In the world of trucking, companies can engage in several different relationships with the actual drivers of the trucks. The business purpose of these options is maximizing efficiency for both the company and the driver. Current options are employee, owner-operator, or subcontractor. However, a recent decision by the National Labor Relations Board (“NLRB”) against the multinational technology company, Amazon, may cause companies to rethink how they define certain employees.
Amazon’s delivery trucks, ubiquitous in many neighborhoods, are not actually operated by Amazon. Instead, they are operated by subcontractors, termed by Amazon as delivery service partners (“DSP”). These DSPs in turn employ the drivers who drive the trucks and make the deliveries. Employees of several DSPs have attempted to unionize and one in particular, California-based Battle Tested Strategies, succeeded. When Battle Tested Strategies sought to enter into a collective bargaining agreement with the Teamsters, Amazon terminated its contract with the DSP, leaving no employees with which to negotiate.
In response, the Teamsters filed a complaint against Amazon with the NLRB, and a regional board in California found Amazon to be a joint employer of the DSP’s employees. As a joint employer, Amazon’s termination of its contract with Battle Tested Strategies was unlawful and Amazon is now required to collectively bargain with the Teamsters over Battle Tested Strategies’ employees.
A joint employment relationship exists when a second entity exercises a certain level of control over another entity’s employees. The original rule on joint employment published by the NLRB in 2020 deemed a joint employer existed when the second entity exercised “substantial direct and immediate control” over the workers. However, in October 2023 the NLRB revised the rule to say a joint employer exists when two or more entities co-determine the workers’ essential terms and conditions of employment. The revised rule eliminated the element of control over the employee.
The revised rule calls into question the ability of businesses to engage “subcontractors” to perform any aspect of the business’s operations, and one federal district court has already struck down the revised rule. It will come as no surprise if Amazon appeals the NLRB’s decision, and many large businesses that have subcontractor relationships will be watching the outcome.
If you have questions about this article, or about the finer points of employees, owner-operators and subcontractors, contact Todd Knode (tknode@setlifflaw.com) at (804) 377-1277 or Steve Setliff (ssetliff@setlifflaw.com) at (804) 377-1261.
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