Who is your employer if you work for a Staff-Leasing or Temporary employment Agency?

The National Labor Relations Board (NLRB) today handed down an opinion that changes the question of who is your employer? At issue was the definition of a joint-employer. Employers over the past several decades have moved to hire employees through staff-leasing companies, temporary employment agencies and sub-contractors. In this case the NLRB stated stated that these types of employees are now joint-employees which reflects the real world situation the these employees find themselves. In El Paso, Texas we have thousands of employees who work for staff-leasing companies but who actually report to a boss who works for the company where the employee is working. The real employer is the company the employee is working for and the staff-leasing company is really just the entity that is paying the employee. The NLRB (that enforces some labor laws) now recognizes that the staff-leasing/temporary agency situation is a legal fiction and that the employer is really the one the employee is working for. This will also hold true for sub-contractors. Many companies, for example, hire subcontractors to do janitorial work. Now these employees may simply be working for both the staff-leasing company and the client company (the company where they are working) as joint employers. Companies are already threatening to cut ties with staffing agencies that help recruit temporary workers and subcontractors that provide janitorial and security services because they don’t want to be responsible for another company’s employees. They say they would rather bring those jobs in-house to establish more control over the situation.

“It will make it much harder for self-employed subcontractors to get jobs,” said Beth Milito, senior legal counsel at the NFIB. “Subcontractors will come under pressure by their clients to change their employment policies or they’ll be cut out of the picture altogether.” This is really good news for the thousands of El Paso, Texas and Las Cruces, New Mexico employees who work for staff-leasing agencies, temporary employment agencies and sub-contractors. It is clear that this will apply only to those sub-contractors who are long term and are really doing a job that was traditionally done “in-house”.

The joint-employer doctrine is nothing new for employers. Recently the 6th Cir ruled that an employer could be liable for its subcontractors employees under the joint-employer doctrine. The Court stated that entities are joint employers if they “share or co-determine those matters governing essential terms and conditions of employment.” These “terms and conditions are things like setting hours of operation; pay rate and schedules. The Court went on to state that “[t]o determine whether an entity is the plaintiff’s joint employer, we look to an entity’s ability to hire, fire or discipline employees, affect their compensation and benefits, and direct and supervise their performance.” The 5th Cir Court of Appeals (which covers El Paso, Texas) has been less than clear on what is the test for joint-employer, but it seems that the Courts in Texas will probably follow the 6th Cir. A Federal District Court recently ruled that joint employer will or will not exist based upon a 5 factor test.

The five factors are whether the alleged joint employer:

did the hiring and firing;
directly administered any disciplinary procedures;
maintained records of hours, handled the payroll or provided insurance;
directly supervised the employees; and
participated in the collective bargaining process if applicable.
Courts and Administrative agencies are finally starting to look at the realities of the work place and not the technicality of who pays the employee. This has ramifications for employees who believe they are being discriminated against. They should not only put the staff-leasing company on notice of the discrimination but should also put the general contractor or client-company on notice of the discrimination because both may be responsible for preventing work place discrimination.

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