Ever since the National Labor Relations Board (“NLRB”) issued its August 2015 decision in Browning-Ferris Industries of California, Inc., holding two entities may be joint employers if one exercises either direct or indirect control over the terms and conditions of the other’s employees or reserves the right to do so, the concept of joint employment has generated increased interest from plaintiffs’ attorneys, and increased concern from employers. Questions raised by the New York Court of Appeals in a recent oral argument, however, indicate that employers who engage another company’s workers on an independent contractor basis would be wise to guard against another potential form of liability, for aiding and abetting acts that violate various anti-discrimination statutes, including both the New York State (“NYSHRL”) and New York City Human Rights Laws (“NYCHRL”) and the New Jersey Law Against Discrimination (“NJLAD”).

On March 28, 2017, the New York Court of Appeals heard oral arguments in Griffin v. Sirva, Inc., to answer three questions that had been certified by the U.S. Court of Appeals for the Second Circuit: (1) does the NYSHRL’s prohibition of employment discrimination based on workers’ criminal records limit liability to an aggrieved party’s “employer”; (2) if so, is the scope of the term “employer” limited to a worker’s direct employer, or does it include other entities who exercise a significant level of control over the direct employer’s discrimination policies and practices; and (3) does the portion of the NYSHRL that prohibits aiding and abetting the discriminatory acts of another apply to a non-New York entity that requires its New York agent to discriminate in employment based on a worker’s criminal history.

Griffin illustrates a concern faced by employers in a variety of industries, who subcontract certain types of work to employees of a separate business entity on an independent contractor basis. Among other tasks, companies may engage contractors to provide cleaning services, security, delivery of goods, installation of purchases or, as in Griffin, packing and moving services.  Such subcontracted services may be performed in a variety of settings, ranging from the company’s premises to its customers’ homes.  With increasing concerns regarding workplace violence, companies often choose to conduct their own criminal background checks on these contract workers, either personally or through an outside vendor, in an attempt to protect the company’s employees, customers, and property. This concern is particularly heightened when, as in Griffin, the contract workers in question will be performing services in the homes of a company’s customers.

In these types of scenarios, a question often arises regarding whether the company that engaged the contractors can be liable for violating state or city laws prohibiting discrimination based on criminal convictions, by virtue of requiring the background check, even though that company was not the workers’ direct employer. In resolving this question, courts typically rely on the concept of joint employment, analyzing the extent to which the company is involved in the hiring or firing of the contractors, or in exerting control over their working conditions. Presumably anticipating this sort of analysis, the parties in Griffin (including the State of New York, which filed an amicus curiae brief and was permitted to participate in oral argument) focused their briefing and arguments on whether a company that performs background checks on its contract workers should be deemed an employer under the NYSHRL.  Through its questions at oral argument, however, the court appeared to indicate that there may be a simpler resolution in this type of case, which does not require addressing the complex question of whether the company requiring the background checks is the workers’ employer or joint employer.

In addition to directly prohibiting discrimination based on criminal history, the NYSHRL states that it is “an unlawful discriminatory practice for any person to aid, abet, incite, compel or coerce the doing of any of the acts forbidden under [the NYSHRL], or to attempt to do so.” “Person” is defined as including “one or more individuals, partnerships, associations, corporations, legal representatives, trustees, trustees in bankruptcy, or receivers.” Based on this expansive language, several judges seemed to indicate that the NYSHRL’s “aiding and abetting” provision was sufficiently broad to encompass third parties who conduct background checks on contractors, regardless of whether such entities would otherwise be considered the contract workers’ employer or joint employer.  Assuming the “aiding and abetting” provision covers such conduct, multiple judges noted that imposing liability under that provision would be simpler than wrestling with the joint employment issue.  Further, the judges expressed concern that expanding liability under the main section of the NYSHRL to non-employers would render the “aiding and abetting” provision superfluous.

While it is premature to predict how the Court of Appeals may ultimately rule in Griffin, particularly given the recent unexpected death of one of the court’s seven members, Judge Sheila Abdus-Salaam, companies who engage workers on an independent contractor basis should be aware that potential joint employment issues may not be their only concern with regard to such workers. Regardless of whether a company exerts sufficient control over its contract workers to be deemed a joint employer, if the company operates in a jurisdiction whose anti-discrimination laws allow for “aiding and abetting” liability, that provision may serve as an alternative basis of potential liability for a company that conducts criminal background checks on contract workers engaged through a separate business entity.  Specifically, because the NYSHRL, NYCHRL, and NJLAD each include broad provisions that prohibit any person or entity from aiding, abetting, inciting, compelling, or coercing any acts that violate those laws, businesses that operate in New York State, New York City, or New Jersey should ensure that any background check requirement imposed on another entity’s workers complies with all applicable “ban-the-box” and anti-discrimination laws (e.g., NY State Correction Law Article 23-A, the NYC Fair Chance Act, and the NJ Opportunity to Compete Act), in order to avoid potential liability under the applicable “aiding and abetting” provisions in those jurisdictions.

