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Our U.S. colleagues recently wrote a great piece about the long-awaited and much-debated decision of the National Labour Relations Board (the “NLRB”) in Browning-Ferris Industries of California, 362 NLRB No. 186,  (“Browning-Ferris”) which has dramatically changed the concept of “joint employment” south of the border.  U.S. employers who – on the basis of 30 years of NLRB precedent – have operated on the basis that workers supplied by temporary staffing agencies were not their employees should take heed.  The rules have changed and employers will need to adapt.  Readers who want a purely U.S. analysis of this landmark case can link to it here.

An Overview of the Browning-Ferris Case

The case involved a recycling company called Browning-Ferris Industries (“BFI”) which used workers supplied by a staffing agency called Leadpoint Business Services (“Leadpoint”) to clean and sort recycled products at its facility in Milpitas, California.  The Teamsters attempted to unionize the workers.  Along with Leadpoint, BFI was named as a “joint employer” in the petition.

An election was held in April 2014 and the ballots cast by the workers were “impounded” and not counted while the NLRB grappled with the joint employer issue – an issue that quickly became a lightning rod in academic, political and legal circles about access to unionization, generally, and meaningful collective bargaining, specifically.

What is Joint Employment and Why Is It Important?

Joint employment contemplates that there may be more than one employer of a group of employees for the purposes of the rights and responsibilities that arise under the web of laws the regulate the employment relationship and the workplace (and, as we all know, there are plenty of employment laws at play when it comes to the employment relationship).

In the Browning-Ferris case, the issue was whether BFI, who had contracted with an arm’s length third party, Leadpoint, could be considered to be one of the employers of the workers that were supplied to it even though, strictly speaking, BFI did not employ any of them.  In fact, the relationship between BFI and Leadpoint was structured to specifically avoid an employment relationship between BFI and the workers supplied by Leadpoint.

If found to be a joint employer, BFI would be deemed to simultaneously employ Leadpoint’s workers and thereby become jointly responsible for Leadpoint’s labour relations with the Teamsters.  Among other things, this would include an obligation on the part of BFI to recognize the Teamsters, to bargain with them in good faith and to be bound by any collective bargaining agreement (if one were ever concluded).  It would also mean that BFI could be responsible for any unfair labour practice complaints made by the Teamsters and for breaches of the collective bargaining agreement.

The Legal Test Before the Browning Ferris Case

In order to be found a joint employer with a separate and unrelated employer, like a staffing agency, the NLRB historically required “direct” and “immediate” control over the essential terms and conditions of employment of workers. Hiring, firing, discipline and control over compensation were some of the traditional hallmarks of the control test.  “Reserved” or “incidental” control was not sufficient to establish a joint employment relationship.

The traditional legal test quite clearly favoured BFI whose control over the workers supplied by Leadpoint was, at best, reserved and incidental.  Leadpoint, not BFI, had the authority to hire, fire and discipline the workers (though BFI could have a worker removed from its facility presumably if there were disciplinary or other work related issues).  Leadpoint also compensated, supervised and directed the workers through on-site management. Further, the agreement between BFI and Leadpoint stated that Leadpoint was the sole employer of the workers it supplied.

What Has Changed and Why?

In what amounts to a sweeping change of previous joint employer standard (and in what some commentators have called a tortured analysis of the joint employment issue), a 3-2 majority of the NLRB held that BFI was, in fact, a joint employer with Leadpoint.

In making that finding, the majority of NLRB held that an employer is no longer required to exercise direct and immediate control over workers’ terms and conditions of employment to be a joint employer.  Indirect or even reserved control may be sufficient to establish a joint employer relationship.  Further, the factors used to determine control are extremely broad under the NLRB’s new test and make it far easier to establish a joint employment relationship.

Why the dramatic change?  With almost 3 million U.S. workers employed through temporary agencies in August 2014, the majority of the NLRB held that its previous joint employer standard had failed to keep pace with changes in the workplace and modern economic circumstances.  It would appear that the majority’s hope, if not expectation, is that expansion of the joint employer standard will lead to more meaningful collective bargaining particularly for those workers who are perceived to be more vulnerable members of the workforce.

Implications for Canadian Employers?

Although it is a U.S. decision, the Browning-Ferris case is a good reminder for Canadian employers of the risks of using temporary workers. Many employers continue to wrongly assume that by using workers supplied by a temporary staffing agency, they have not only avoided dealing with the most basic aspects of the employment of the relationship (like hiring, training, payroll, etc.), but that they have avoided the employment relationship altogether.

That is not the case.  By and large, Canadian courts and tribunals have tended to find that the employer to who the workers are supplied, and not the temporary staffing agency, is the “true” employer where disputes have arisen.  In the labour relations context, for example, labour boards have long included temporary workers in larger, all-inclusive bargaining units with “regular” employees.   If the Browning-Ferris decision signals a coming shift by Canadian labour boards from traditional legal tests that focus on actual control (like hiring, firing and discipline) to tests which focus more on indirect or reserved control, then employers will face even greater challenges when dealing with temporary workers.

Are there steps that employers can be taking?  Absolutely, but none of this is new or particularly earth shattering.  The starting point is to consider the value of using temporary workers, particularly in industries more vulnerable to unionization.  While for many large employers it would require a dramatic shift in thinking to move away from the use of temporary workers, the perceived flexibility and efficiency that is gained may well be illusory where these workers are subsequently deemed to be employees of the employer they are supplied to (an issue that often arises after a union has applied to represent employees when it is too late!).  For employers who continue to use temporary workers, consider whether it makes sense to review contracts with the temporary staffing agency to ensure that they contain adequate protections, including indemnity provisions.  Vigilance in the separation of day-to-day control over temporary employees must be maintained at all times and that starts with the contract with the staffing agency.

What is the takeaway?  If you are using temporary workers, understand the risks and plan accordingly.  Now, if you are wondering what ultimately happened with BFI, the ballots that were impounded after April 2104 election were counted in early September 2015 and workers voted 73-17 in favour of unionization by the Teamsters.  Whether or not BFI will now recognize the Teamsters and bargain a collective agreement – as the majority of the NLRB appears to hope – is another question all together.  It appears that late last week the Teamsters filed an unfair labour practice charge against BFI for being unresponsive to its bargaining request.  We will continue to monitor those proceedings and will keep you informed.