In late August the National Labor Relations Board (NLRB) issued a decision involving Browning-Ferris Industries of California. According to the official statement on the NLRB’s site:
In a 3-2 decision involving Browning-Ferris Industries of California, the National Labor Relations Board refined its standard for determining joint-employer status. The revised standard is designed “to better effectuate the purposes of the Act in the current economic landscape.” With more than 2.87 million of the nation’s workers employed through temporary agencies in August 2014, the Board held that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances.
In the decision, the Board applies long-established principles to find that two or more entities are joint employers of a single workforce if (1) they are both employers within the meaning of the common law; and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the Board will – among other factors — consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so.
In this specific situation Browning-Ferris was supplied employees by another company, Leadpoint, to help out with the cleaning and organizing of recycled materials. As a result, the NLRB ruled that Browning-Ferris was a “joint employer” of these workers.
How Could This Affect Your Business?
While this isn’t an insurance decision, it does have ramifications from an insurance standpoint, especially when it comes to Worker’s Compensation. Since Worker’s Compensation is payable by the employer and the NLRB has refined its definition of what it means to be a “joint employer,” you could potentially be on the hook for Worker’s Compensations payouts to a contractor’s employees if you’re not careful.
How Can you Protect Your Business?
How do you reduce the likelihood of finding yourself in a situation like this? First and foremost, make sure you’re identified as an “alternate employer” in your contractor’s worker’s compensation policy. By having this “alternate employer” endorsement in place, worker’s compensation claims filed against your company by a contractor’s employee will be covered by the contractor’s insurance, not yours. This endorsement hasn’t frequently been used. But in light of this recent NLRB decision, it will, more than likely, become a precaution that more businesses take advantage of.
Another way to protect your business is to broaden your contractor’s indemnification obligations to cover your business for Worker’s Compensation claims, Employment-related claims or any similar claims. The goal is to make sure that the indemnification requirements are broadened enough so they provide you with coverage for any potential claims that could be filed against your company by the contractor’s employees. This would include being named as an additional insured on your contractor’s liability insurance policies. If you’re unsure about what kinds of potential claims you should account for, reach out to your insurance broker for guidance and he or she will make sure you have the appropriate coverage in place.
Philadelphia, PA, 19102
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