MN Employment Law Report

MN Employment Law Report

The Bottom Line on Labor & Employment Law

State Delivers Criminal Sentence to Papa John’s Franchise Owner

Posted in Employment Advice, Wage & Hour


Pizza has become a staple of the American diet, and employees at nine Papa John’s pizzerias in New York often worked more than forty hours per week in recent years to satisfy their customers’ cravings. Despite the long hours, however, the paychecks they took home weren’t as large as they should have been, and the restaurants’ owner is now headed to jail as a result.  This is an excellent reminder that violation of federal and state labor laws can lead to personal liability, and even land them in jail.

Fraud and Deceit

The case of People v. BMY Foods Inc., involved Adbul Jamil Khokhar, the owner of numerous Papa John’s pizzeria franchises located in the Bronx, New York. On July 15, 2015, New York Attorney General Eric Schneiderman announced that the State of New York would be bringing criminal charges against Khokhar and his company, BMY Foods. These charges followed a U.S. Department of Labor (“DOL”) investigation into whether Khokhar had violated federal and state laws by failing to pay his employees overtime and minimum wages.

This probably was not a case of simple oversight. Upon learning of the DOL’s investigation, Khokhar appears to have created fictitious identities to conceal the overtime worked by employees, and filed fraudulent tax returns with the State of New York in order to keep the authorities off his trail. In total, it is estimated that around 250 current and former Papa John’s employees were affected by Khokhar’s efforts to scrimp on wages.

Paying the Price

In July of 2015, Khokhar reached a civil settlement with the DOL that required him to pay $230,000 in liquidated damages in addition to $50,000 in civil monetary penalties. Khokhar and his companies will also be required to appoint an internal compliance officer, create controls and procedures to avoid further violations, and will be subject to independent auditing.

Khokhar pleaded guilty in the New York prosecution to a misdemeanor failure to pay wages, and his company pleaded guilty to falsifying business records, a felony. On November 16, 2015 a judge handed down a sentence ordering Khokhar to spend two months in jail. The State also imposed an additional $230,000 in restitution of unpaid wages in addition to the DOL fines. This appears to be the first instance of a franchisee of a large national chain serving jail time for wage violations.

The Bottom Line

Khokar’s case may be an extreme one, but it provides a useful reminder to employers that wage violations can be accompanied not only by hefty monetary penalties, but also jail time. A surprising number of statutes include provisions identifying certain breaches as misdemeanors and even felonies. That’s an extra topping to be avoided.


Employer’s Policy Was Illegal But Enforcing it Was Not – Huh?

Posted in Disability Accommodation, Discrimination

Blog-Pic---Disabled-Employee.jpgA Texas hospital recently experienced the legal world’s version of a good news/bad news joke when a federal judge told them that their policy of limiting the duration of leaves was illegal but they didn’t violate the law when they applied the policy to a disabled employee. Salem v. Houston Methodist Hospital, C.A. No. 4:14-1802 (S.D. Tex. Oct. 30, 2015). Here’s how the story unfolded.

Absolute Policies are Absolutely Wrong

Due to some personal medical issues, Fatima Salem, a nurse at Houston Methodist Hospital, took a leave of absence under the Family and Medical Leave Act (FMLA). She returned for a short time two months later but then needed to go back on leave, this time for a period that would exceed her remaining FMLA eligibility. This meant that she would also exceed the limits of the Hospital’s policy restricting any leave of absence to no more than six months. When Salem asked the Hospital to waive this policy in her case, they declined and ended up terminating her employment when she was not able to return to work within the requirements of the policy.

Salem filed a discrimination charge with the Equal Employment Opportunity Commission (EEOC) claiming that the application of the employer’s policy capping leaves of absence at six months was a failure to accommodate under the Americans with Disabilities Act (ADA).She also alleged that the corresponding termination violated the ADA as well. The EEOC agreed that the six-month limit on leaves violated the ADA because it created an artificial means of avoiding the employer’s duty to engage in an interactive process to see if a reasonable accommodation for the employee might be feasible. In other words, this one-size-fits-all policy is completely at odds with the individualized analysis that the ADA requires for all cases.

