IAML's Executive Director, Bob Lee, discusses the ramifications of the NLRB's decision in the Browning-Ferris Industries case with esteemed faculty member, John F. Wymer, III, Esq. of Sherman & Howard.
Bob Lee: "Hello and welcome. I am Bob Lee, the Executive Director of the Institute for Applied Management & Law. Thank you for joining us for the IAML Alert on the impact of the recent NLRB decision in Browning-Ferris Industries. You may wish to follow along on the accompanying PowerPoint.
"We are pleased to introduce John Wymer as our esteemed presenter for this presentation. John will provide a background, history, overview and his take, most importantly his take, on this decision. There is none better, Mr. John Wymer. John, take it away."
John F. Wymer, III: "Thank you Bob for those kind words. The Browning-Ferris Industries case was recently decided by the labor board and is in my view, as important an NLRB case that has been decided perhaps since the history of the National Labor Relations Act. From your standpoint, I guess the question is why should I be interested in this or better stated, who should be interested in Browning-Ferris?
"First of all, whether you're unionized or non-unionized makes no difference. Browning-Ferris applies to you. Second, if you are an employer who has employees on your property who work for someone else, then Browning-Ferris applies to you and you should pay particular interest. Almost every employer in America, in addition to having its own workforce, contracts with other companies to provide certain services, whether it's having security on the premises, IT services, maintenance/custodial services, temporary employees or just companies with whom they contract to provide some service on the premises, this case is critical on a going-forward basis to how you do business.
"The facts of Browning-Ferris are fairly straight-forward. In the relationship between Browning-Ferris, which the NLRB refers to as the user company and a company called Leadpoint, which the NLRB refers to as the supplier company was a classic example of what I just described.
"Browning-Ferris is a recycler and one of the functions in a recycling plant is to sort the incoming materials into various categories before they can then go through the recycling process. Browning-Ferris subcontracted out that sorting function to Leadpoint. Leadpoint selected its own workforce, disciplined its own workforce, evaluated its own workforce and terminated its employees without any involvement of Browning-Ferris. Leadpoint even went so far as to have its own human resources manager on Browning-Ferris' property.
"Conversely, Browning-Ferris selected its employees, supervised them, evaluated them, disciplined and discharged them as well. In short, they were two entirely separate and distinct workforces with two entirely separate and distinct sets of supervisors, including an on-site supervisor that represented Leadpoint on the property. Leadpoint decided how much it paid its employees, decided which shifts they were going to work on and controlled entirely the terms and conditions of its own employees.
"The Teamsters Union however filed a petition for an election and they wanted to organize the Leadpoint employees, but also named Browning-Ferris as a co or joint employer. And in this case, the National Labor Relations Board deciding, to not follow 30 or 40 years of precedent, said that in this case despite the divisions that I just described between the two workforces that Browning-Ferris is in fact a joint employer with Leadpoint. The Board based this decision on the fact that even though Browning-Ferris had no direct control or involvement in anything that Leadpoint did or its employees did that there was in place a labor services agreement pursuant to which Browning-Ferris had the right to require Leadpoint to meet or exceed Browning-Ferris' own standard selection procedures and tests when it hired employees. Browning-Ferris had the right to require that Leadpoint hires first pass a 5 panel drug screen and the contract also prohibited Leadpoint from hiring anyone ineligible for rehire at Browning-Ferris. Browning-Ferris was evidently concerned that if it fired someone and then was not eligible for rehire, they certainly didn't want that person to come back to the premises through the backdoor of Leadpoint. And, the agreement gave Browning-Ferris the right to reject any Leadpoint worker for "any or no reason." Even though Browning-Ferris had no direct role in how much Leadpoint paid its employees, it did have a provision that said Leadpoint would not pay anyone who was performing work comparable to a Browning-Ferris employee, would not pay anyone more than Browning-Ferris paid. Again, Browning-Ferris was understandably concerned that it didn't want its employees to go over to Leadpoint where they could make more money.
