U.S. News

U.S. Appeals court grapples with labor board 'joint employment' test

WASHINGTON (Reuters) - A California waste management company on Thursday asked a U.S. appeals court to overturn a contentious labor board decision on “joint employment” that could make it easier to hold companies accountable for the labor practices of the staffing agencies, contractors and franchisees with which they partner.

Judge Patricia Millett of the U.S. Court of Appeals for the D.C. Circuit said the National Labor Relations Board had “dropped the ball” in its legal analysis, which made her concerned about whether it can police the line between genuine joint employment and contractor relationships.

The NLRB roiled the business community with its 2015 decision that Browning-Ferris Industries of California Inc, a subsidiary of Republic Services Inc, jointly employed workers it hired through Leadpoint Business Services, a staffing agency, for its recycling facility in Milpitas, California.

The decision revised the NLRB’s test for determining whether companies are joint employers. The U.S. Chamber of Commerce, National Retail Federation and other business groups have characterized that new test as a major change that threatens a range of business-to-business relationships that companies often rely on.

Many companies use contract labor in part to avoid the costs and responsibilities of directly employing workers. But being categorized as a joint employer can complicate that strategy for companies as they can be held liable for labor law violations and required to bargain with unions.

Critics of the new test hope that the NLRB under President Donald Trump will rollback the test, but it could take more than a year for a Republican majority to control the board and the right case to emerge as a vehicle for reversal.

The joint employment test set forth in the decision expanded the board’s criteria to consider whether an employer has indirect or unexercised control over another company’s workers, whereas before it had considered whether a company had “direct and immediate” control.

During oral argument in court, members of the three-judge panel said the NLRB’s decision that Browning-Ferris jointly employed the staffing agency workers was not clear enough about which terms of employment it supposedly controlled.

Browning-Ferris told the panel that the NLRB’s test takes a company’s efforts to control the outcome of contracts and treats them as signs of joint employment.

But the NLRB argued that it looks to a company’s control over the details of the work process itself for evidence of joint employment.

Reporting by Robert Iafolla, Editing by Alexia Garamfalvi and Grant McCool