Based on the specific facts of the case, however, the EEOC also ruled that they were unable to conclude that the termination itself violated the ADA.

No Harm, No Foul

Salem subsequently marched right into federal court to sue the Hospital based on the same facts and offering the same arguments. Federal Judge Nancy Atlas also criticized the Hospital’s refusal to consider bending their six-month restriction on the duration of leaves.   Nonetheless, she concluded that the employer had not unlawfully failed to reasonably accommodate for one very simple reason – Salem had never demonstrated that any accommodation might be possible because she did not inform the Hospital of a date on which she might return.

Judge Atlas explained that had Salem offered a projected date for her possible return, the Hospital could have considered their options and determined whether they might be able to work around Salem’s absence until she was able to resume working. But, by asking only to be gone from work without indicating when she might be back, if ever, her request was tantamount to an indefinite leave of absence which the court considered unreasonable. Salem therefore was not permitted to take her case to trial and her claims were dismissed in their entirety.

Bottom Line

This decision is a very important reminder of how policies on leaves of absence should be enforced. Certainly, it is reasonable to maintain guidelines on how long leaves of absence may last. However, using those guidelines to inflexibly deny any medical leave that might exceed the limit invites liability under the ADA, which mandates individualized analysis of each case to determine whether a reasonable accommodation might be possible. Simply standing behind such a policy to decline a leave for an extra week or two, or even more depending upon the circumstances, flies in the face of the this requirement of individualized consideration.

As seen in this case, courts are increasingly unwilling to consider an indefinite leave of absence to be a reasonable accommodation. It is not at all uncommon for an employee to present a doctor’s note requesting a leave of absence for a specific period (three months, for example) at the end of which the employee will be reevaluated. When the reevaluation takes place, the employee returns with another note seeking three more months and another reevaluation, and so on and so on.

At some point, it becomes clear that such employees no longer are seeking leaves to permit them to return to work to perform the essential functions of their jobs.. Instead, they are just seeking to be gone and are unlikely ever to return. In such instances, the leave of absence is no longer reasonable and as this case demonstrates, courts are increasingly likely to support employers will who say enough is enough. The key for the employer, of course, is to know when to make that call and for this, inflexible standards are no substitute for an individualized evaluation of each and every situation that comes up.

English Only Rules and the Applebee’s Assault

Posted in Discrimination


What’s That You Say?

Blog-Pic---EEOC-Seal.jpgA patron at a bar smashes a beer mug across the face of someone seated nearby. A scene at the saloon in an old cowboy movie? No – just a casual dinner at Applebee’s in Coon Rapids, MN, a few weeks ago where the victim is said to have angered the offender by conversing with her family in Swahili, the victim’s native language.

Obviously, this is not an example of good problem-solving skills, especially in an environment where the offender could have chosen simply to get up and leave rather than commit a possibly felonious assault. But what if this had taken place in a workplace setting where an employee is not free to leave? Does the potential for this sort of conflict permit an employer to take precautions by requiring employees only to speak English at work?

English Only Rules

Probably not. Employer policies requiring that English be spoken at all times in the work place (commonly referred to unsurprisingly as “English Only” policies) tend to be viewed as national origin discrimination under Title VII by the courts and the Equal Employment Opportunity Commission (“EEOC”) if they are inflexibly enforced without regard to the particular circumstances. As a result, an employer cannot discipline two employees who, for example, choose to speak Spanish to each other at work, even if it makes a co-worker feel uncomfortable, excluded or even interested in smashing a mug across their faces.

