Much Discussed NRLB Ruling Will Have Little Impact on Texas Contractors

June 7, 2016

 

The construction industry was worried about the implications of a case before the National Labor Relations Board (NLRB). The case, called Browning-Ferris, involved the “joint employer” doctrine under which an owner can be found to be a joint employer of its contractor’s employees or a contractor can be found to be a joint employer of its subcontractor’s employees.

 

The NLRB ultimately decided the case in a way the construction industry feared. It broadened the test for “joint employer” status, holding that the key inquiry is whether a company has the right to control or co-determine  essential terms of an employee’s employment, including hiring and firing, discipline, supervision, scheduling, seniority, and the means and methods of performance.

 

This means is it is now easier for contractors to be considered a “joint employer” of a subcontractor’s employees. This result is important in states that are more heavily unionized. In those states, contractors now have much more exposure to unions and union activity. For example, a contractor can be picketed if it hires a non-union subcontractor who is picketed. This is because the contractor is considered a “joint” employer of the non-union subcontractor’s employees.  Prior to this decision, that contractor could not be picketed because it was not considered an employer of the non-union subcontractor’s employees.

 

Texas contractors face little impact from this case because Texas is much less unionized than other states. That being said, the wary Texas contractor can still take the following steps to stay out of the “joint employer” zone:

 

  1. Review contractual clauses covering control of your subcontractor’s employees. If your contract says you can hire, fire, or control a subcontractor’s employees, consider modifying this language to make clear the subcontractor retains ultimate control over these employer duties.

  2. During a project, make sure that you are not doing what you said in your contract you can’t do. So don’t attempt to control the hiring, firing, or specific means and methods of a subcontractor’s work. Your contract can say all the right things, but if you end up doing the opposite, you can still be found to be a joint employer.

 

At the end of the day, in Texas, this much-anticipated decision should have a limited impact and contractors can protect themselves by taking the steps outlined above.  

 

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