The NLRB and Independent Contractors

The National Labor Relations Board recently issued a decision , Browning-Ferris Industries of California, Inc., d/b/a/ BFI Newby Island Recyclery,  that establishes a new standard for determining who is a joint employer.  

BFI Newby Island Recyclery hired Leadpoint, a staffing services company, to provide some workers for its recyclery.  BFI and Leadpoint had signed a temporary labor services agreement which could be terminated by either party upon thirty days’ notice.  The agreement stated that Leadpoint was the sole employer of the workers and that nothing in the Agreement shall be construed as creating an employment relationship between BFI and the personnel supplied by Leadpoint.  In other words, the agreement contained language that is pretty standard in independent contractor agreements.  The agreement also provided that Leadpoint would recruit, interview, test, select and hire personnel for BFI.  BFI was not involved in Leadpoint’s hiring procedures.  BFI, however, had the authority to “reject any Personnel and…discontinue the use of any personnel for any or no reason.”  Again, this is fairly standard language in independent contractor agreements.  In a departure from precedent, the NLRB ruled that a company that hires a contractor to provide workers may be considered a joint employer of those workers if it has the right to control them even if it does not actively supervise them. The dissenters were rather unhappy and their opinions are worth reading as they lay out the expected impact of the ruling.  

It’s a significant decision and one that should make lawyers take another look at their clients’ independent contractor agreements to see whether they contain language that indicates the potential to control the contractor’s employees. While the language in the contract was not the only factor influencing the Board’s decision, it was an important one.