On the other hand, employers may require employees to speak only English in the work place at certain times if the directive is justified by business necessity. The EEOC has explained in its Compliance Manual that an English Only policy is justified by business necessity “if it is needed for an employer to operate safely or efficiently.” The following examples may justify an English Only policy:

  1. For necessary job-related communications with customers, coworkers, or supervisors who only speak English;
  2. In emergencies or other situations in which workers must speak a common language to promote safety;
  3. For cooperative work assignments in which the English-only rule is needed to promote efficiency; and
  4. To enable a supervisor who only speaks English to monitor the performance of an employee whose job duties require communication with coworkers or customers.

Bottom Line:

In an increasingly diverse workforce, employees will frequently wish to converse with each other in their native language. As long as doing so does not impede production or interfere with necessary communication on the job, they should be allowed to do so.


OSHA Penalties May Go Up

Posted in OSHA, Workplace Safety


The Federal Occupational Safety and Health Administration (“OSHA”) is set to increase its maximum penalties effective August 1, 2016. A provision to raise OSHA fines was included in the budget agreement (H.R. 1314) by Republican and Democratic lawmakers and passed by Congress last week.

Increases on the Horizon?

The law gives OSHA discretion to adjust penalty amounts to something less than the maximum authorized by Congress, and officials at the agency have not determined just how significantly maximum penalty amounts will increase from the current caps of $7,000 for a “serious” violation and $70,000 for a “willful” or “repeat” violation. Congress has authorized increases tied to the increase in the Consumer Price Index since penalties were last raised (i.e., up to 82% times current penalty amounts based on current CPI). Thus, based on the present calculus, the penalty amount for a “serious” violation could increase to approximately $12,740, and the penalty for “willful” and “repeat” violations could increase to approximately $125,740. Based on the amount of penalties assessed in fiscal year 2014, increasing penalties to the maximum would have generated nearly $120 million of additional revenue to finance government operations, including OSHA’s operations.

Before raising penalty amounts, the law requires the White House Office of Management and Budget (“OMB”) to issue guidance by January 31, 2016 detailing the procedures for implementing the law’s provisions, and OSHA must publish an interim final rule by July 1, 2016.

Bottom Line

The cost of an unsafe workplace may keep going up. We will continue tracking developments in this area.


Court “Likes” Labor Board’s Decision for Employees Fired Over Facebook Comments

Posted in Labor Law, NLRB

Blog-Pic---Facebook-Like.jpgEvery day people take to social media to vent frustrations with daily life. But what happens when employees use social media to blow off steam about their employer? This was the question that the Second Circuit Court of Appeals confronted in Three D, LLC v. National Labor Relations Board involving a Connecticut sports bar and its employees.

Fired Over Facebook Comments

In January 2011, at least two current and former employees of the Triple Play Sports Bar learned that they owed more in state income tax than they had expected. One former employee speculated on her Facebook page that this happened because the bar owner allegedly failed to properly complete tax paperwork. She wrote: “Maybe someone should do the owners of Triple Play a favor and buy it from them. They can’t even do the tax paperwork correctly!!! Now I OWE money . . . Wtf!!!!” Vincent Spinella, a current employee, clicked the “Like” button on the post. Several other current and former employees responded with their own comments, including Jillian Sanzone, a bartender, who wrote: “I owe too. Such an a[**]hole.” The bar’s owner fired Sanzone and Spinella for their Facebook activity soon after discovering it.

The employees took their case to the National Labor Relations Board (NLRB), alleging that the bar’s owner violated their rights under the National Labor Relations Act (NLRA) to act collectively “to improve terms and conditions of employment or otherwise improve their lot as employees.” The NLRB ruled in favor of the employees, and the Second Circuit upheld that decision on appeal, ruling that their right to act together to improve their employment includes the right to use social media to communicate with one another or the public for that purpose.

Are Facebook posts protected concerted activity?

When an employee is terminated over their public comments, a court is forced to engage in a balancing act—the employees’ rights to act collectively to pursue improvements to their working conditions must be weighed against the employer’s interest in preventing disparagement of its products or services. How do we know which one weighs more heavily?

