This isn’t getting anywhere near the same amount of oxygen in the news cycle as the Net Neutrality story, but it certainly should be.
The National Labor Relations Board (NLRB) under the tenure of Barack Obama was busy handing out all sorts of goodies to the unions which finance most Democratic political campaigns. One particular burr under the collective, conservative saddle was a new “reinterpretation” of rules regarding the obligations of larger corporations who authorize the operation of franchises under their name. I wrote about this back in 2015 when the rule was originally finalized and it was a deplorable situation. The NLRB was basically trying to hold parent companies responsible for acting as the HR departments for all of their privately owned and managed franchises and subcontractors. This was an obvious backdoor for collective bargaining agreements and the biggest targets of the Democrats on this front were in the fast food industry. (McDonald’s actually only owns about 30% of the restaurants you see. The rest are franchised.)
Now, with some new, Trump appointed blood at the NLRB, that rule has been reversed. (NLRB website)
In a 3-2 decision (link is external), the National Labor Relations Board today overruled the Board’s 2015 decision in Browning-Ferris Industries, 362 NLRB No. 186 (2015) (“Browning-Ferris”), and returned to the pre–Browning Ferris standard that governed joint-employer liability.
In all future and pending cases, two or more entities will be deemed joint employers under the National Labor Relations Act (NLRA) if there is proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine.
This sounds like some dry legalese which could put some readers into a coma, but the distinction being drawn here is important. The phrase Joint Employer is critical here. When a subcontractor or franchise owner agrees to have the parent company exercise direct, immediate control over their personnel policies (rather than simply issuing “guidelines” which are left up to the smaller unit to implement and enforce) then the parent company is a true joint employer. In such cases, workers may wish to collectively bargain with the parent company or hold them accountable for labor law violations.
But when the subcontractors are left to manage their own HR affairs or the franchise owner is basically just renting out the brand name of the company, those conditions do not and should not apply. The NLRB has now wisely conceded this point. Of course, the description you’ll get of this story at the New York Times takes a decidedly different tone.
The ruling changes the standard for holding a company responsible for labor law violations that occur at another company, like a contractor or franchisee, with which it has a relationship.
The doctrine also governs whether such a corporation would have to bargain with workers at a franchise if they unionized, or whether only the owners of the franchise would have to do so.
While most labor law experts expected the labor board, which gained a Republican majority only in late September, to overturn the board’s so-called joint-employer decision from 2015, the speed of the change came as a surprise to many.
“Frankly, it’s shocking,” said Wilma B. Liebman, a former Democratic appointee on the board who once served as its chairwoman.
Oh, yes. It must be shocking indeed that the NLRB would ask the business owners who are actually employing the workers and are directly responsible for them to deal with labor law enforcement or collective bargaining. And they’re additionally shocked at how quickly it happened. Quickly? Trump has been in office for almost a full year. It took some time to get new appointments in place, but frankly, I’m personally shocked that it took this long.
As I mentioned above, this distortion of the rules under the Obama administration was primarily a sop to the unions who have been trying to go after the fast food industry for decades. In 2014 the NLRB sanctioned McDonald’s for the actions of a few franchises who they claimed had “punished” people who protested fast food restaurants. This effort later morphed into the Fight for 15 movement which has always targeted McDonald’s and the other big fast food chains. (It’s also why they’re now moving more and more to automation and simply eliminating jobs.)
It’s good to see the NLRB exercising some common sense. If you have a problem with your employer, take it up with your employer. Not with the company that they may be renting your services out to or simply paying for permission to uses their brand name.