NLRB Extends Reach to Small Business

September 10, 2015

pic-nlrb-laborAt the end of August, the National Labor Relations Board (NLRB) issued a series of decisions–all of which have negative consequences for business—including one that could extend the jurisdiction of the NLRB to non-unionized small businesses.

The most troubling of these decisions overturns decades of precedent and could jeopardize the relations of thousands of small business contractors with their large customers by declaring the contracting company to effectively employ the workers of its contractors (or franchisees or subsidiaries). In the Browning-Ferris and Leadpoint decision, the NLRB made two key decisions that make a finding of “joint employer” status much easier.

First, the Board ruled that one company must no longer “directly and immediately” control the workforce. Any guidance or standards that a company gives another employer for the conduct of its workforce (e.g., how a landscape company’s employees should conduct themselves while on company property) could suffice.

Second, the business does not have to actually exert control over the workforce of another employer. That company could be named a “joint employer” if it simply has the potential to exert such control.

These standards will continue to be refined through the courts in the future. But clearly these rulings could have a significant negative affect on the competitive advantages of thousands of small businesses working with larger companies.