"Even though Browning-Ferris never exercised any of those rights, the Board said that Browning-Ferris pursuant to that labor services agreement, indirectly controlled the Leadpoint employees. That by having these requirements as to who Leadpoint could hire and what the standards would be and there would be a cap on how much Leadpoint could pay its employees, that that gave Browning-Ferris, the user, indirect control over Leadpoint's employees to the extent that Browning-Ferris and Leadpoint were deemed to be joint employers.
"And, even though Browning-Ferris had no involvement in firing or disciplining any Leadpoint employee, they were too situation-sided that where Browning-Ferris probably went too far. On one occasion a Browning-Ferris manager saw two Leadpoint employees handing a pint of whiskey back and forth to one another. The Browning-Ferris manager contacted Leadpoint, described what he had seen and recommended that those two employees be dismissed immediately.
"There was another occasion where the Browning-Ferris surveillance tape captured a Leadpoint employee causing damage to Browning-Ferris property. Browning-Ferris notified Leadpoint and again recommended that the employee be "immediately dismissed."
"So, the ramifications are enormous. The most important thing, I think, to think about at this juncture though is what could you do preventatively to avoid this problem or at least to reduce the risk? And there are three things I encourage you to think about.
"Number 1: In establishing a relationship with a supplier (if you are the user) or with a user (if you are the supplier), would it not make more sense that rather than have the user require the supplier to meet certain standards for the supplier to simply promise affirmatively and voluntarily that it will meet certain standards? Rather than being required by the user, the supplier simply says these are the things that we intend to do.
"Second: There are certain rights that Browning-Ferris had that frankly I don't think they would ever have exercised and had no need to. For example, the right to reject supplier's workers, for any and no reason. The reason you select the supplier is because the supplier hires the right people and promises affirmatively to hire people who are qualified. There is no reason for Browning-Ferris to get involved in "rejecting" anyone who the supplier, in this case Leadpoint, provides.
"And the third thing to think about is better training for user managers. Browning-Ferris would have been better off if the manager who observed the two Leadpoint employees handing a pint of whiskey back and forth between themselves and the Browning-Ferris manager who observed an employee on surveillance tape, a Leadpoint employee causing damage to Browning-Ferris property, to simply report that without any admonitions/suggestions or hint that those employees should be immediately dismissed.
"If you do those three things, I think you significantly reduce the likelihood that you will be found to be a joint employer. Two more things to think about:
"Number 1: What if Browning-Ferris and Leadpoint follow my advice and restructure their relationship so that is more Leadpoint affirmatively promising to do certain things as opposed to Browning-Ferris requiring Leadpoint to do certain things and eliminating some unnecessary rights? Could Browning-Ferris then file what's called a unit clarification petition with the Labor Board and say we are no longer a joint employer? I THINK THE ANSWER TO THAT IS YES.
"The second question is the flip-side of that question though. What if you have a company on your premises, a security provider, a maintenance company, a company that sorts materials they come in that you pay, and it is already represented by a union? Could the union under Browning-Ferris then file what's called a unit clarification petition and say, the user employer has sufficient control over what my employer (the supplier) does that they should be identified as a co-employer and they should have to sit down and bargain with us so that we have both the user and the supplier employer present in the room? I THINK THE ANSWER TO THAT QUESTION IS PROBABLY YES AS WELL.
"Even though the Browning-Ferris case rose in the context of a representation election, it could be used in a number of contexts outside a union representation election in order to corral a user employer into being a co-employer."
Bob Lee: "Thank you John! Thank you very much for the clarification, the insights and your recommendation in this important decision. This example of an IAML Alert is but one example of what John shares in IAML's Advanced update in employment law conferences. There will be two conferences offered this year; in Las Vegas in October and in Orlando in November. Please take advantage of what John can offer further with a number of other topics during these important conferences.
"With that, I want to thank you very much for joining us. John, thank you very much again."
John F. Wymer: "You're very welcome. Thank you."