Joint employers revised

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Presented by:
Bruce Anderson
Jim Nottingham
Phone: (303) 218-3650
Email: banderson@laborlawyers.com

BROWNING-FERRIS INDUSTRIES
• A recent N.L.R.B. decision, Browning-Ferris Industries,
reversed 40 years of legal precedence when it changed
the factors it will consider when determining whether two
separate companies are joint employers.
• The N.L.R.B. dramatically expanded the “joint employer”
standard.
WHY?

OLD STANDARD
• Both companies share or codetermine matters governing
the essential terms and conditions of employment.
• An Employer actually exercises, direct, immediate and not
limited control over workers to be considered a joint
employer with another company.

NEW STANDARD
• The new standard eliminates the requirement that the employer
actually exercises direct, immediate and not limited control.
• If the business has the contractual right to control it will be held to
be a joint employer.
• Indirect control by a business indicates joint employment status.
• The new test will require a factual inquiry into the particular
circumstances of every case.

HOW ARE THE STANDARDS DIFFERENT?
• The new standard:
• Is much broader;
• Is very fact specific;
• Is not limited to an exclusive list of factors;
• Is “inclusive” as to what constitutes essential terms and
conditions of employment.

WHAT WERE THE IMPORTANT FACTORS IN BFI?
• BFI retained the ability to reject workers assigned to the facility;
• BFI required drug tests;
• BFI exercised indirect control by setting shift schedules and
controlling when overtime was needed;
• BFI signed off on the accuracy of subcontractor’s employees’ time
summaries;
• BFI assigned specific tasks to be performed by subcontractor
employees.

BROAD NEW STANDARD
• Although the facts in the Browning-Ferris case are quite
different than in the standard subcontractor-contractor
relationship on a construction site, the test described by
the NLRB is so broad it extends to any business
relationship in which one company supplies labor in some
manner for the benefit of another.
– Contractor- Subcontractor relationships; and
– Using an employee leasing company are two examples of
business relationships which meet this broad standard.

CONTROL
»Under the new test what does Control mean?
»You have the absolute right to Control the Project!
» Encore cannot control the terms and conditions of
employment of a subcontractor’s employees.

CONTROL
• What terms and conditions of employment are considered?
» Primarily the contractor’s power over:
» Setting wages;
» Hiring / Firing;
» Dictating the number of workers to be supplied;
» Requiring disciplinary action;
» Controlling scheduling, seniority and overtime;
» Determining the means and methods of performance.

TWO TYPES OF CONTROL
– Indirect Control- What is in the Subcontract Agreement that
allows Encore to affect the employment of a subcontractor’s
employees?
– Direct Control- What do Encore’s onsite supervisors do to
affect the employment of a subcontractor’s employees?

INDIRECT CONTROL
• Primary focus is on any contract terms that could be
interpreted to mean Encore can control- hiring/firing,
discipline or scheduling of a subcontractor's employees.
• Encore’s current Subcontract Agreement provides:
– Encore’s onsite supervisors can require a subcontractor to remove an
unsatisfactory employee from the jobsite.
– If a subcontractor is behind schedule Encore can “hire additional workmen” to
perform subcontractor’s scope of work.
– Subcontractor’s employees are to check in to Encore’s onsite foreman each day
they are onsite.

DIRECT CONTROL
• What can Encore’s onsite supervisor’s do on a jobsite that
could be considered as controlling the hiring/firing,
discipline or scheduling of a subcontractor’s employees?
– Job is behind schedule:
» Can Encore’s supervisor require subcontractor to schedule
employees to work overtime?
» Can Encore’s supervisor require subcontractor to bring in more
workers?

DIRECT CONTROL- Continued
Subcontractor says can’t find qualified employees:
• Can Encore’s supervisor say raise employee’s pay?
You observe a subcontractor’s employee not wearing a
hardhat and tell him to put it on. After you see same
employee not wearing a hardhat again:
• Can Encore’s supervisor tell the subcontractor to fire this
employee?