The nature of the discussion matters. In this case, the employees were found to be engaged in concerted action because the comments involved current employees and were “part of an ongoing sequence of discussions that began in the workplace about [the bar’s] calculation of employees’ tax withholding.” The Facebook discussion was protected because the topics included withholding and possibly being owed back wages, which can fairly be considered terms and conditions of employment. Also key to the Court’s reasoning was that although the discussion among employees was public and viewable by customers, there was no evidence that the discussion was targeted at customers. Moreover, although the alleged reason for the tax liability may have been inaccurate, the statements were not made maliciously, but as part of a good faith discussion of working conditions.

Wait . . . is “Liking” a Facebook post concerted activity?

Does the simple act of clicking the “Like” button on a message typed by another person rise to the level of engaging in a discussion to improve the terms and conditions of employment? Both the NLRB and the Appeals Court said yes. While a “Like” is somewhat ambiguous, in the context of an ongoing dialogue among employees about tax withholding Spinella’s “Like” was construed as an expression of approval of the initial post by the former employee.

Bottom Line

Employees are not unconditionally entitled to communicate messages with the public that are disloyal or defamatory to their employer. Employers should recognize, however, that online discussions about the employees’ terms and conditions of employment might be protected even where they contain profanity, are negative toward the employer, or possibly inaccurate.

Employers can protect themselves by implementing clearly worded social media policies that cannot be construed to prohibit employees from discussing the terms and conditions of their employment.

An Unread Policy is No Policy At All

Posted in Uncategorized

sexual harassmentWhen Tiffany Jones sued her former employer, Family Health Centers of Baltimore, for sexual harassment, most of her claims were pretty benign (e.g. her supervisor once remarked about “taking [her] somewhere”, he blocked her path in the hallway on one occasion and he sometimes stared at her through a crack in the door). One time, though, he allegedly came up behind her and “got up on [her] so close, [she] felt his private parts on . . . [her] buttocks” and his hand on her waist.”

Jones reported the incident to her manager, who suggested she report the matter further up the chain of command. Jones therefore approached the CEO on two different occasions but he was in meetings each time and could not meet. She then left and never came back, ignoring a call from the Human Resources Director a few days later asking her to come in for a meeting.

The policy protects us…doesn’t it?

In response to the company’s dismissal motion, a Federal District Court Judge in Maryland had no trouble finding that the one remark, the hallway encounter and the doorway peeping did not meet the test set forth by the United States Supreme Court test for a sexually hostile work atmosphere. That test requires a workplace that is ‘”sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.”

The judge felt differently about the physical contact, however, explaining that even an isolated event can alter the work environment if it is sufficiently severe. Therefore, Jones’ cleared her first hurdle, namely that she could present a credible claim of actual harassment.

Jones’ next task was to convince the judge that the company should be held liable for the supervisor’s harassing behavior. This is usually pretty easy since for the most part, supervisory harassment is automatically imputed to the employer. However, there is small window of hope for employers. Under the US Supreme Court decision in Faragher v. City of Boca Raton, If it can be shown that the company used reasonable care to prevent and promptly correct any harassing behavior, and the employee unreasonably failed to take advantage of these opportunities, the employer can escape liability.

The judge was prepared to let the company climb through the window and escape liability. First, he noted that the company maintained an anti-harassment policy, which is usually “compelling proof” of an employer’s reasonable care. He also offered that Jones may have unreasonably failed to avail herself of her options by rejecting the call from HR and by just popping in unannounced to see the CEO rather than making an appointment to visit with a very busy company executive.

But wait – even though the company maintained a policy on harassment, the judge found no proof that Jones had actually seen the policy or that it had been distributed to her. Interestingly, the judge suspected that Jones had in fact received the policy, and Jones herself never claimed she hadn’t, but without actual proof, of her receipt, the window slammed shut and the employer’s dismissal motion was rejected.

