Agencies’ decisions mean they could face increased union activity, liability for violations of labor law by logistics contractors  Last summer, the United States National Labor Relations Board came down with a decision that determined that Brown-Ferris Industries, the owner and operator of a California recycling facility, is a “joint employer” with a temporary employment agency, Leadpoint Business Services, which actually supplied the workers. Among the implications of the decision is that the recycler could be required to bargain collectively with workers under U.S. labor law if the employees choose to organize. Besides that, if government agencies picked up on the NLRB’s “joint employer” concept—and some already have—companies could find themselves on the hook for wage-hour violations, worker safety issues, and employment discrimination perpetrated by staffing agencies. NLBB Decision The NLRB decision was a departure from concepts followed for more than 30 years. Until the Brown-Ferris case, the NLRB held that a company had to have direct control over the actions of a subcontractor or franchisee’s employees in order to be considered a joint employer. But the August 2015 ruling said a company could be considered a joint employer even if it had only indirect or unexercised control.  The U.S. Labor Department recently issued new guidelines on joint employers, which followed, and arguably expanded upon, the position taken by the NLRB. The business model that led the NLRB to rule in the Brown-Ferris case also prevails among retailers and their logistics providers, especially those providing warehouse operations. Companies like Walmart, Amazon, and Home Depot use facilities to store their merchandise, where third-party staffing agencies provide the workforce. The NLRB decision and the Labor Department guidelines could have ramifications for the retailing industry, and its logistics operations, expanding as they do what constitutes a joint employer. But retailers are having none of that and the National Retailing Association has spoken out against the new Labor guidelines. Until the Brown-Ferris decision, companies that use the staffing agencies to provide logistics manpower, have not had to answer for the conditions under which warehouse workers toil. These days, warehouse work doesn’t bear much resemblance to the well-paid unionized factory jobs that they sometimes replace. Researchers at the University of California found that the majority of blue-collar warehouse jobs typically pay less than a living wage, are often temporary, and do not provide health-care benefits, making them prime targets for union organizers. Joint Employer With the recent NLRB decision, retailers may have to sit across the table from unions to negotiate wages, benefits, and conditions of warehouse workers. Unions would prefer to organize against companies like Walmart, rather than going against the smaller and shakier staffing agencies.   The National Retail Federation (NRF) said, the joint employer standards issued by the Labor Department were too broad. The NRF further said the Obama administration attempts to hold more companies responsible for the action of subcontractors or franchisees should be overturned by Congress. “The Labor Department’s concept of a joint employer is even worse than what we’ve seen from the NLRB,” said David French, the organization’s senior vice president. “Lawyers are already saying it’s only going to lead to more litigation.” Experts also say that the Browning-Ferris decision and the Labor guidelines make it easier to bring warehouse users—in this case, the retailer—to the bargaining table as joint employers. “This type of interference in well-established business practices is just one more roadblock to job creation and economic recovery,” French added. “Ultimately, it’s American workers and families who will suffer.” Under U.S. labor law, an employer controls the conditions of work such as setting production goals and scheduling work shifts. Retailers sometimes manage warehouses in that way, even if the actual hiring is left to staffing agencies. Under those circumstances, the retailers could face successful union drives and a raft of potential new legal liabilities.  “Washington needs to understand that businesses can’t be held responsible for what they don’t control,” French said. “Subcontractors and franchisees are independent companies who make their own decisions on how to deal with their employees. Trying to treat large companies and smaller businesses as one large entity is just another effort to make life easier for organized labor.” Labor Dept. Guidelines Guidelines released by the Labor Department’s Wage and Hour Division would set a broad definition of what can be considered a joint employer, using language from the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act that defines employment as “to suffer or permit to work.” The National Labor Relations Act provisions cited by the NLRB in its joint employer rulings last year require an element of “directing and controlling.” DOL would recognize two types of joint employers. Under a “horizontal” model, an employee would work for two or more employers that are only technically separate. Under a “vertical” model, the employee would work for an intermediary such as a staffing agency that in turn is hired by another company. Labor’s Wage and Hour Division is now the third federal agency to become involved in the joint employer scenario. The department’s Occupational Safety and Health Administration is also considering whether to broaden the definition it uses, looking at whether franchisers can be held responsible for franchisees’ safety and health violations. In October, the House Education and Workforce Committee approved legislation that would amend the NLRA to say a company can only be considered a joint employer if it has “actual, direct and immediate” control over essential terms and conditions of employment, a definition which is consistent with the NRF’s position on the matter. How might the retailing and logistics industries react if they are not able to stem the current trend, which expands the definition of joint employers? Relocating warehouses to another state wouldn’t make a difference since federal law controls the issue and offshoring them would be ridiculous since that would add transportation costs to retailers’ logistics operations and would undermine their efforts to streamline their supply chains.  They could, however, pass increased costs along to consumers. Or, more likely, they could invest in warehouse automation technology that would reduce the required headcount at a facility, thereby jeopardizing the very jobs the NLRB decision and Department of Labor guidelines were meant to protect.