Ding-Dong, the Witch is Dead! NLRB Overrules Browning-Ferris

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Remember the good old days, way back in 2014? You recall the time — back when David Letterman was still on the air and it was not yet illegal in New York to take a selfie with a tiger.

Yes, that was life before 2015, when the NLRB waved its magic wand, rewrote the definition of joint employment, and forced several of the planets to spin out of orbit. The Board’s decision in Browning-Ferris erased decades of precedent and caused bloggers everywhere to vomit profuse amounts of text and doomsday predictions.

For those of you who missed the news in 2015 (understandable if you spent the year focused on following the saga of Winston, the Aussie python who swallowed salad tongs), allow me to offer this quick refresher: The 2015 Browning-Ferris decision declared that, under federal labor law, a business would be considered a joint employer if it retained the right to exercise even a teeny tiny bit of control, and even if it never actually exercised that control.

Good news, citizens of earth! The planets realigned on Thursday, when the Board reversed its 2015 decision and reverted back to the old standard. The new standard is the old standard. (Got it?)

Effective December 14, 2017, here is the standard for determining joint employment under the National Labor Relations Act:

For all these reasons, we return today to pre-Browning-Ferris precedent. Thus, a finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having “reserved” the right to exercise control), the control must be “direct and immediate” (rather than indirect), and joint-employer status will not result from control that is “limited and routine.”

From today forward (or at least until the next administration reconfigures the Board and they go back to the old-new-old Browning-Ferris standard), businesses will not be deemed joint employers under the NLRA unless (a) they actually exercise control, (b) the control they exercise is over essential employment terms, and (c) the control is direct and immediate. Here is the decision, titled Hy-Brand Industrial Contractors.

This is a practical, workable standard, just in time for the holidays. Thank you, Santa.

Now if only we could get Pluto back on the roster of planets.

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

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Did You Know You Can Be Cited for OSHA Violations for Non-Employee Workers?

osha violations joint employment

Can OSHA cite your business for conditions that affect another company’s employees? Maybe.

OSHA’s Multi-Employer Citation Policy addresses who gets cited for violations that occur on a multi-employer worksite. If your company hosts staffing agency workers, that may include you.

The policy has been subjected to several legal challenges, though, based on an argument that OSHA obligations extend only to an employer’s own employees. One of these challenges is currently pending in the Fifth Circuit Court of Appeals, based on a dispute over an Austin, Texas, construction site.

While we wait for a decision, though, here’s what OSHA has to say about its authority to issue citations on multi-employer worksites:

OSHA applies a two-step process for determining whether to cite more than one employer for a hazardous condition that violates an OSHA standard.

First, it must be determined whether the business is a “creating, exposing, correcting, or controlling employer.” If so, it may have at least some obligations under OSHA. The extent of this obligations vary based on which category applies.

Second, depending on the category, it must be determined whether the employer satisfied its obligations.

A “creating” employer is one that caused a hazardous condition that violates an OSHA standard. Employers who create hazardous conditions may be cited even if the employees exposed are employees of another employer at the site.

An “exposing” employer is an employer whose own employees are exposed to a hazardous condition. If the exposing employer created the condition, it may be cited. If the condition was created by another employer, the exposing employer may still be liable if it knew (or should have known) of the condition and failed to take reasonable steps to protect its employees.

A “correcting” employer is a business engaged in a common undertaking, on the same worksite, as the exposing employer and is responsible for correcting a hazard. This can happen when an outside business is brought onsite to install or repair equipment. The correcting employer’s duty is to exercise reasonable care in preventing and discovering violations and to meet its obligations related to correcting the hazard.

A “controlling” employer is one who has general supervisory authority over the worksite, including the power to correct safety and health violations itself or require others to correct them. Control can be established by contract or by the actual exercise of control. A controlling employer must exercise reasonable care to prevent and detect violations on the site. The controlling employer has less of a duty with respect to other employers’ employees than it does with respect to its own employees. For example, the controlling employer is not normally required to inspect for hazards as frequently or to have the same level of knowledge of the applicable standards or of trade expertise as the employer it has retained.

If you host employees of another business, dig deeper to examine the extent of your obligations under OSHA. Your duties may not be the same as for your own employees, but you may still have important responsibilities when it comes to maintaining a safe worksite.

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

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Don’t Wear Pajamas to Work: Be Careful Using “Statutory Minimum” Workers Comp Clauses in Subcontractor Agreements

Pajamas - Independent Contractor Agreements and Workers Compensation ClausesHave you ever had the dream where you show up at work or school in your pajamas or underwear? You’re exposed and embarrassed in the dream, and you can’t figure out why you forgot to put on regular clothes, right? (Please don’t tell me I’m the only one who’s had this dream. Please?)

You may be living this dream inadvertently in your vendor or subcontractor agreements. (And this is not what people mean when they say, “I’m living the dream!”)

Here’s the problem:

It’s commonplace in vendor and subcontractor agreements to include a section requiring insurance. You might require $1 million in commercial liability coverage, for example. Insurance clauses usually (and should) require the vendor or subcontractor to carry workers’ compensation coverage too. But sometimes these clauses are written in a way that may leave you exposed. Here’s an example:

“Subcontractor agrees to provide workers’ compensation coverage to its workers in the minimum amount required by law.”