Bottom Line

When the Supreme Court gives you a clear directive on how to avoid liability, it is best to follow it.  Employers can win sexual harassment claims if they can show that they tried to prevent such claims, and that they dealt with them appropriately if and when they occurred.  The best way to do that is to enact a comprehensive policy banning sexual harassment (and other forms of illegal harassment as well), and then make sure that the workforce sees the policy and has access to it.

Publish the policy in handbooks, post it on bulletin boards and intranets, obtain acknowledgments and sign-offs from employees when they receive it and do periodic reminders and education sessions.  A great policy does you no good if nobody reads it.

Yogi Berra: Human Resources Consultant

Posted in Employment Advice


Baseball Hall of Famer Yogi Berra passed away this month at the age of 90. In addition to being a great player for the perennial champion New York Yankees in the 1950’s and early 1960’s, Berra was also known as a type of clown-prince for his penchant for amusing malapropisms relating to baseball as well as life in general.

Many people probably don’t realize, however, that Yogi Berra’s frequently-quoted observations can also be viewed as astute critiques of the American workplace. His ability to reduce the complexities of life into humorous sound bites created a treasure trove of good counsel, especially on the importance of thoughtful evaluation and looking at the big picture, when he reminded us that you can “observe a lot by watching.”

Some of Berra’s shrewdest thoughts on the American workplace included:

  • “Ninety percent of the game is mental. The other half is physical.”  Berra understood that hiring workers and having them show up is only half the battle. You want a workforce that is motivated and engaged, and who takes pride and satisfaction in their jobs. That’s the other half of the equation and it is the far more significant half.
  • “I never said half the things I said.”  This was Berra’s great reminder of the importance of documentation for managers and supervisors. For all the times that employees claim that their supervisor said they could take the day off, or that a manager uttered a discriminatory remark, Berra knew that you have to be able to prove that you did not say what they claim you said.
  • “It was impossible to get a conversation going, everybody was talking too much.”   Despite his sometimes befuddling remarks, Berra understood the importance of clear and effective communication. It is important that everybody be on the same page and work together toward the common goal, and you can’t achieve that unless there is a very clear voice coming from the leader.
  • “There are some people who, if they don’t already know, you can’t tell ’em.”  Berra saw a great number of baseball players come and go, and he understood that some of them just could not compete at a Major League level. In any workplace, there will be people who simply are not able to perform their job responsibilities capably. In those cases, Berra would tell you that at some point, if they haven’t caught on, they never will. Don’t avoid making the hard decision to let someone go if they simply can’t play the game.
  • “Nobody goes there anymore. It’s too crowded.”   Innovation and creativity are often critical to success in business. You need employees who can think outside the box and come up with creative ways to increase productivity, reduce expenses and stay ahead of the competition. Berra reminded us of how important it is to distinguish yourself from the other guys.

Bottom Line

Berra’s most enduring line may have been “It ain’t over until it’s over.” He is gone now, but Yogi Berra’s impact on the American workplace will never be over.


Test for Unpaid Interns Getting More Relaxed

Posted in Wage & Hour

Internship Blue MarkerThe test for determining whether to classify workers as unpaid interns or paid employees is continuing to broaden, largely in favor of employers, as we reported here in July.  In Schumann v. Collier Anesthesia, P.A., the United States Court of Appeals for the Eleventh Circuit rejected the Department of Labor’s rigid six-factor test and ordered the trial court to decide an intern case under the more relaxed “primary beneficiary test” that the Second Circuit recently adopted in the case of Glatt v. Fox Searchlight Pictures, Inc. Interestingly, the trial court had already ruled that the interns were properly classified as unpaid but they did so using the “old” test. Therefore, it seems likely that that the employer will prevail again but we may get additional clarity on how the new standard is to be applied.

