In the May issue of Building Savvy, Billy Hammel and Hunter Johnson authored an article published discussing how the construction industry can plan for potential joint employer liability risk given the current National Labor Relations Board’s (NLRB) current standard for joint employment.
Most construction companies use employees from subcontractors, staffing agencies and vendors (primary employers) to help cut labor costs, which can create risk of joint employer liability wherein the construction company (as a secondary employer) is liable to an employee for any statutory employment law violations.
For decades up until 2015, the NLRB held that a secondary employer must have “direct and immediate control” over a primary employer’s employees to be held liable as a joint employer. Three years ago, the NLRB expanded this standard in Browning-Ferris to include that a secondary employer can be held liable as a joint employer if it merely “reserves the ability” to control the primary employer’s employees. “In other words, the actual exercise of control was not required,” noted Hammel and Johnson.
After a couple of reversals by the NLRB in recent months, the employee-friendly Browning-Ferris “ability to control” test stands as the current standard for determining joint employer liability in matters before the NLRB. “Additionally, because actual control is no longer the standard, companies have less of an incentive to let subcontractors run their businesses as they see fit, meaning that subcontractors can expect more control and oversight from their general contractors,” explained Hammel and Johnson. For the construction industry to achieve a stable standard for joint employer liability, companies should assess and prepare for the heightened risk of joint employer liability by taking the following steps:
- Reduce control language in agreements such as avoiding provisions that reserve the right to exercise control over the contractor’s workers or requiring a subcontractor’s works to adhere to the contractor’s employment policies and procedures manual.
- Contractually allocate risk and backup with indemnity and mandatory insurance stating in the agreement which company is responsible for complying with applicable laws (including labor and employment laws).
- Include the right to audit the primary employer for compliance with the laws for which it took on contractual responsibility.
To view the full article, please click here and scroll to page 18: