More than 780,000 franchise businesses and contractors now have an even bigger reason to be worried about compliance. In August, the National Labor Relations Board issued a decision that overturns a 30-year-old definition of the “joint employer” standard. So what does that mean for more than 10% of the country’s businesses? A lot. Check out PeopleMatter's ‘Joint Employer Compliance’ webinar presentation, featuring the nation’s leading labor and employment law firm, Ogletree Deakins, to: – Understand the reasoning behind the NLRB’s decision and what it means for employers – Uncover how the ruling changes the landscape for unions and collective bargaining … and who’s responsible for labor violations – Find out why 82% of franchisors think the decision will cause a “significant” impact to their business – Get new strategies and best practices for employers to remain compliant with the new “joint employer” standard

2. Today’s Presenter
John Merrell
Employment and Labor Law Attorney
Ogletree Deakins

3. What’s going on?
April
2014
December
2014
NLRB grants review in BFI
(subcontractor situation)
General Counsel authorizes
complaints vs. McDonald’s
(franchisee situation)

4. What’s going on?
August, 27
2015
NLRB issues decision in
Browning-Ferris Industries (BFI)
Reversed 30 years of precedent
and created a new standard for
determining joint employer status
30
years

5. What is a Joint Employer?
Not mentioned by Congress in
NLRA
Created by the NLRB to reach
independent companies that:
• Share control/co-determine employment
terms of another company’s workers
• Exercise that control in a manner that is
“immediate and direct”
• Does not apply where the companies
aren’t legitimately separate legal entities
(“single employer” doctrine)

6. What does it mean to be a
Joint Employer?
If you and another company are
joint employers, then each of you:
• Can be held liable for the other company’s
unfair labor practices
• Could be obligated to bargain with a union
representing the other company’s
employees
• Could lose “secondary boycott” protection

7. What relationships could give
rise to a Joint Employer finding?
● Franchisor / Franchisee
(Ex: McDonald’s)
● Contractor / Subcontractor
● Primary employer and
staffing agency

8. The Old Standard
Laerco and TLI
1984
● Legally separate entities are
joint employers ONLY when
they actually share the ability
to control or co-determine
essential terms and
conditions of employment
(hiring, firing, discipline, supervision
and direction of employees)
● Putative employer’s control
must be “direct and
immediate”

9. The Old Standard
Laerco and TLI
1984
● “Limited and routine”
instruction is not enough to
make you a joint employer
● Employer may be able to tell
another company’s
employees what to do, but
not how to do it

10. The Old Standard
Laerco and TLI
1984
“Immediate and direct”
Making personnel decisions:
Setting individual wages
Hiring, disciplining or discharging workers
Setting individual employees’ schedules
Resolving workers’ disputes
It does not mean:
Pointing out issues with workers
Setting operating hours
Requiring particular attire or safety equipment
“Limited and routine” directions on services to perform

11. Example: TLI, Inc.
No Joint Employment
TLI
Crown
Crown did not hire, fire or discipline TLI drivers
Drivers reported
accidents to Crown →
TLI investigated and
determined discipline
If drivers’ conduct
concerned Crown, it gave
incident reports to TLI →
TLI conducted its own
investigation

12. Example: TLI, Inc.
No Joint Employment
Although Crown may have exercised some
control over the drivers, Crown did not affect
their terms and conditions of employment to
such a degree that it may be deemed a joint
employer
Crown’s daily supervision was not meaningful,
but rather, limited and routine
TLI

13. BFI
International Brotherhood of Teamsters (IBT)
petitioned for joint employer status of
BFI and Leadpoint at BFI Recyclery
Sorting line operations outsourced to Leadpoint
Leadpoint had 15 on-site
supervisors and an HR
Representative to manage
its 200 employees
BFI not involved in hiring,
supervising, disciplining or
discharging employees

14. BFI
BUT
● Cost-plus contract
● BFI owned building and equipment
● BFI determined hours sorting line operated
● BFI provided “target” headcount estimates
● BFI occasionally observed employee misconduct and
reported it to Leadpoint
● Leadpoint investigated and made decisions
● BFI on (rare) occasions (allegedly) gave directions to one
or two employees

15. ALSO
● BFI required drug testing
● BFI retained the right to demand that Leadpoint stop
using a particular worker
● BFI imposed safety requirements
● BFI controlled the speed of the conveyer belt
BFI

