Last week's National Labor Relations Board ruling on joint ownership was a complex and dramatic departure from previous standards of labor law, and it may have left you wondering what you need to do to operate in this new world.
As a refresher, the ruling, which involved a staffing agency that provided workers for a California recycling center, reclassifies what it means to be a joint owner. It affects anyone who uses contract labor in their daily operations, as well as all parties involved in franchise operations. Legal experts say it also could draw in sole proprietors with more individual contracts, for things as small as fixing the plumbing in your house. And if you operate a franchise, you will now be on the hook for any labor disputes happening at the local level of your franchisee’s operations.
Bad as this may seem for your business, the NLRB’s new ruling is an acknowledgement that the nature of the workforce has changed. In a statement, the NLRB said a key factor in the ruling was that some 3 million laborers are now temporary workers, with none of the rights that full-time employees have.
While the ruling is likely to be disputed in court, you could still find yourself drawn into the affairs of another company with which you previously had no direct relationship.
Still confused? Here are five things you need to do right now to prepare.
1. Review your contracts. You’ll need to go over your external labor agreements with a fine-toothed comb to find any language that appears to give you direct control of workers. That includes setting hours; requiring background checks to perform sensitive job duties involving customer information, such as in financial services businesses; or applying individual state standards for hiring health care workers, legal experts say.
2. Going forward, make sure your contracts are written in a general way that gives the contracting agency full authority over workers. In the event you’re unhappy with the work, make sure you explain to the agency where things fell short, without naming specific employees or groups of employees. “It is possible to craft a relationship with a labor contractor or franchisee so that the employer does not directly or indirectly have the right to control the terms or conditions of employment,” says Mark Carter, a labor partner at law firm Dinsmore & Shohl, in Charleston, West Virginia. A word of caution: Your prior relationship won't necessarily be protected by the contract rewrite.
3. Carefully vet any contract agency you plan to work with. You’ll want to make sure it is not subject to any outstanding labor complaints. You’ll also have to make sure it meets its own contract terms. If you bargain to pay its workers $15 an hour, or for them to be guaranteed benefits like health care, verify that’s what they receive.
4. Be careful not to terminate existing relationships with contracting agencies whose workers are in the process of organizing. That may now be illegal in the eyes of the NLRB, and could be viewed as an attempt to head off unionization by employees. The same thing holds true if you’re looking to lower your costs and find cheaper labor from another company. Exceptions are likely to be made for companies that can prove that they can no longer afford to keep staff on board.
5. Consider working with something called a professional employer organization (PEO), many of which are hybrids of staffing firms and third-party human resources firms that take on tasks like benefits and payroll administration, or with companies that will indemnify you from their own labor claims.
It seems almost ridiculous to say, but instead of using contract labor, it might now be easier for you to just hire the employees you need rather than deal with the nuances of joint employment. “If am going to be on the hook, I might as well make them my employees in the first place,” says Rebecca Bernhard, of counsel at law firm Dorsey & Whitney, in Minneapolis. It’s important to remember that your status as a joint employer is not automatic, Bernhard adds. The NLRB would have to determine that via a formal labor dispute process in each case.