DIRECT CONTROL- Continued
• You observe a subcontractor’s employee working on a roof with no fall protection:
– Can Encore’s supervisor take immediate action to correct this safety issue?
– Can Encore’s supervisor tell the subcontractor to discipline the employee for not working
safely?
– What should Encore’s supervisor do?
• Notify subcontractor’s onsite supervisor of what happened.
• Don’t make a specific recommendation of what action subcontractor should take.
• Don’t say “fire that guy”.

FLOW DOWN CLAUSES
• Encore’s Subcontract Agreement says subcontractor
assumes all obligations and responsibilities which
Encore by Contract Documents assumes towards
General Contractor and Owner.
– Does this contract term impact Encore’s indirect control
over a subcontractor's employees?
– Does this contract term impact the direct control Encore’s
onsite supervisors have over a subcontractor's employees?

FLOW DOWN CLAUSES - CONTINUED
– How does this contract term impact Encore’s indirect control over a
subcontractor's employees?
• Examples:
– Hensel Phelps “Regulatory Packet”
» Flow Down clause requires Encore to comply with all terms in contract
between Hensel Phelps and Microsoft
– Microsoft Vendor Code of Conduct
» Pre-Placement Policy
» Requires background checks and gives Microsoft right to have an
employee removed from the jobsite.
– J.E. Dunn “Controlled Insurance Program”
» May request removal and requires disciplinary action of subcontractor
personnel who violate safety program

• What has Encore done to address this issue?
– Revised Subcontract Agreement to say:
• Subcontractor acknowledges all orders, instructions, directives and determinations
issued by General Contractor or Owner, pursuant to the terms and conditions of the
Contract Documents, which require Subcontractor to take an action which may impact
one of Subcontractor’s employees, even if Contractor communicates the information
to Subcontractor on behalf of General Contractor or Owner, do not constitute a
decision or a determination of Contractor affecting the terms and conditions of the
employment of Subcontractor’s employees. (Depending on the specific requirements
in the Contract Documents of the GC or the Owner (i.e. Microsoft’s pre-placement
policy or Dunn’s Controlled Insurance program or similar requirements) the following
should be added--- Subcontractor also acknowledges it is complying with the
requirements of (insert GC or Owner name as applicable)___________________,
described in the attached Exhibit _____, as specifically required by (GC or
Owner)______________________ in the Contract Documents.

– How does this contract term impact the direct control Encore’s
onsite supervisors have over a subcontractor's employees?
• Example:
– General Contractor’s Project Manager tells you a subcontractor’s employee
violated safety program, get him off the jobsite. What should you do?
» Contact subcontractor’s onsite supervisor - do not speak to the employee
directly;
» Explain specifically directed by general contractor to communicate that this
action be taken;
» Document both conversations in detail.

REVISED CONTRACT CLAUSES
• Encore revised other contract terms which impact onsite supervisor;
– Paragraph 32 now says;
• If Subcontractor must allow a union representative to contact Subcontractor’s
employees on the jobsite, Subcontractor’s Project Manager will remain with the
union representative the entire time the union representative is on the jobsite and
the Project Manager will prohibit the union representative from communicating
with individuals on the jobsite who are not union members.
– You need to make sure this is done. Intent is to limit the ability of a union
representative to interact with Encore Employees.

REVISED CONTRACT CLAUSES
• Changes were made in Attachment “B” Special Terms & Conditions:
– Old language:
• All personnel will be required to check in with Encore Electric, Inc. onsite
foreman each day they are onsite.
– New language:
» Subcontractor shall provide Encore Electric’s onsite foreman a daily report identifying
all of Subcontractor’s personnel present on the jobsite.
» New language:
» Subcontractor’s Project Manager shall attend Encore Electric’s weekly safety
meetings and Monthly Job wide safety meetings.

QUESTIONS?

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