A decision by the National Labor Relations Board that franchisors and companies
The 3-2 decision involved Browning-Ferris Industries of California. It contracted with Leadpoint Business Services to supply employees to sort and screen items at a recycling plant. A union sought to represent the Leadpoint workers as joint employees of Browning-Ferris.
Following NLRB precedents, a regional official of the agency ruled that the workers were solely employed by Leadpoint. The union requested a review of the decision.
Labor organizations, legal scholars and the agency’s own general counsel urged the NLRB to revise its standards for assessing joint-employer status. Employers argued that the standard, established in 1982 in a case that also involved Browning-Ferris, should continue.
The NLRB decided that its past policies were “out of step with changing economic circumstances.” The majority opinion of the board said that two or more entities are joint employers of a single workforce if (1) they are both employers within the meaning of the common law and (2) they share or co-determine essential terms and conditions of employment.
In evaluating whether an employer has enough control over employees to qualify as a joint employer, the NLRB – and presumably the IRS, when looking at ACA issues – therefore will look at whether an employer exercises control over the terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so.
The NLRB’s decision is expected to have broad effects, including related to the ACA. A company with fewer than 50 direct employees that also uses workers from a staffing agency may now have to include those workers in its count of full-time-equivalent employees.