduling of work flow controls third-party scheduling
• Potential control can be enough, depending upon:
• Reserved contractual rights, even if unexercised
• Core vs. non-core nature of the work
• Integration of the work
• Economic commercial leverage in the relationship
• Technological oversight
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8. Key “Control” Facts
• Management structure
• Separate supervisors/leads/HR
• Hiring practices
• Contractual right to reject
• Meet/exceed BFI’s selection procedures and tests
• Discipline and termination
• Right to discontinue use
• Wages and benefits
• Cost-plus contract
• Agency wages cannot exceed BFI wages
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9. Key “Control” Facts
• Scheduling and hours
• Control over speed of work streams/productivity standards
• Authentication of hours worked
• Work processes
• Assign specific tasks through agency supervisors
• Training and safety
• All safety rules applicable
• Limits on duration of employment
• Never exercised
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10. Implications
• Decision not limited to its facts
• Joint liability for ULPs and contract violations
• Union organizing (but, one more shoe to drop)
• Oakwood Care Ctr. likely to be reversed – amicus briefs requested in July
• Currently, unions can organize jointly-employed employees in a discrete unit
• Joint collective bargaining obligations
• Unions can try to bring deeper pockets to the table
• Who bargains about what?
• Information disclosure may disrupt leverage among contracting entities
• Secondary pressure
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11. CLE Presentation
82054
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12. Browning-Ferris – What’s Next?
• Any direct appeal to the Circuit Courts will have to wait
• Congressional fix unlikely in the near term
• Other agencies to follow
• DOL efforts to hold large companies responsible for wage/hour compliance
• EEOC amicus brief in Browning-Ferris in support of expanded test
• OSHA “draft” memorandum indicating interest in pursuing joint employer
cases against franchisors and franchisees
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13. Options to Eliminate/Mitigate Risk
Terminate
relationship
Modify
relationship
and/or contract
Accept/embrace
joint employer
status
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14. Possible Responsive Strategies
• Review key areas of relationship
• Contract provisions
• Physical presence
• Day-to-day interaction
• Create a decision framework relevant to your business
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15. Framework for Assessment
High-Level Considerations
Employee/
Facility-specific
HR/LR
Business/
Economic
Enterprise HR/LR
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16. Framework for Assessment
Type of Facility
Unionized
Non-Union
No Organizing
Non-Union
Prior/Ongoing
Organizing
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17. Framework for Assessment
Type of Work
Core Non-core Skilled
Unskilled Integrated
Non-
integrated
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18. Framework for Assessment
Type of Third-Party
Temp-to-Hire
Supplemental
Discrete Provider
Demonstrated
Expertise
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19. Spectrum of Options to Eliminate/Mitigate Risk
Terminate
relationship to
avoid risk
Modify
relationship and
agreement to
mitigate risk
Accept/embrace
joint employer
relationship
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20. Putting It All Together
• New election rules – median time to election is now 23 days
• Specialty Healthcare – micro-units
• Browning-Ferris
• Reversal of Oakwood Care Ctr.
• Limits on employer discipline (PCA, inherently concerted)
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21. Proactive Employer Strategies
• Assess your current program for measuring/addressing
employee sentiment
• Identify vulnerabilities to organizing activities
• Test your ability to quickly assess and respond to a campaign
• Evaluate risks in key areas
• Micro-units
• Joint employer
• Supervisor status
• Employee conduct rules
• Discipline rules and procedures
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22. CLE Presentation
82054
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23. Thank you