NLRB Decision Could Mean Excellent News for Fast-Food and Other Low-Wage Workers

In a decision that could greatly improve prospects for workers to form unions in a fast-growing and largely low-wage swath of the US workforce, the National Labor Relations Board (NLRB) redefined August 27 the standards for determining when more than one firm will be considered “joint employers” of a group of workers.

The new standard is largely a return to a broader, more inclusive definition used before the Reagan-era NLRB tightened the rules, thus narrowing the number of business operations considered to have joint employers of a particular group of workers

This is important in cases like the one just decided by the NLRB, which enforces the National Labor Relations Act: It concerned a 2014 vote on whether 240 workers could form a Teamsters union local at a recycling plant in California. Browning-Ferris, a waste disposal giant that employed 60 workers on operations outside of the recycling facility and 240 inside, owned the building but subcontracted the provision and direct management of its workers to a small firm, Leadpoint.

Although the representation election ballots were impounded without being counted, the union asked for a determination that Browning-Ferris, which set many constraints on pay and operating procedures, was a joint employer with Leadpoint and should be a party to any labor contract. Under the old rules, it was ruled not to be a joint employer; under the new rules, it would.

The conservative Republican NLRB view articulated in decisions dating to the early 1980s, and further narrowed over the past three decades, proved extremely advantageous to many industries and corporations that have relied heavily over recent decades on strategies such as out-sourcing, sub-contracting and franchising, which on the whole have reduced workers’ power, wages, security and protections.

Such business models evolved in response to capital markets’ demands for higher profits, according to David Weil, a former Boston University economics professor who is now administrator of the Department of Labor’s Wage and Hour Division. Weil identifies them as examples of “the fissured workplace.” The growth of such workplaces – where power and responsibility were separated to protect bosses’ interests – partly explains “why work became so bad for so many,” as Weil’s book’s sub-title reads.

Large companies attempted to avoid as much responsibility as possible for directly managing their workforces and the risks and liabilities involved, including the responsibility to bargain with organized employees. Yet they exercised great control over subordinate businesses, ultimately reducing the legal protections for workers and their ability to organize, according to Weil and to the friends of the court brief supporting a new rule that was filed by the National Employment Law Center and other groups.

For example, large commercial building landlords could easily replace any cleaning service if the janitors at that service joined a union, thus undermining workers’ possibilities for collective bargaining. Or multiple layers of subcontractors would insulate Walmart from attempts of warehouse workers to organize.

Or to take another, increasingly relevant example, franchisers like McDonald’s set standards for operations that closely determine what a franchisee may do with his operation and its workers. But if workers were to organize a McDonald’s restaurant, under the old definition of a joint employer, they would likely not be able to bring the corporation to the bargaining table. Now the Fight for $15 will likely get a more serious hearing on an argument that McDonald’s Corporation, as a joint employer, is jointly responsible for alleged illegal retaliation against workers who spoke out for a higher wage and union representation.

The “fissured workplace” makes it harder for workers to organize, according to the 3-2 Democratic majority in a decision made along party lines, and it was the board’s responsibility to examine and revise the application of the nation’s labor law to fulfill its primary responsibility to encourage collective bargaining.

In the NLRB majority’s summary of the evidence in the Browning-Ferris Industries case, it said the company had considerable power over how the facility should be managed, including setting terms for hiring, pay (nothing above BFI pay for similar work), scheduling, training, work processes, numbers of workers assigned to different material “streams.” BFI supervisors intermittently intervened as well in directly supervising and disciplining workers.

But when the union initially filed for an election in the NLRB’s 32, the board’s regional director rejected the union request to define BFI as a joint employer. While acknowledging the potential power BFI retained over the recycling work, the director ruled that the power was not exercised as directly, immediately and comprehensively as needed to qualify as a joint employer. The old rules had defined businesses as joint employers not only when it had the authority to control terms of employment; it also had to exercise that authority regularly and substantially, and to do so directly and immediately.

In response to arguments from the union, the NLRB general counsel, and friends of the court, the NLRB majority concluded that conditions had evolved in so much of the economy that the old rules interfered with the Board’s responsibility to guarantee workers the right to bargain collectively. They noted that contingent workers make up 4.1 percent of the workforce, or 5.7 million employees in 2005, and temp work was also exploding: by 2022 the employment services industry, for example, is expected to employ 4 million workers.

But even if the world of work had not changed, the current NLRB majority concluded that there was no reason to have changed the definition three decades ago. Even if more than one employer shares some right of control over employment and does not choose to exercise its authority, or if the joint authority covers only part of the operation of the workplace, or if one of the employers does not use its authority immediately, the Board new rules say that the workers face a joint employer. (The new rules acknowledge that the extent of power of the joint employers over different managerial actions, such as hiring or pay, may vary from case to case,)

The Republican minority objected strenuously that the new rules will make bargaining unwieldly and complicated with multiple employers, that they will upset all sorts of contractual relations beyond those governing the terms of labor (as always, still framed in terms of common law notions of “master” and “servant”), and that nobody deserves to be considered an employer without actually exercising the power of the employer.

While unions have trumpeted the ruling as a victory, the battle can be expected to continue through both NLRB cases and the courts. Republicans in Congress already have plans to introduce legislation that would overturn the new rule, according to Politico. Republicans can mobilize many small business and franchise owners as a political force to persuade some conservative Democrats to join Republicans against the NLRB rules.

On the other hand, the Fight for $15, local minimum wage movements and other allies could aid the labor movement if it mobilizes to defend an important victory that has a strong potential to help workers organize and win the right to bargain in many industries where unions are now rare or totally absent.