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NLRB rules against business in pivotal joint-employer decision

From The Hill

The Obama administration is redefining what it means to be an employer.

The National Labor Relations Board (NLRB) on Thursday handed down one of its biggest decisions of President Obama’s tenure, ruling that companies can be held responsible for labor violations committed by their contractors.

While the ruling from the independent agency specifically deals with the waste management firm Browning-Ferris, the so-called “joint employer” decision could have broad repercussions for the business world, particularly for franchise companies.

Opponents of the action warn the ruling could hurt businesses as diverse as restaurants, retailers, manufacturers and construction firms, as well as hotels, cleaning services and staffing agencies. “This decision has broad implications, as it appears to upend decades of settled law defining who the employer is under the National Labor Relations Act,” said Randy Johnson, a senior vice president at the U.S. Chamber of Commerce.

Restaurants could see the biggest changes. Fast food chains such as McDonald’s and Burger King will likely assert more authority over — or even cut ties altogether with — local franchise owners, business advocates say.

At issue in the case was whether Browning-Ferris was responsible for the treatment of contracted employees. The Houston-based company hired Leadpoint Business Services to staff a recycling facility in California.

The labor board determined Browning-Ferris should be considered a “joint employer” with the Phoenix-based staffing agency. As a result, the company can be pulled into collective bargaining negotiations with those employees and held liable for any labor violations committed against them.

The NLRB ruling is a sharp departure from previous decisions that stated companies were only responsible for employees who were under their direct control. Without the power to set hours, wages or job responsibilities, the earlier rulings held, companies could not be held responsible for the labor practices of the contractors.

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