NLRB decision puts staffing agency, subcontracting model in jeopardy

Stephon Johnson | 9/3/2015, 2:26 p.m.
The employer-employee relationship may be forever changed by a recent National Labor Relations Board decision.
Richard Trumka US Department of Labor photo

The employer-employee relationship may be forever changed by a recent National Labor Relations Board decision. Last week, in a 3-2 vote split evenly between Democrat and Republican appointees, the NLRB voted to adopt an expanded definition of “joint employer,” which would make it more difficult for companies to avoid responsibility via outsourcing and subcontracting. The decision would allow more workers to bargain with their employer’s employer, which sets in motion events that could change the nature of temporary staffing agencies, subcontracting and franchising.

Richard Trumka, president of the AFL-CIO, expressed happiness with the ruling involving Browning-Ferris Industries of Pennsylvania, hoping that it would send a jolt through major corporations.

“This decision may very well signal the beginning of the end of outdated laws that fail to address an economic structure tilted against working people,” said Trumka in a statement. “It means more working people can engage in meaningful collective bargaining by bringing all parties who control their wages and other conditions of employment to the table.

“Simply put, labor laws in America have failed to keep pace as the workplace has continued to evolve. This is one of many sensible, new avenues that can help bring workplace laws into the 21st century and reflect the true nature of today’s economy.”

As a result of this case, franchises like McDonald’s could be held liable for hiring and firing decisions made by individual franchisees. Decisions such as figuring out if they should fire a contractor would have to be examined in regards to how they affect workers’ ability to organize.

In a release explaining its decision, the NLRB said, “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.”

However, organizations such as the International Franchisee Association aren’t taking this decision lying down. Last week, the organization’s legal team filed a Freedom of Information Act request with the Department of Labor’s Occupational Safety and Health Administration asking for the rationale behind the questions OSHA inspectors are asking franchise owners. The organization believes that the questions appear to be specifically designed to presume a joint employer relationship between companies and local franchise owners.

Elizabeth Taylor, IFA’s vice president of governmental relations, public policy and counsel, issued a statement in regards to the NLRB and what they felt was a desire to kill business as Americans know it.

“The Labor Department is conducting a witch hunt that, at a minimum, exceeds the statutory authority afforded to the OSHA by Congress,” said Taylor. “At worst it is engaged in a conspiracy to destroy the franchise model in cooperation with the Service Employees International Union and the supposedly-independent unelected bureaucrats at the National Labor Relations Board and its General Counsel.

“The SEIU and its unelected allies in this administration will stop at nothing to eliminate the legal separation that exists between franchisees and franchisors in order to grow their steadily-dwindling membership coffers,” said Taylor.