Readers of this newsletter know that federal and state agencies are seeking to expand joint employer status for temporary staffing firms and their customers. A recent court decision takes this to a whole other level by vastly expanding it.
In regard to labor law, the National Labor Relations Board created joint employer status in 2015, a decision that may be overturned when President Trump names two new NLRB board members to create a Republican majority.
In March the Fourth Circuit Court of Appeals issued a ruling that rejects the many different multi-factor tests used earlier by other federal courts to determine if joint employment existed in different cases. These tests range between four to 13 factors.
The Fourth Circuit said those tests wrongly focus on the relationship between employer and employee, instead of between the two would-be employers.
The court said those tests wrongly focus on whether workers are “economically dependent” on the temp customer, which “reflects a failure to distinguish the joint employment inquiry from the separate, employee-independent contractor inquiry.”
Inquiries should address the relationship between the firm that uses and benefits from the services of workers, and the party that hires or assigns the workers to that employer, the court held.
The new test is significantly broader than the joint employer standards currently used by the EEOC, NLRB, DOL, and other federal courts because it assumes that the two entities are joint employers unless they can show that they are “completely disassociated” from one another, said Brittany Buccellato of the law firm of Akerman LLP.
Although the decision only applies in Maryland, Virginia, North Carolina and South Carolina, employers should be aware of the risk of joint employer liability, she warned.