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The Labor Law Insider: Joint Employer Standards Changes, Part II



Host Tom Godar continues his discussion with partners Tyler Hibler and Tracy Wolf of Husch Blackwell as they discuss anticipated changes to joint employer standards by the National Labor Relations Board: Department of Labor Proposes New Rule to Distinguish Independent Contractors from Employees | Labor and Employment Law Insights. The discussion also takes us into the alphabet soup of the NLRB and DOL’s implementation and enforcement of these employee and union friendly rules. Further, the podcast addresses the possibility of joint investigations between government entities and divisions, which may significantly raise the stakes for employers attempting to interpret and comply with various joint employment standards.

Fortunately, the podcast settles on some practical advice. It was recommended that organizations make it a priority to understand these new rules and guidelines when making business decisions involving potential joint employment scenarios. A company must be capable of responding to these shifting standards when assessing the risks associated with using workers other than those that they consider W-2 employees. Additionally, policies should be adopted that clearly identify the roles of various workers and take into account that the mere opportunity to provide discipline or control workplace conditions may impact the employee/non-employee analysis. Third, employers must invest in top-down training and orientation—including front line and second line supervisors and managers—to ensure such policies are followed.

Given the complexity of the interaction between laws related to the National Labor Relations Act, wage and hour laws, tax laws, and various state laws, consultation with counsel as these new rules and guidelines emerge is essential. In this time of intense competition for workers, careful analysis and counsel has never been more important when it comes to joint employer considerations.

Read the Transcript

This transcript has been auto-generated using Adobe Premier Pro.

00;00;03;28 - 00;00;27;28

Hello and welcome to Husch Blackwell's Labor Law Insider podcast. I'm your host, Tom Godar and together with my Husch Blackwell colleagues and thought leaders from around the country, we will discuss and explore the ever changing issues in the world of labor law. President Biden promised to be the most pro-union president ever, and he is fulfilling that promise the next four years.

00;00;27;28 - 00;00;57;05

Promises to be a wild ride, so buckle up and join us on the Labor Law Insider podcast. In part two of our Joint Employer discussion, we're going to look a little bit more at the rulemaking announced by the National Labor Relations Board as well as the rulemaking announced on October 13 by the Department of Labor. We're going to have new rules from both of these organizations regarding joint employer status, aren't we, Tracy?

00;00;57;19 - 00;01;21;11

Apparently so. I mean, this was this came out fairly recently in a memorandum. And to note that the DOL it's interesting because one of the side comments, I can't help but think they're their view. It's, you know, their test for whether or not there's a joint employer. Little bit different from from the NLRB. I'm thinking perhaps maybe they can get on the same page.

00;01;21;11 - 00;01;50;18

But you know that that kind of half joke aside. No, this is this is something that's very serious for employers because it's one thing to have like under the Velox Express, Misclassifying, someone can get you in violation of Section seven of the NLRA, but then to top things off, on top of that, what if they're doing a joint investigation with the Department of Labor, then you're going to get audited for for wages and FLSA claims.

00;01;50;27 - 00;02;24;03

I mean, I know that they've changed in recent years and in jurisdictions such as the Fifth Circuit, I mean, they and the FLSA was changed significantly with regard to whether or not they could be considered. And I've lost my word for it. Sorry, Tom (crosstalk: joint employees) No, not just. Yeah. Whether or not it could be a collective action. But these laws are in flux right now and there's uncertainty.

00;02;24;03 - 00;03;02;07

So what employer would want to have two potential investigations? It's kind of daunting and something that I'm sure many employers are concerned and and rightfully so about right now. And, Tom, I think that, you know, these comments by the general counsel are also indicative of the risk that the new broader rule that's been proposed by the board could be or will be adopted by other federal agencies, labor friendly courts, and that the broader application could apply in other circumstances.

00;03;02;20 - 00;03;28;06

And so when you anytime you see the idea of joint enforcement, as Tracy talked about, you're going to have to see some sort of common acceptance of what the standard of joint employment would be. And, you know, typically courts and other agencies, including, for example, the EEOC, do look at how joint employment is defined under the NLRA for guidance.