You’re good, right? Depends on the state — and the circumstances.

The “minimum amount required by law” may be none.

First, if the worker retained by your vendor or subcontractor is its independent contractor (and not its employee), then there is probably no coverage required at all. State laws impose standards for determining Independent Contractor vs. Employee, but usually there is no requirement to provide any coverage to a true independent contractor.

Second, even if the worker is your vendor’s employee, the “minimum amount required by law” in the state might be none:

In Texas, for example, workers’ compensation coverage is generally optional. The minimum amount required by law is none.

Several states do not require employers to carry coverage unless they have a minimum number of employees. According to this chart from the National Federation of Independent Businesses (NFIB), an advocacy organization for small businesses, the following states require employers to provide workers’ compensation coverage only if they have at least this number of employees:

VA – required if 2 or more
GA, NC, WI – required if 3 or more
RI, SC – required if 4 or more
MS, MO – required if 5 or more

Some states have different requirements for construction and non-construction businesses:

NM – construction: required if 1 or more; non-construction: required if 3 or more
FL – construction: required if 1 or more; non-construction: required if 4 or more
TN – construction: required if 1 or more; non-construction: required if 5 or more

In some states, such as Ohio and New York, workers’ compensation might not be required for sole proprietors who have no employees other than themselves.

So what does all this mean for your agreements?

1. Depending on how your contract is written, you might be wearing pajamas to work. In other words, your agreement might leave you exposed, inadvertently, since the minimum amount of required workers’ compensation coverage for your vendor or subcontractor’s employees might be “none.”

2. Please don’t rely on the thresholds I have listed above. I have not examined the workers’ compensation laws state-by-state and I am merely listing state law summaries from the web. I have not checked these for accuracy. Check the laws in your state and check with legal counsel.

The point here is that the state-minimum required amount of coverage might be “none.” Things can go south for your business in a hurry if your vendor or subcontractor has insufficient coverage. If one of their workers is severely injured, the worker may bring a lawsuit against your business as an alleged joint employer. If the injury is severe enough and there is no workers’ compensation coverage, liability could be in the millions.

Keep this risk in mind when drafting the insurance sections of your vendor and subcontractor agreements. Draft carefully, and be sure you are fully covered.

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

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NLRB Shifts to Republican Majority; Change in Joint Employment Doctrine Is Likely

NLRB joint employment william emanuelWatching the National Labor Relations Board is like riding a see-saw (a very slow one, and not a very fun one, but stay with me here).

Board members serve five-year terms and, when they expire, the President has the right to appoint a successor, with confirmation by the Senate. Predictably, under Democratic administrations, the Board tips toward union workers’ rights, and under Republican administrations, the Board tips toward protecting businesses.

With the late September confirmation of William Emanuel to the Board’s fifth (and tie-breaking) seat, the see-saw tipped back toward the side of protecting businesses.

Emanuel joins the Board from a defense firm that represents many large companies in labor disputes. Firms that represent companies in labor disputes typically do not also represent employees because doing so would create philosophical conflicts between the firm’s clients. You’d be arguing to interpret the law one way for an employee client, then another way for an employer client. Emanuel’s background therefore, has been pro-business.

As I wrote here, that background caused several Democrats to express concern. It was little surprise, then, that he was confirmed by a partisan vote of 49-47, winning by a safety when the Democratic quarterback was sacked in the end zone late in the fourth quarter.

Emanuel joins Republicans Philip Miscimarra and Marvin Kaplan, giving Republicans a 3-2 majority on the Board for the first time in almost 10 years.

The Board does not decide which cases to bring. The NLRB General Counsel does that. But the Board acts as the main decision-making body for labor law disputes, with its decisions appealable to the U.S. Courts of Appeal.

One of the Board’s most controversial decisions in the past five years was the Browning-Ferris decision in 2015, which drastically lowered the bar for finding joint employment in a relationship. You know those playground monkey bars you used to have to jump to reach? The Board lowered those to knee level. You’d have to limbo to get under them. They are no fun to play on. Under the new standard, a business can be a joint employer even if it exerts only indirect and minimal control. You can read more about that decision here.

The Browning-Ferris case is currently under appeal in the D.C. Circuit Court of Appeals. It might be affirmed, might be reversed. But here’s what you should remember: The NLRB tends not to follow the rulings of the U.S. Courts of Appeals. The NLRB’s decisions cover all 50 states, but each Court of Appeals covers only a handful of states, and so its rulings do not have widespread reach.

So no matter what the Court of Appeals does in Browning-Ferris, the NLRB is likely to continue to apply the standard it wants to apply. Under the Obama Board, that standard was to lower the monkey bars to your knees. Under the new Board, the standard for finding joint employment is expected to be raised back up to the point where you can swing freely from bar to bar without your feet ever touching the mulch below. The new Board is likely to re-establish the old joint employment standard, in which more direct control over workers is required for a finding of joint employment under federal labor law.