16. BFI
● BFI not a joint employer with Leadpoint
● Leadpoint solely controlled individual employee
decisions
○ Made all hiring, firing and discipline decisions
● Leadpoint’s staff of supervisors managed workers
● Any direction by BFI was “limited and routine”
Area Regional Director
NLRB: We would like to see briefs on whether we ought
to reconsider the existing standard

17. The New Standard
Pre-1984
standard
● Focuses on “industrial realities”
● Direct OR indirect control over
terms and conditions
○ OR the unexercised potential to control
terms and conditions of employment
○ Does the company impose operational
requirements and monitor and retain
effective control over those operations?
● Based on the “totality of the
circumstances”

18. The NLRB General Counsel's
Position
Joint-employer status exists when, “under the totality
of the circumstances, including the way the separate
entities have structured their commercial relationship,
the putative joint employer wields sufficient influence
over the working conditions of the other entity’s
employees such that meaningful bargaining
could not occur in its absence.”

19. ● Tracking data on sales, inventory and
labor costs
● Calculating labor needs
● Setting and policing employee work
schedules
● Tracking wage reviews
● Tracking time needed for employees to
fill customer orders
● Retention of right-to-approve
employees
● Requiring another company and
employees to follow safety rules
WHO IS
A JOINT
EMPLOYER?
Examples of “indicia of control” that the
General Council has given:

20. ● Any company that outsources on-site
operations to a third party might be
deemed a joint employer of the third
party’s employees
● Any company that closely controls
off-site operations of a third party,
like a franchisor, might be a joint
employer
○ Then, unions can effectively use
corporate campaign tactics to
organize
WHO IS
A JOINT
EMPLOYER?

21. ● The term “employer” was intended to be
construed broadly
● Employers who use staffing companies
and subcontractors are still influencing
terms and conditions of employment by
influencing price by controlling other
variables (“industrial realities”)
● In this type of situation, employees don’t
have a chance to achieve better terms and
conditions through collective bargaining
The General Counsel’s
Reasoning

22. Where is this coming from?

23. ● Spent more than $150 MILLION
to re-elect the President
● Want to organize fast food
workers
● Spent more than $15 MILLION
this year on fast food worker
protests
Service Employees
International Union (SEIU)

24. Look familiar?

25. ● Takes a lot of energy to organize local
retail outlets unless employees really
want a union
● Far easier to attack large companies
with PR campaigns, class action
lawsuits, and environmental
challenges to their development plans
● Also look for neutrality agreements
SEIU likes corporate campaigns,
not grassroots organizing

26. They work for independent third parties
● Subcontractors
● Franchisees
● Business partners
But, many employees don’t
work for the “Big Guy”
BUT NOT IF THE NLRB REDEFINES THE CONCEPT
OF A “JOINT EMPLOYER” UNDER THE NLRA

27. State in agreements that sub-contractor
(or franchisee) makes all employment
decisions
Stick to what you write!
NOTE: There is an exception for franchisors to control
product quality and brand
So what’s an employer to do?
Give as much control to the third party as
you can accept

28. ● Embrace your new-found status
as a joint employer
● Talk to your staffing company
● Draft protections into
agreements
● Require compliance with laws
● Insulate yourself against union
organizing risks
If you can’t beat ‘em…
JOIN
‘EM

29. The combination of the NLRB’s new
“Ambush Election Rules” (which went into
effect in April) and the new joint employer
rules could make 2015 and beyond scary for
employers
7-Day position statement requirement
Can you gather the information in time?
Elections in as few as 10-21 days
Where are your weak spots?
The Perfect Storm?

30. The NLRB has asked for briefs in Miller & Anderson
on whether the NLRB should
What’s on deck?
Continue disallowing inclusion
of solely-employed employees
and jointly-employed employees
in the same unit without both
employers’ consent
(Oakwood Care Center)
-OR-
Return to prior case law,
permitting inclusion of solely-
and jointly-employed employees
in same unit without consent
of employers
(M.B. Sturgis)

31. Q&A
John Merrell
Employment and Labor Law Attorney
Ogletree Deakins
john.merrell@ogletreedeakins.com

32. HRCI
Program ID: 259345
Recertification Credit Hours Awarded: 1
Specified Credit Hours: HR (General)
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