Why Can’t Both Sides Benefit?

A central part of the “old” test was whether the company offering the internship received an “immediate benefit” from the interns. If the answer was yes, this often meant the intern must be paid as an employee. The Eleventh Circuit determined that this test was outmoded since unpaid intern programs of the past tended to be used to train a pool of potential employees for future work opportunities. Now, internships typically offer the chance for students to “learn on the job” and it is only natural that companies will receive some sort of immediate benefit from the added labor. This coincidental benefit, the Court explained, should not be the deciding factor.

The interns in Schumann were all student registered nurse anesthetists (SRNAs) currently enrolled in school. In Florida, all students must complete several hundred clinical hours to become a certified registered nurse anesthetist (CRNA). These particular students all went to the same private college and all completed their clinical hours with Collier Anesthesia, (“Collier”), a privately owned practice group. The interns argued that they should have been paid because Collier received a financial benefit by being able to serve more patients when SRNAs were scheduled. Collier disagreed, explaining that their internship program was set up with either a 1:1 or 2:1 ratio of SRNAs to CRNAs. The CRNA would supervise the intern, evaluate their daily performance, and provide instruction throughout their shift. This level of supervision often took additional time for the CRNAs and several reported that the interns actually caused a decrease in the overall efficiency of their work.

What, if any, benefit Collier received from the use of interns will be sorted out in the district court, but the Eleventh Circuit left no doubt that under the new primary beneficiary test, the central focus should be on the benefit that the internship affords to the students. As long as Collier is not taking unfair advantage of the students by making them perform tasks or work hours well beyond the clinical hour requirement, the court concluded that “the mere fact that an anesthesiology practice obtains benefits from offering SRNAs internships cannot, standing alone, render the student interns “employees” for purposes of the FLSA.”

Bottom Line:

Again, Collier probably will win this one and employers will get some relief if they utilize hands-on, “on the job” internship programs. As long as the program provides the intern with tangible benefits such as educational credits, experience, and training, the fact that the company also benefits will no longer preclude the intern’s status as unpaid. Remember, however, that these rulings are limited to the Second Circuit Court of Appeals (covering New York, Connecticut and Vermont) and the 11th Circuit (Florida, Alabama and Georgia). Minnesota employers can take heart from these developments but our Eighth Circuit still has yet to weigh in on this emerging trend.

President Orders Paid Sick Leave for 2017

Posted in Employee Benefits, New Legislation

Blog-Pic---Doc---Cropped.jpgPresident Obama has now issued an Executive Order requiring federal contractors (and subcontractors) to offer up to 7 days of paid sick leave each year. This new requirement will not apply, however, until January 1, 2017, and only to contracts bid on or received in 2016 or later.

Paid Sick Leave for Federal Contractors

The Department of Labor must still undertake rulemaking to implement the Executive Order. However, here is a summary of the new sick leave requirement for federal contractors:

  • Employees earn at least 1 hour of paid sick leave for every 30 hours worked.
  • Employers may not “cap” the accrual of sick leave at or less than 56 hours.
  • The paid leave can be used for the employee’s own illness or to obtain “diagnosis, care, or preventive care from a healthcare provider.”
  • The paid leave also may be used to care for or to obtain a diagnosis or preventative care for a family member, which is defined to include anyone “related by blood or affinity whose close association with the employee is the equivalent of a family relationship.”
  • The paid leave also may be used to recover from or seek assistance for incidents of domestic violence, sexual assault or stalking.
  • The paid leave cannot be made contingent on the employee finding a replacement to cover the missed time
  • The paid leave can carry over to successive years (subject to the 56-hour cap).
  • The paid leave need not be paid out at termination, although employees who are rehired within 1 year are entitled to have their paid leave reinstated.

Questions remain about how the mandatory sick leave will interact with employer-provided PTO and other leave mandated by state or local law. It appears, however, that contractors who already provide sick leave benefits (and presumably PTO) will not be required to do anything more as long as their policies meet or exceed what the Executive Order requires.

