Subcontractors Can Be Jointly Liable for Contractors’ Labor Law Violations

Otter: “He can’t do that to our pledges.”

Boon: “Only we can do that to our pledges.”

–Animal House, 1978

Subcontractors are like pledges in a way. They have to abide by the rules that apply to the primary contractor. If they fail to do so, they are responsible. Fairness isn’t really the issue.

A recent case shows how subcontractors can be held responsible when a primary contractor improperly fails to bargain with a union. In 2014, a contractor won a bid to take over a Job Corps Youth Training Center. The Center had been a union facility, and the contract was set to expire right around the same time the contractor took over operations. The contractor brought in a subcontractor, MJLM, to handle wellness, recreation,

The contractor initiated a new hire process, and some union employees were rehired while others were not. The contractor imposed new terms and conditions of employment, disregarding the progressive discipline and other procedures that had been negotiated into the prior union contract.

The union filed an unfair labor practice charge with the NLRB, alleging that the contractor engaged in various unfair labor practices, including making unilateral changes to terms of employment without bargaining and improperly discharging various union employees. The Board’s General Counsel amended the complaint to allege that MJLM was equally responsible for any violations as a joint employer.

MJLM fought back, claiming that it was along for the ride, but the NLRB — and ultimately the Fifth Circuit Court of Appeals — found otherwise. The Board and the Court found that MJLM was a joint employer because it was involved in the hiring process, had influence over wages, assisted in setting holiday schedules, and helped to operate the center.

MJLM, as a subcontractor, was found to be a joint employer and therefore equally responsible for any unfair labor practices committed by the contractor.

When I read the case, I assumed the case was decided under the controversial new Browning-Ferris standard that allows for a finding of joint employment if there was merely indirect control. I was wrong. The Board (and Court) ruled that even under the old standard requiring direct exercise of control, the subcontractor was a joint employer.

Businesses should remember that joint employment can result in liability for violations by others. A subcontractor can be held responsible for unfair labor practices by a contractor. In this case, both the contractor and subcontractor were required to recognize the union, undo their unilaterally imposed practices, commence bargaining, and reinstate and make whole the employees who were not rehired.

MJLM was just as responsible as the contractor. To paraphrase the Court’s decision, with apologies to Dean Wormer, “The time has come for someone to put his foot down, and that foot is me.”


© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

Enter your email address to follow this blog and receive notifications of new posts by email.