IFA president Steve Caldeira released a statement following the ruling, saying “The Board’s tortured analysis will undoubtedly be met with skepticism and will be rejected by local franchise owners, legislators and, ultimately, the courts. IFA and its allies are asking Congress to intervene to halt these out-of-control, unelected Washington bureaucrats to preserve the established joint employer standard.”
In legal-ease, the word “employer” just gained a much broader meaning according to the National Labor Relations Board (NLRB). Fresh off of a controversial D.C. Circuit appeals court ruling that gave the Labor Department the right to mandate minimum wage and overtime protections to millions of domestic care workers, the Board ruled in favor of more protections for nontraditional workers. Last week, the NLRB itself was involved in a controversial ruling, dismissing the petition to unionize by the Northwestern University football team, claiming lack of jurisdiction in the matter. The NLRB, however, did find it within its scope to grant increased bargaining power to employees of staffing services, franchisees, and employees of other nontraditional labor subcontractors. Voting 3-2 on a party line basis, the three Democrats broadened the definition of a “joint employer” relationship, which essentially removes a layer of separation between the company paying for the worker and the employee doing the work. The board cited “dramatic growth in contingent employment relationships” that “potentially undermines the core protections of the act for the employees impacted by these economic changes.”
The ruling revolves around a case involving several hundred sorters and other blue-collar employees working at a recycling center and landfill owned by Republic Services in the Silicon-Valley city of Milpitas. The workers were actually employees of the staffing agency Leadpoint. The Teamsters wanted to unionize the workers alongside 60 Republic employees at the facility, citing them as a joint employer. For its part, Republic argued that it had no authority over the Leadpoint employees. In the split ruling, the NLRB decided that Republic indeed had enough influence over the “wages and working conditions” to be considered a co-employer. In a statement released following the ruling, the Board acknowledged that it has been late to adapt to changes in the modern workforce, writing “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.”
In addition to the partisan nature of the ruling, the case brought a great deal of advocacy from leading business and labor groups. Larry Daugherty, the leader of the local Teamsters union responded to the ruling, saying “We are pleased with this decision, which will provide justice to workers who have been fighting for fairness in the workplace for a long time.” Beth Melito of the National Federation of Independent Business believes that the ruling could change the entire workforce, saying “If this decision stands, the economic rationale for hiring a subcontractor vanishes.” The International Franchise Association (IFA) has also lobbied heavily against a broader definition of employer, organizing public hearings and releasing advertisements to illustrate their argument. IFA president Steve Caldeira released a statement following the ruling, saying “The Board’s tortured analysis will undoubtedly be met with skepticism and will be rejected by local franchise owners, legislators and, ultimately, the courts. IFA and its allies are asking Congress to intervene to halt these out-of-control, unelected Washington bureaucrats to preserve the established joint employer standard.”
Republicans in Congress have already responded to the plea, issuing a rider inside of budget legislation that prevents the joint employer standard from taking effect. House Education and the Workforce Committee Chairman John Kline (R-MN) vowed to “roll back” the NLRB ruling, and Senate Health Education Labor and Pensions committee chairman Lamar Alexander (R-TN) also said he would introduce legislation to “invalidate” the decision. Republic Services will also likely appeal the case to either the 9th Circuit or the D.C. Circuit Court. The NLRB is facing a slew of cases in the fall regarding McDonald’s franchisees and employees, and the federal court system has faced several cases involving Uber and FedEx contractors in recent years. The ruling also comes after key Labor Department rulings about the classifications of independent contractors, and the Occupational Health and Safety Administration has reevaluated the liability of employers of subcontractors regarding safety issues. Due to these measures, it is likely the issue will continue to be fought over for several years to come.
Los Angeles Times – Michael Hiltzik
Wall Street Journal – Melanie Trottman
Washington Post – Lydia DePillis