Our colleagues Adam C. Abrahms and Steven M. Swirsky, attorneys at Epstein Becker Green, have a post on the Management Memo blog that will be of interest to many of our readers in the retail industry: “NLRB Drops Other Shoe on Temporary/Contract Employee Relationships: Ruling Will Require Bargaining In Combined Units Including Employees of Multiple Employers – Greatly Multiplies Impact of BFI Expanded Joint Employer Test.”

Following is an excerpt:

The National Labor Relations Board (“NLRB” or “Board”) announced in its 3-1 decision in Miller & Anderson, 364 NLRB #39 (2016) that it will now conduct representation elections and require collective bargaining in single combined units composed of what it refers to as “solely employed employees” and “jointly employed employees,” meaning that two separate employers will be required to join together to bargain over such employees’ terms and conditions of employment.” …

The potential for confusion and uncertainty is enormous. In an attempt to minimize these concerns, the Board majority stated that the so-called user employer’s bargaining obligations will be limited to those of such workers’ terms and conditions that it possesses “the authority to control.”

Read the full post here.

Our colleagues Adam Abrahms, Steven Swirsky, and Martin Stanberry at Epstein Becker Green have a Management Memo blog post that will be of interest to many of our readers: “NLRB Issues 13 Complaints Alleging McDonald’s and Franchisees Are Joint-Employers.”

Following is an excerpt:

While the General Counsel’s actions are alarming, particularly for businesses that rely upon a franchise model, the issuance of these complaints comes as little surprise because, as we reported in July of this year, the General Counsel had previously announced the decision to take this action and pursue claims of joint-employer liability. What is somewhat surprising about the announcement is its timing because the Board has not yet issued its decision in Browning-Ferris, 32-RC-109684, where the Board invited interested parties to opine in amici briefs on the benefits and drawbacks of the current standard relied upon by the Board to determine if two employers are a joint-employer and to propose a new standard and factors the Board should consider in such cases. Similar to its recent repudiation of Register Guard, the Board may use Browning-Ferris to moot the thirty years of joint-employer case law that followed TLI, Inc. 271 NLRB 798 (1984).

On the Wage & Hour Defense Blog, coauthor Steven Swirsky comments:

The National Labor Relations Board continues to focus on the changes in the nature of the employer-employee relationship, and the question of what entity or entities are responsible to a company’s employees for compliance with the range of federal, state, and local employment laws, including wage payment and overtime laws.

The Board’s General Counsel has now taken another big step in his effort to broaden the definition of “employer,” issuing a series of 13 complaints alleging that McDonald’s shares responsibility for franchisees’ employees. At the same time, the Board is poised to answer the question of whether the long standing test that the NLRB has relied on for more than 30 years to determine joint employer status should be replaced with a broader definition, and if so what it should be.

Read the full original post here.

The issue of joint-employer status has become a prominent issue of concern for retailers, many of which are comprised of franchises or include independent boutiques and counters in their stores. As the NLRB moves towards a broader definition of joint employer status, the  NLRB’s General Counsel’s position in a series of cases involving McDonald’s and numerous franchisees across the country appears to foreshadow the NLRB’s new, more aggressive position on what factors establish the joint employer relationship.

On Epstein Becker Green’s Management Memo blog, Steven M. Swirsky discusses this issue and the following is an excerpt from the blog post:

NLRB General Counsel Richard Griffin announced on Tuesday July 29th that he has authorized issuance of Unfair Labor Practice Complaints based on 43 of 181 charges pending against McDonald’s, USA, LLC and various of its franchisees, in which the Board will allege that the company and its franchisees are joint-employers. If the General Counsel prevails on his theory that McDonalds is a joint employer with its franchisees, the result would be not only a finding of shared responsibility for unfair labor practices, but could also mean that the franchisor would share in the responsibilities of collective bargaining if unions are successful in organizing franchisors’ workers.

To access the full blog post, please click here.