Last week, the National Labor Relations Board ruled that companies that use temporary agencies are considered “joint employers,” of temp workers and share responsibility with the agencies for liabilities regarding those workers. In addition, temporary workers that unionize have the right to bargain with the parent company as well as the temporary agency.
The NLRB case involved a Browning-Ferris Industries recycler in California with about 60 unionized permanent employees, mostly working off site, and 240 temporary employees working on-site in sorting and cleaning. The Teamsters union argued that Republic Services, which owns Browning-Ferris, should be considered an employer of the temporary workers and subject to bargaining along with the temporary agency, Leadpoint.
The NLRB ruled that previous Board decisions about joint employer status dating back to 1984 were misguided, having “no clear basis” in the common law or in the National Labor Relations Act. Those decisions have left the board “increasingly out of step” with “changing economic circumstances, particularly the recent dramatic growth in contingent employment relationships,” the NLRB stated
Under the board’s new standard — which the majority, to be clear, maintains is the old standard, revived — the test is whether a company has the potential to exercise control over a worker’s wages and working conditions, regardless of whether that control is used.
The decision by the board’s three Democratic appointees was fiercely disputed by the Republican minority, who said it reverses several prior decisions that established a clear standard for whether a company is an employer, all of which had been approved by powerful federal courts of appeal.
The reality is utilizing temp labor (temps, Independent Contractors, etc.) makes good business sense and comprises 35% of our workforce today and growing rapidly. Within the next three years, it is estimated nearly 50% of the average company’s total workforce will be considered “independent” or “contractor. Leveraging temp labor helps companies stay nimble and profitable during shifts in demand domestically and globally. It’s cost effective, and in the midst of a talent war; gives you access to high quality, productive, critical talent who are dedicated and committed.
Will this ruling result in a reversal of the rapid growth of the non-employee workforce? This seems highly unlikely. It’s too profitable, too effective, and too appealing for those workers who chose this profession and the organizations that leverage them. It could impact the nature of how organizations engage non-employees and require changes in contractual language, and structure of the working relationship. The progression of this ruling will need to be monitored closely.
The good news is those in the temp workforce industry; Staffing Partners, Technology Partners, Independent Contractors, Managed Service Providers and Workforce Consultants are already monitoring this ruling closely and determining what it means to valued customers. That could mean education on how these workers are engaged and managed or adjustment to processes, contract, or technology solutions. For years, mitigating risk has been a cornerstone of the value-add when your workforce strategy partner’s deliver temp talent and that will not change. It’s a matter of understanding the true risk, and providing solutions and strategies to address it.
Terri Gallagher is the President/CEO of Gallagher and Consultants; a workforce strategy solutions company; focusing on contingent workforce strategies. She can be contacted at firstname.lastname@example.org