Keith D. Flynn, Esq. is a labor-law attorney at the Miller Cohen firm in Detroit.
As the times have changed, so has the workplace. There used to be a time when it was easy to identify one’s employer. Now, that question is becoming more and more muddied as companies attempt to avoid liability by using third party intermediaries to manage their workforce. For instance, companies are hiring temporary employment agencies to meet their workforce demands. Since 2009, the number of temporary employees has increased by 50%. Another example is the fast food industry where companies like McDonald’s have franchise agreements with local business owners to manage individual locations. In those situations, these companies have denied employing those who provide them with services arguing that the real employer is the temp agency or the franchisee, even though the temp agency or the franchisee is still forced to follow the companies’ policies, business model, or other instructions or directions.
What difference does it make? The definition of “employer” is important for the various statutes governing the workplace. Anti-discrimination statutes protect employees from being discriminated against by their “employer” on the basis of race, gender, ethnicity, religion, height, weight, age, marital status or disability. Notably, these statutes often only protect employees from discrimination by “employers.”
Another good example is the National Labor Relations Act (NLRA). The NLRA prohibits retaliation for forming or joining a labor union and engaging in activity to protect a co-worker. However, this protection similarly only applies against “employers.” Up until a recent decision from the National Labor Relations Board (NLRB), a parent company or a company contracting with a temp agency could escape liability by placing a separate company or business entity “direct[ly] and immediate[ly]” in charge of supervising its workers and determining essential terms and conditions of employment. As long as any control was “limited” or “routine”, a company could avoid statutory obligations.
That standard was clarified recently in the August 27, 2015 NLRB decision, Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015), to broaden the protections provided to employees. Noting that “the diversity of workplace arrangements in today’s economy has significantly expanded,” the NLRB found that the most important consideration is whether each of the companies retain the “right to control” the employment of the workforce. Under Browning-Ferris, a company no longer has to have “direct or immediate” control over the employment of others to constitute an “employer” under the NLRA. Instead, it is sufficient that the company has the “right to control”, even if that right is never exercised. For instance, if a company merely acts through an intermediary to exercise control over employment, as long as it reserves the authority to exercise authority directly, it is an “employer.”
Consequently, companies like McDonald’s that provide extensive policies governing employment to the various franchisees could be on the hook for labor law violations at their locations across the country. That matter is currently under consideration in a separate case before the NLRB.
It is too soon to see whether the NLRB standard under Browning-Ferris will be applied to other statutes as the area is still evolving. If there are any questions regarding the identity of your employer or any other legal issues pertaining to your employment, please make sure to contact an attorney.