NLRB Joint-Employer Decision Could Affect Associations
Associations and other nonprofits with certain business structures and operations---such as for-profit subsidiaries, management by association management companies, or office roles filled by temporary staff---could feel the impact of last month's ruling by the National Labor Relations Board redefining "joint employment."
A recent decision of the National Labor Relations Board could have significant implications for associations and other nonprofit organizations that share employees with a subsidiary, affiliate, staffing agency, or service provider.
The NLRB’s August 27 ruling in Browning-Ferris Industries [PDF] determined that a Silicon Valley recycling center was a “joint employer” along with the staffing agency that provided the facility’s workers and could also be held responsible for labor violations. Before the ruling, companies had to have “direct operational and supervisory control” over employees to be considered joint employers. With the NLRB’s decision, a company could be held responsible for unlawful wage violations or labor violations of a staffing agency or contractor.
Joint-employer situations could arise in the association community depending on the circumstances of the arrangement, according to ASAE’s general counsel firm, Pillsbury LLP.
“Examples might include associations with separately incorporated nonprofit credentialing board affiliates or for-profit insurance-related subsidiaries; association management companies with numerous association clients; associations that use temporary employees from temp agencies; or associations that outsource certain functions to staffing agencies or vendors that provide onsite services,” Pillsbury said in a client memo.
Rep. John Kline (R-MN), chair of the House Education and the Workforce Committee, said NLRB’s decision has “far-reaching consequences” for entrepreneurs and small-business owners.
“By redefining what it means to be an employer, the board has set a dangerous precedent that will lead to higher costs for consumers and fewer jobs for workers,” Kline said in a statement after the ruling was announced. “This decision is as bad as we feared, and it extends the board’s long track record of siding with union leaders instead of America’s workers and job creators.”
Education and the Workforce Committee Democrats countered that the ruling simply protects the rights of employees to bargain with their employers—whether those employers solely or jointly control their wages and working conditions.
“Today, businesses increasingly outsource employment to employee staffing and leasing firms and temporary employment agencies, which allows them to avoid taking responsibility for the workers who produce the goods and provide the services from which they profit,” Ranking Member Bobby Scott (D-VA) said in a statement. “Employees deserve a meaningful opportunity to bargain by having all of the employers who determine their terms and conditions of employment at the table.”
The board used similar reasoning in reaching the decision. “With more than 2.87 million of the nation’s workers employed through temporary agencies in August 2014, the board held that its previous joint-employer standard has failed to keep pace with changes in the workplace and economic circumstances,” the NLRB Office of Public Affairs said in a statement.