00;03;28;17 - 00;03;58;21

So joint investigations are obviously concerning, but also the potential that, yeah, you could see a broadening of this rule under under different agencies or courts for various forms of, of employment laws. And so many of our clients are sophisticated and when they have risks, they allocate them through contracts between to sophisticated, you know, corporate or institutional interest. These aren't risks that you can just allocate with a contract.

00;03;58;21 - 00;04;25;07

These are risks that regardless of the contract which says, I am an independent contractor or I am the contingent workforce employer and you are the primary employer, but we'll take responsibility for all Title seven and you'll take risk. But it doesn't work here, does it? Not at all. And it's inherently a fact driven analysis and which has to be viewed on a case by case basis.

00;04;25;07 - 00;04;59;20

And as we can talk about this as well, an employer can have the best contract in the world which specifies an outline, specific roles and responsibilities between it and the other, you know, joint employer or other entity involved in the transaction. But the reality is, is that if the individual's on the ground and the actual members of management who are overseeing these contractors or temps or owning a proposed joint employees are not adhering to those terms.

00;05;01;10 - 00;05;22;09

That contract's not really going to be worth the paper it's written on because it's going to be fact driven. And if that managers exercising certain levels of supervision and control, that's what's going to bind the employer. So it really is difficult. Yeah, precisely. It's going to be all and how it's how it's implemented and just the the oversight that would be required by the employers.

00;05;22;17 - 00;06;00;20

It's something that becomes almost impossible to to be able to monitor and navigate through. So our chief human resource officers that are on the listening to the podcast are in-house GC or associates. You see, many of our friends have just said, thanks a lot guys, really appreciate the information. If we left it there, we would just be sort stern in the hornet's nest beyond saying, Never hire someone who you're not ready to take on as your identified employer never used within the work activities.

00;06;00;25 - 00;06;22;11

Someone you've not identified as an employee with all the bells and whistles that go with it. That's my practical advice. Give me some better advice to when you're talking with with our clients or would be clients about what kinds of steps, what kinds of thought processes, what kinds of anticipated standards should they keep in mind and how to minimize risk in this area.

00;06;22;21 - 00;06;57;27

And I'll let either of you take on this really hot potato. Tracey, go right at the silence. Isn't that great? You know, I don't think should we have a disclaimer? This is not legal advice. This is not legal advice. No, this is this is a best guess. And, you know, it's just that it's going to be hard to to to navigate and not not trying to, you know, to stir the pot or to upset any any of our clients or any of the GSEs or CEOs out there listening.

00;06;57;27 - 00;07;35;24

It's it's just necessarily something that you're going to have to exercise caution and try to implement best practices. And it's going to vary from industry to industry. But just as as Tom mentioned, it's having someone on as a an independent contractor. Is that really the role that you need filled and how is that going to take place or how is that going to affect your your business down the road, especially if a union comes in and there's a collective bargaining talks?

00;07;35;24 - 00;08;04;26

I mean, how is that going to all play into into the overall scheme and the overall development and health of the company? It's it's going to vary, but I think communication understanding the the guidelines and the rules as they come out, we know we're going to see some new rules very shortly, making certain that those are understood and people in management positions understand the relationships and how to interact with the employees.

00;08;05;04 - 00;08;29;17

A little bit of stepping in in advance of it, going through human resources and outlining these types of relationships and what is expected and implementing policies and sticking to those policies, not letting them just kind of fall by the wayside. I think that's the only way to navigate. And it's going to be it's going to be trying, I think, for everyone.

00;08;30;19 - 00;08;54;20

Well, I can certainly see the SEIU coming along, recognizing that somebody is performing some of the same tasks or essential tasks as the, let's call them, manufacturing health care employees, whichever it might be, and goes to the board and says this person is an employee under the under the new board law and they should be engaged in this in in this.

00;08;54;20 - 00;09;21;13

And we've created a unit determination. And the employer is trying to keep people out from having a voice in their workplace and using this not only as a legal tool, but as a tool for persuasion. In an era when we see the number of elections literally doubling in the last 18 months or something like that, certainly those are possibilities beyond just the the analysis, aren't they?

