Recently, some government agencies (including the National Labor Relations Board and the federal Departments of Labor and Treasury) have changed their rules to more easily find joint employment in situations where they did not find it before – such as franchise networks and staffing arrangements.
Joint employment can expose separate employers to union organizing and to increased liability for wage payment, payroll taxes, civil rights violations, workplace safety, and other issues. It can also subject small employers to federal jurisdiction under laws that would otherwise exempt them for having fewer than 15, 20, 50, or 100 employees.
The possibility of joint employment in using contingent workers is not really news and should not be a big issue now. However, in the past, some companies needlessly imposed assignment limits following the Microsoft benefits case and are now imposing excessive coverage mandates under the Affordable Care Act. Spurred by advisors’ warnings of joint employment risk, companies may seek help with “solutions” to it from their staffing providers.
Here are some ways you can ask your suppliers to help:
General:
- Ask your supplier to provide standby labor counsel to respond quickly to joint employment issues. Ideally, counsel should be knowledgeable in staffing, employment law generally, and so-called “traditional” labor law (the law of unions and collective bargaining.)
- Pre-establish lines of communication between your counsel and your suppliers’ counsel.
- Reinforce your separate employer status in communications to both workforces.
- Train your front-line supervisors in the principles of contingent employee management.
- Ask your suppliers to train their in-house staff on unfair labor practices (ULPs), because their actions can expose your company to liability and because some ULPs are counterintuitive things that no normal person would consider bad or illegal.
- When economically feasible, maintain on-site supervision by staffing firm personnel.
Operational:
The terms of the workers’ employment may also be useful for rebutting joint employment theories. The NLRB’s Kalamazoo Paper Box decision listed factors relevant to determining whether joint employees have the “community of interest” necessary for including assigned employees in a client’s union bargaining unit. To avoid this combination, and for several issues, you and your supplier may want to maximize differences in your workforces according to these factors:
- method of compensation
- hours of work
- employee benefits
- supervision
- qualifications, training, and skills
- job functions
- working time spent away from the assignment location
- infrequency or lack of contact with other employees
- lack of integration/interchange with other employees
Note that assignment length is not on this factor list.
Contractual:
Staffing agreements can contain helpful items:
- Make the statement that the staffing firm reserves the right to control the details of the work, even though you actually supervise the work and remain liable for it.
- Keep your organization out of the processes of recruiting, selecting, disciplining, and terminating assigned employees.
- Don’t set or contract for temps’ pay rates; use dollar amount bill rates instead. How can your company be the employer of assigned workers if you don’t even know their pay rates? You can still achieve markup pricing, based on the percentage relationship of aggregate billings to aggregate pay, without knowing any worker’s individual pay rate.
- Don’t resist conversion fees for hiring assigned employees or for transferring them to successor staffing firms. They help to reinforce your separate employer status. How can your company be a joint employer if it has to pay to become the staffing firm’s employees’ employer or to move them to another supplier?
- Avoid separate definition, pricing and administration of payrolled employees. Instead, track how frequently you source assigned employees and, at contract renewal, take the staffing firms’ recruiting cost savings of payrollers into account in the overall rates applicable to all temporary employees.
- Promise not to seek or acquiesce in a union bargaining unit that would combine your direct employees with your suppliers’ assigned employees.
- Allocate the costs associated with potential labor organizing.
- Provide for rate adjustments if collective bargaining affects wages or other labor costs.
There is no guarantee that these measures will fend off a joint employment finding by a determined court or government agency, but they should make the case harder for your opponents to win.