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NET Report - The Move to Eliminate Joint Employer Status

Posted by Tara Jones

11/1/17 3:07 PM


In 2015 the National Labor Relations Board, or NLRB, heard and decided a case involving Browning Ferris Industries. In that case, Browning was the hiring contract party using a contingency agency for a significant part of Browning’s workforce. Like many such relationships, the agency’s staff worked and functioned in activities similar to employees of Browning but they were placed based on a contract instead of as hired employees. The case was brought to the NLRB to hold Browning financially responsible for the workers versus just the contingency agency contract terms alone. The NLRB’s decision was critical; it changed the way contingency hiring could be treated legally, holding Browning responsible as a joint employer of the workers involved, not just a contract party receiving a service from another contract. Both Browning and the contingency agency were seen as in a de facto partnership as joint employers of the workers involved. And that meant hiring companies could be stuck with far more costs than anticipated in a contingency staffing contract.

Fast forward to the middle of 2017 and Congress is now dealing with proposed legislation in the form of H.R. 3441, dubbed the Save Local Business Act. The Congressional attention is in addition to the legal already appeal on file in the courts for the Browning decision as covered by Staffing Industry Analysts' Fiona Coombe in a June report earlier this year. This legislation seeks to strictly define the definition of “joint employer,” voiding the NLRB 2015 decision as well as court cases relying on the NLRBs case for their own additional interpretations of the matter, broadening the concept. The legislation also has the effective potential of voiding added responsibilities of the contract company to be responsible for beyond a contingency worker contract. Anything a contract company would owe would be per the terms of the service contract only. Further the proposed legislation would also extend to any benefits the worker is eligible for under the Fair Labor Standards Act as well. This proposed change would shut down a big hindrance for clients considering further use of contingency assignments and the operational savings they offer over traditional hiring.

Contingency hiring is extremely commonplace and growing as companies seek extensive flexibility to scale up and down as operations need them for additional profit margins. Staffing Industry Analysts projects, "U.S. temporary staffing market to grow 3 percent in 2017 and then 3 percent again in 2018, reaching a market size of $126 billion in revenue next year." When permanent search & placement are added into the mix, the same industry grows another $20 billion in size. And a slight downward trend in Bureau of Labor Statistics-tracked contingency work separations favors more staffing assigned and increasing in number versus shrinking. Bottom line, contingency worker hiring works for business success in a proven manner.

If the H.R. 3441 legislation passes, client companies should be far more prone to contract for services. They will no longer have to worry about the potential hit of ambiguous or undetermined ancillary financial risks due to not being a defined joint employer per se. And that will once again open up the full financial benefits of contingency hiring for companies that need quick and powerful flexibility in their labor force.

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