Employment relationships can take many forms, and employers’ perceptions of their legal responsibilities for certain workers is not always reality. An employer may classify workers as temporary or independent contractors, but that does not mean DOL will agree. This is particularly challenging due to continuous changes in the law relating to these types of employment relationships.
One particular area in flux over the past several years has been the joint-employer standard, significantly expanding in the Obama-era NLRB decision in Browning-Ferris, but in the wake of change through an ongoing NLRB rulemaking. Similarly, the boundary between employees and independent contractors has also been a moving target. Although the prior administration took the view that a majority of workers are employees in its guidance to employers, the Trump Admin. has signaled a change in direction.
Even where there is not a legal employer-employee relationship, companies may have certain safety and health obligations and potential liabilities depending on their role at multi-employer worksites or the use of temporary workers. Protecting temporary workers and enforcing the responsibilities of host employers and staffing agencies was a priority of OSHA in the Obama Admin. through a Temporary Worker Initiative that continues today. OSHA has also continued to defend its multi-employer worksite enforcement policy through legal challenges.
The Trump Administration has taken the reins at OSHA, and the first year of the new OSHA’s enforcement and regulatory (or de-regulatory) agenda is in the books. We have already seen significant changes in the way OSHA does business and the tools available to the Agency in its toolkit. Now, as the new Administration finishes filling out the OSHA leadership team with its own appointees, we are sure to see shifting of enforcement priorities, budgets and policies, and an amplified effort to repeal or re-interpret controversial Obama-era OSHA rules and policies. Accordingly, it is critical to stay abreast of OSHA developments.
Employers’ perceptions about their legal responsibilities for certain workers is not always reality. Although an employer may classify workers as temporary workers or independent contractors, that does not mean the Department of Labor takes the same view. At the tail end of the Obama Administration, DOL was vocal about its belief that most workers should be treated as employees, insinuating that in most cases, employers will be accountable for the specific obligations of an employer-employee relationship. The Trump Administration is moving in the other direction, but a lot of questions remain unanswered or muddled. DOL has also been cracking down on employee misclassification and division of responsibility among multiple employers. Additionally, employers continue to have certain safety and health related obligations and potential OSHA liability depending on their role at multi-employer worksites or in joint employer situations.
It is essential for employers to carefully evaluate the employment relationship and their own individual function in the multi-employer context.
Employers must beware as the U.S. Department of Labor (“DOL”) cracks down on what it perceives as rampant misclassifying employees as contractors and shirking other responsibilities, such as safety training, because a worker is supplied by another employer. With more and more unique employment relationships and multi-employer worksites, it is crucial to understand the complexities of how the DOL and its various enforcement agencies define the employment relationship and/or assign liability in these contexts.
It has long been a priority of the Obama Administration to treat more workers as actual employees of host employers in order to provide them with a litany of labor protections and benefits, even when these workers are not hired directly, may not stay long, and may not even consider themselves to be employees. This enforcement philosophy affects businesses in numerous areas – such as wage and hour law and OSHA compliance – even when employers thought staffing through an agency or on an independent contract basis relieved them of many of these DOL burdens and liabilities. Not only does this increase the cost of many temporary, contract and multi-employer arrangements, it also puts employers at great risk of costly DOL enforcement actions if they do not understand when they have the responsibility (as opposed to another employer) to satisfy certain terms of labor law compliance.
First and foremost to keep in mind, although an employer may classify a worker as an independent contractor or as a non-employee temporary worker, and their maybe contract documents that express that classification, that does not mean DOL takes the same view. Indeed, as DOL sees it, most workers should be treated as employees. Also, employers may have certain employment law and OSHA-related obligations and potential liability even for non-employees depending on the employers’ roles at multi-employer worksites or in joint-employer situations.
New ‘Joint Employer’ Standard
Outsourcing to a temporary or contract worker can be a great way for a company to take care of some tasks and may make more sense for the business, rather than hiring full-time workers to fill those gaps. However, if the DOL finds under one of various legal tests that the business is a joint-employer of that worker with another company, then numerous legal obligations kick in vis-a-vis these shared employees (such as collective bargaining and mandatory dispute resolution) as well as significant exposure for your organization under various labor laws.
In the past few years, both state and federal agencies have been expanding the joint-employer definition. Continue reading →
Employers’ perceptions about their legal responsibilities for certain workers is not always reality. Although an employer may classify a worker as a temporary worker or independent contractor, that does not mean the Department of Labor takes the same view. Recently, DOL has been vocal about its belief that most workers should be treated as employees, insinuating that in a majority of cases, it would hold employers accountable for the specific obligations of an employer-employee relationship. Additionally, employers may have certain employment law and OSHA related obligations and potential liability depending on their role at multi-employer worksites or in joint employer situations.
Overall, DOL has been cracking down on employee misclassification and division of responsibility among multiple employers; thus, it is essential for employers to carefully evaluate the employment relationship and their own individual function at in the multi-employer context.
On August 27, 2015, the National Labor Relations Board (“the Board”) “refined” its standard for determining joint-employer status pursuant to its decision in the Browning-Ferris Industries case. In a 3-2 party-line decision, the NLRB reversed an August 2014 ruling that found Leadpoint Business Services Inc. to be the sole employer of the workers at the BFI recycling facility where the local Teamsters union attempted to organize. As part of its reversal, the Board announced a new joint-employer standard that is significantly broader and more inclusive than the standard the Board has upheld for the past 30 years.
In its “restatement” of the legal standard, the Board explained that it may find two or more entities are joint employers if:
They are both employers within the meaning of the common law; and
They share or co-determine those matters governing the essential terms and conditions of employment.
In evaluating the control an entity has over essential terms and conditions of employment, the Board will assess the actual exercise of direct and/or indirect control, as well as determine whether such control has been reserved by the entity in question. To make this determination, the Board will consider, for example, whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary or whether it has reserved the authority to exercise such indirect influence. The Board also took an inclusive approach in defining the terms and conditions of employment to mean dictating the number of workers to be supplied; controlling scheduling, seniority, and overtime; assigning work; and determining the method and manner of work among other considerations related to hiring, firing, supervision, and wages/hours.
Under its new standard, the Board determined that BFI was a joint employer with Leadpoint because BFI possessed direct and indirect control over essential terms and conditions of employment of the workers supplied by Leadpoint. It also determined that BFI reserved authority to control such terms and conditions, which added additional support to its finding in favor of joint employer status.
Application of the Browning-Ferris Decision
This new standard adopts more of a “totality of the circumstances” approach, requiring “a full assessment of the facts” in each case. The dissenting Board members criticized such an approach, pointing out that it provides little to no predictability or certainty in who would be considered a joint-employer, and could potentially allow the most tangential evidence to suffice to support joint-employer status. The majority, however, responded that a definitive formula is not appropriate for this type of evaluation and that a full assessment of the facts and incidents should prevent a finding of joint-employer status where there is only tenuous indications of control in a relationship. In its explanation of how the standard will be employed, the majority made clear that a finding of joint-employer status will be a very fact-specific assessment and require a case-by-case analysis of the level of control asserted by the putative joint-employer.
Although the majority claims that this new standard is simply a “return to the traditional test used by the Board,” in actuality this standard is completely different from prior iterations and will significantly expand coverage of the joint-employer relationship through consideration of