This change won’t happen right away. It may be a while before the right case gets to the new Board and the new Board has the opportunity to change course. But it is expected to happen.

Employers concerned about being tagged as joint employers for labor law purposes should remain cautious and continue to follow developments. Even if the labor law standard changes, though, there are still different tests for joint employment under different laws, so a change will have limited effect. For now, the indirect Browning-Ferris standard remains in place, but probably not for too much longer.

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

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Irma, Harvey and Force Majeure Clauses: What Does It All Mean?

What is Force majeure hurricane legal law irma harvey contracts IMG_1108Your contracts with staffing agencies and consultants probably include a bunch of legalese boilerplate mumbo jumbo at the end, which no one ever reads. One of those standard clauses is a “force majeure” clause. That’s French for “Skim over this clause.”

Companies affected by Irma and Harvey, however, may have good reason to check their contracts for these clauses. “Force majeure” means, literally, superior force.

These clauses typically say that So-and-so is excused from performing under the contract in the event of uncontrollable circumstances, such as war, terrorism, hurricanes, voodoo curses, other Acts of God, or anything caused by Pedro Cerrano and Joboo’s Cult (Major League) [Ed. Note: “Hats for Bats!”].

These clauses excuse non-performance that would otherwise be a breach, if the breach is caused by these types of conditions. Suppose you have a hotel in Tampa. You kept the hotel open during Irma because your building is sturdy and can provide respite to residents in evacuation areas. South Floridians who drove north fill your hotel, and it’s sold out. Your housekeeping and restaurant services are outsourced and provided by a separate services company. The services company is required to supply labor sufficient to staff the hotel’s housekeeping and restaurant functions. The day before the hurricane, however, no one shows up to work.

Did the services company breach the contract? Under normal circumstances, probably yes. With a hurricane bearing down on the area, however, the force majeure clause may excuse the failure to perform. A failure that might otherwise constitute a breach may be excused under a force majeure clause.

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

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When to Embrace Joint Employment, and When to Run Like Hell (Pink Floyd, 1979)

Joint employment risks dangers choices joint employer IMG_1101Life is full of serious questions. For example, Should I stay or should I go? (The Clash, 1982). Or, Will you love me forever? (practically every song ever, but for now, we’ll go with Meatloaf in Paradise by the Dashboard Lights, 1977).

When engaging non-employee workers, businesses must also confront a serious question: Embrace joint employment, or try to avoid it? (Frank Zappa confronted a different kind of serious question in Why Does It Hurt When I Pee?, 1979, but that’s beyond the scope of this blog.)

Many of my posts have been geared toward strategies for trying to avoid joint employment. There is another way, though. Sometimes, it may be better to embrace joint employment. But know the pros and cons.

Here are some things to consider:

Pros:

So, you’re thinking of embracing joint employment? That’s certainly an option. If you go in this direction, you can exert all the control you want over your non-employee workers. Tell them how to do the work, supervise them, discipline them, make them follow all your rules. Let them have a company email address and fancy name badge. If the workers are going to be joint employees anyway, there’s no reason to hold back.

You still have the benefit of having another company handling the administrative burdens like payroll and onboarding. You avoid adding to employee headcount, and you probably maintain some extra flexibility in setting staffing levels if your business is experiencing ebbs and flows.

Cons:

The biggest downside to joint employment is the risk of joint liability for errors you didn’t make. Did the staffing agency underpay overtime? Or miscalculate hours worked? Or fail to pay for time worked off the clock? Or hire illegal aliens? Or fail to file proper tax forms?

You get the picture. If you are a joint employer, your business is equally responsible for the consequences of any of these errors, even though you had nothing to do with them.

Yes, you can include an indemnity provision in your contract, but that should provide only limited comfort. Is the staffing agency adequately insured? Will they stand behind their promise? Do you want the hassle of defending an audit or lawsuit, then trying to rely on a contract to recover your losses? (Read more on the dangers of joint employment here.)

Joint employment can still be full of nasty little surprises, even when you go into it with your eyes open to the risks.

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

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Tip for Master Services Agreements: Protect Your Business Opportunities

Master servbice agreement protect business opportunities non-circumvention clause staffing agency agreement IMG_1095If you google “Quotes about Opportunity,” you’ll find 1273 quotes on Goodreads.com. Everyone’s interested in opportunities. But when it comes to business relationships, don’t let others take yours.

When servicing a customer, businesses often call upon use subcontractors for help. That can be a win-win, so long as the subcontractor does not try to poach the relationship once that deal is done.

Consider protecting the opportunities you present to subcontractors with a non-circumvention clause. The concept here is that when your business has introduced a subcontractor to a customer to work on a project, the subcontractor should not be allowed to circumvent your business and provide the same service directly to that customer, effectively cutting you out.

Non-circumvention clauses should be drafted carefully and narrowly. The prohibition should be limited in scope to (a) services your business can provide directly and (b) services that the subcontracor provided through your arrangement, as a result of your introduction. Don’t overreach. The prohibition should be limited in time, as well.

Protect the opportunities you create. Or the 1274th quote might be about opportunities lost. (Goodreads.com also has 903 quotes about regret.)

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

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