More companies may be held responsible for labor-law violations committed by the contractors they hire under a decision by a politically split U.S. labor board in a closely watched case.
Advertisement
The new standard is important because corporations could be held liable for labor law violations by their subcontractors and could be forced to the bargaining table by unions seeking to organize the employees of a subcontractor or franchisee.
The ruling could affect arrangements at franchise companies such as McDonald’s Corp. that are in many instances a step removed from workplace matters at their franchises.
Unions could now be able to negotiate directly with parent companies to win higher wages and better working conditions. They say it could also eventually impact franchise businesses, such as fast food restaurants.
“The employer can’t say, ‘It’s the subcontractor’s responsibility, ‘” she said. “Now that’s not as viable of an option anymore”.
Wilma Liebman, a former head of the labor board who advocated for the new standard, said shifts in the workforce shouldn’t make basic protections provided by labor laws “illusory”. It needed “direct and immediate” control over them.
Dublin-based Wendy’s could be among the companies that will be affected by the ruling.
The change was supported by the board’s three Democrats, with the 2 Republicans dissenting.
“Our industry is the nation’s second-largest private sector employer, and 90 percent of restaurants are owned by small business men and women”. It’s “just one more example of unelected government bureaucrats creating roadblocks in the path of job creation and economic growth”. The NLRB’s decision also impacts only the joint employer definition under the National Labor Relations Act, and it can be appealed. The companies have claimed their franchisees – not the companies themselves – control decisions about hiring, firing and paying employees.
The ruling, which came from a case involving a waste-management company and its staffing company, refines the board’s standard for determining when parties can be identified as employers.
The labor board explicitly rejected that logic. The new ruling states Browning-Ferris Industries can be considered a joint employer along with a staffing agency that provided the company employees.
The statement said that BFI was in both direct and indirect control over “essential terms and conditions of employment of the employees supplied by Leadpoint as well as BFI’s reserved authority to control such terms and conditions”.
The decision was cheered by the Teamsters, the union that wanted to organize the recycling center workers at the heart of the ruling.
Thursday’s ruling, by enshrining a broader joint-employer definition into doctrine, makes it more likely to apply in the McDonald’s case as well, though experts point out that joint-employer designations are typically dependent on the circumstances of each case. Roy Blunt (R-MO) released a statement on the decision, which contradicts legislation he authored earlier this year.
“The unions are licking their chops, so to speak, at the prospect of getting at [financial] resources that the primary employer may not bring [to the table]”, Bernstein said.
Advertisement
The Obama administration is redefining what it means to be an employer.
