Labor Board redefines the definition of an employer

In a 3-2 decision handed down Thursday, the National Labor Relations Board (NLRB) expanded the definition of “joint employers” to include parent companies which do not necessarily have “direct and immediate” control of hiring practices or employee management.

The ruling essentially means that companies which use franchises (like restaurant or hotel chains) or contractors (security or construction businesses) could be liable for violating labor laws as the result of the wrong-doings of their subsidiaries.

NLRB’s decision also opens the door for union negotiation with parent companies for higher wages and better working conditions of employees they represent.

The case brought before NLRB was initiated by a local Teamsters union in California which wants to organize workers at Browning-Ferris, a recycling company. Workers there are technically employed by a temporary staffing agency however, and negotiating with what amounts to a third-party would limit the union’s bargaining power.

The current working definition of a “joint employer” has been used since the 1980’s though, and business advocacy groups argue that Thursday’s ruling could put enough downward economic pressure on certain companies that it could hurt the job market.

Glenn Spencer, vice-president of the U.S. Chamber of Commerce said that “NLRB’s actions today will subject employers to increased uncertainty, liability for workplaces that they don’t actually control, and ramped up pressure tactics to ease union organizing.”

Indeed, attorney Jeanne Miller, who filed an amicus brief in the case for the Communication Workers of America, said that franchises and contractors will be exempt from violating labor laws now if they are caused by corporate policies.

“Now the arrangement can be put back into balance in a way that gives fuller protections to workers and the leased company,” Miller said.

Two dissenting NLRB board members in the case (both Republican-appointees) claim that the ruling over-steps the bounds of the boards authority by “redefining employment”, according to Reuters.

In their minority opinion, Harry Johnson and Philip Miscimarra wrote, “No bargaining table is big enough to seat all of the entities that will be potential joint employers under the majority’s new standards.”

In a press release following the decision, NLRB’s majority explained the crux of their reasoning for changing the definition.

“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.”

We’ll see how NLRB’s game-changing decision turns out for all interested parties, but only if it holds up legal and legislative scrutiny. Congressional Republicans have already offered an amendment to the FY 2016 budget which prevents the Board’s new employer definition to be implemented.

Browning-Ferris can also appeal the case to either the 9th Circuit or D.C. Circuit Court of Appeals.

A spokeswoman for the parent company that owns Browning said that the firm is “evaluating all of our available options . . . with the objective of not being unlawfully forced into collective bargaining negotiations with another employer’s employees.”


[Reuters] [Washington Post] [Photo courtesy Reuters/Carlo Allegri]