Bottom Line

It is interesting to note that the Executive Order kicks in after President Obama’s term expires, so it remains to be seen whether his successor will be as committed to this new benefit for federal contractors’ employees.

Nevertheless, the move is expected to spur Congressional debate over the “Healthy Families Act,” which would require all businesses with 15 or more employees to offer up to 7 paid sick days each year.

We will continue to monitor this story as it develops.

Are Employers Now Responsible for Their Contract Workers?

Posted in Employment Advice, Labor Law

OutsourceMaybe so, according to the latest pronouncement of the National Labor Relations Board (NLRB).   In Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015), the NLRB dramatically expanded their definition of “joint employers,” so that businesses may now be responsible for the terms and conditions of employment of their subcontractors, franchisees and temp agencies.

What Used to be a Business Contract . . .

Browning-Ferris Industries (“BFI”), retained a staffing agency (Leadpoint) to supply temporary workers to its recycling facility in California.  The contract between the two companies specifically stated that Leadpoint was the workers’ sole employer and set forth the following assignment of responsibilities:

  • Leadpoint handled all the hiring (but the contract required that they make “reasonable efforts” to not assign former BFI workers who had been deemed ineligible for rehire at BFI);
  • Leadpoint was responsible for disciplinary matters (but there were a couple of occasions where BFI insisted that a temp be disciplined);
  • Leadpoint set wages (but could not pay more than what a BFI employee would get for similar tasks); and
  • Leadpoint handled all terminations (although BFI could bar any worker from continuing to work at BFI facilities).

A union then petitioned the NLRB to represent both the BFI employees and the Leadpoint temporary workers under the theory that the two companies jointly employed the Leadpoint workers.   This theory required that the supposed joint employer (1) possessed authority to control the terms and conditions of employment, and (2) actually exercised that authority.

. . . Is Now an Employment Agreement

The NLRB ruled for the union, choosing to adopt a new and scaled-back version of the joint employer test.  Now, for the first time, an employer need only possess the authority to control the working conditions but does not have to have actually exercised that control.  The NLRB declared that the explosive growth of the contingent workforce meant that continuing to follow the old test would represent a failure “to adapt the [National Labor Relations] Act to the changing patterns of industrial life.”

In determining whether an employer possessed control over the working conditions of contract workers, the NLRB acknowledged that “direct, indirect, and potential control” were all relevant to the joint-employer inquiry, as was the “way the separate entities have structured their commercial relationship” because it determines whether the putative employer might have the authority to govern working conditions.

Under the new, relaxed standard, BFI was deemed to be a joint employer of the Leadpoint workers because:

  • BFI “codetermined” the outcome of the hiring process by imposing specific conditions on Leadpoint’s ability to hire certain workers.
  • BFI essentially had the ability to terminate Leadpoint employees because of their “unqualified right to ‘discontinue the use of any personnel.’”
  • BFI managers actually assigned specific tasks that needed to be completed, specifed where Leadpoint workers needed to be positioned, and exercised “near-constant oversight of employees’ work performance.”
  • BFI played a “significant role in determining the employees’ wages” because contract specifically prevented Leadpoint from paying employees more than BFI employees performing similar work.

Bottom Line

Pay attention to this decision if you use independent contractors.  If you are considered a joint employer of the people working at your company from staffing agencies, subcontractors, etc., the value of using those resources is greatly diminished.  Therefore, you should try very hard to minimize your involvement in decisions affecting contract workers in the areas of hiring, discipline, termination and all the others that are typically associated with employers.  Hire a good contractor and let them make those decisions.

Incidentally, the NLRB is not the only government agency looking at these issues.  The Department of Labor recently announced that is also is exploring an expansion of liability for OSHA violations by joint employers, as is the Equal Employment Opportunity Commission in regard to discrimination liability.