00;09;21;13 - 00;09;52;24

Oh, absolutely. 100%. And, you know, the risk that that could potentially pass, as Tracy talked before, for enjoying civil liability under a potential violation of the act, carries real weight, real weight. And I want to kind of circle back to what Tracy was talking about before, about how employers can can prepare for the potential change and the likely change in the rule.

00;09;53;07 - 00;10;27;08
And what would we recommend in terms of how to handle independent contractor relationship ups or temp relationships? You know, those are ultimately business considerations. And the market is the labor market right now is this ripe with situations where there's independent contractor usage, temp to hire usage, and those are effective means of ensuring proper staffing. The importance for any entity that's entering into a contract like that is to make sure you understand what you're entering into.

00;10;28;01 - 00;10;52;15
What the contract states and having an educated decision over when and where you want to reserve the right to control. Now, you know, do you want to have the right to to terminate a temp employee? Do you want to have the ability to issue discipline? There may be business considerations that are very important to the organization that justify having that within a contract.

00;10;53;07 - 00;11;23;16

Just understand that including that within a contract, even if you never exercise that right, simply having that right reserve can expose you to risks as an employer under the NLRA and could subject you to collective bargaining, which again, those are educated decisions, but decisions which should be made honestly through consultation with counsel and consultation with h.r. I love that.

00;11;23;16 - 00;12;05;05

That's really helpful. One more area that I'd like to comment on and Tracy I think you're already began talking about it is the fact that lawyers and sophisticated h.r. Folks can help create contracts. They're not unimportant. But you said that the practical realities are going to determine what happens. I think that this ends up pushing as well into how you train your supervisors and your managers, your front line folk, especially as they interact with those that are considered by the employer as independent contractors or as the employee of someone else who's coming on as a contingency to help in times of, you know, heavy demand or what.

00;12;05;05 - 00;12;39;03

Have you talked a little bit to us, Tracy, about how training and familiarization of front line and second line supervisors and managers might be important here? That's going to be huge because the best the best practice is training and education and understanding of these of of the issues and what it would take to be considered a joint employer, because the standard is not set in stone and varies for different types of of legal considerations.

00;12;39;03 - 00;13;26;21

We've talked a great deal about that today. I know it's important that a best practice sheet or a a some sort of policy be put into place and carried forth with everyone who's in charge of supervising or managing these individuals, such as these independent contractors or joint employers. And they understand the differences. And again, it will vary from industry to industry, but that's going to be incumbent upon the employers to make certain that the categories are not only understood to the best means possible, but also implemented and understood by by the the employees and the people who are going to supervise.

00;13;27;12 - 00;14;06;07

And it's just going to take care and consideration, work with human resources and probably a lot of consultation with legal professionals who understand the various standards. And keep in mind to these standards are constantly changing. And it's not only what the NLRB or the the DOL may come out with as a standard. It also is going to vary a little from state to, you know what I say a little, a lot from state to state, with everything from, you know, worker's comp consideration, unemployment, that sort of thing.

00;14;06;07 - 00;14;32;15

It's going to all come into play. So it's important that employers get ahead of the curve here, make certain that they are implementing the appropriate training and understand to the best of their abilities what the standards are and how that can affect their business. Well, this is really I think, been helpful. I appreciate so much you're sharing. I heard at least three points come through very clearly.

00;14;33;05 - 00;14;56;23

One, you're going to have to do a risk benefit analysis when you're going to use people who aren't immediately identified as your employees. And two, so you're going to have to create the proper relationship contractually and final say. You're going to have to implement it all the way from your line supervisors up through your most sophisticated h.r. And counsel office that you're following those plans to minimize risks.

00;14;56;23 - 00;15;19;14

I really appreciate your thoughtful participation, folks. It's really been fun to have you on Tracy and Tyler and you're invited back anytime to be our labor law insiders. Thanks so much. Enjoyed it. Thanks for having us. All right. Thanks so much for listening to the labor law insider and we'll be out with a new presentation just in a few weeks.

00;15;20;17 - 00;15;29;16

Take care and have a great day.


Thomas P. Godar

Of Counsel

Tyler C. Hibler


Tracy Wolf