The August 27, 2015, ruling by the National Labor Relations Board (NLRB) In The Matter of Browning-Ferris Industries of California, Inc., suggests that anyone who exerts “indirect control” over a worker’s terms and conditions of employment — even if that worker is an independent contractor — is essentially an employer. Browning-Ferris contracted with any company, Leadpoint, to provide contract employees. Consequently, this ruling by the NLRB found that they were “joint employers” of the contract employees. Many business groups petitioned the NLRB to reverse or delay implementation of this ruling. The NLRB has announced that it will not reconsider or delay its ruling.
This could have a direct impact on franchise owners. The application of the ruling may mean:
- Franchise owners will now be responsible for medical care under the Affordable Care Act even if they have fewer than 50 employees, should contract employees and independent contractors be included along with the myriads of workers at other independently owned franchises of the same franchisor.
- Franchise owners could be forced to re-negotiate responsibilities, payment and hours — even after they had previously negotiated them with contractors and employees.
- Franchise owners could be confronted with “new joint bargaining obligations, expand[ed] liability for unfair labor practices and breaches of collective bargaining agreements, and may be subjected to economic protest activity that would have previously been unlawful secondary activity.
- Jurisdictional standards could be combined so that the commercial data from both joint entities would extend jurisdiction of the NLRB to some small businesses.
The joint employer ruling requires a rethinking of many of the assumptions about the nature of employment. Unless Congress acts, small businesses will likely be stuck with new and uncertain rules with respect to employee relations that could affect everything from benefits and tort
liability to employer liability insurance coverage premiums. In fact, the effect upon independent contractor agreements will require them to be reanalyzed and, in most cases, restructured and redrafted.
Staffing services and their client employers will likely find themselves dealing with substantive new liabilities and bookkeeping challenges, as well as increased worker’s compensation and employee liability insurance premiums.
If you have any concerns with regard to how this new ruling may relate to your business, call and set up an appointment with Israel & Samuels, LLP so you can plan for this brave new world of employer liability.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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