A US labor board's newly minted Republican majority on Thursday overturned an Obama-era ruling that had irked business groups by making it easier for unions and workers to hold companies accountable for the practices of staffing agencies, contractors and franchisees with which they partner. The Board majority concluded that the reinstated standard adheres to the common law and is supported by the NLRA's policy of promoting stability and predictability in bargaining relationships.
The so-called "joint-employer" ruling was overturned by a USA labor board Thursday. But unions wanted the board to recognize franchises as under the control of the parent company in order to gain leverage in an industry where they haven't had much luck organizing. Franchising or contract labor laws allow companies to avoid the costs of directly employing workers.
The National Labor Relations Board, in a 3-2 decision involving Raytheon Network Centric Systems, issued a ruling today affecting bargaining obligations that are required before implementing a unilateral "change" in employment matters. Becoming a joint employer, however, could force the company to bargain with unions and be held liable for labor law violations by contractors, staffing agencies, or franchisees.
Before Browning-Ferris, the NLRB held for some 30 years that multiple entities could be considered joint employers of a group of employees only if each had exercised direct and immediate control over a group of employees.
"Accordingly, under the pre-Browning Ferris standard restored today, proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine will not be sufficient to establish a joint-employer relationship." it continued. However, a majority on the board said the administrative law judge reached the right conclusion while applying the wrong standard for determining joint employment.
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The two Democrats on the board dissented, saying the Browning-Ferris decision was legally sound and the majority failed to provide any "real-world examples or even remotely plausible hypotheticals" that show how the standard harmed businesses.
The free-market Competitive Enterprise Institute called the ruling "a crucial victory for entrepreneurs and workers nationwide" that overturned the "infamous joint employer case that threatened to ensnare countless American businesses in vast but vague new employer liability".
This ruling could have a major impact on McDonald's. A trial began more than two years ago.
Thursday's decision to reverse the BFI standard was 3-2 and came in a separate case involving the firing of seven workers by Hy-Brand Industrial Contractors and Brandt Construction.
Essentially, prior to the 2015 ruling in Browning-Ferris, companies were recognized as joint employers of workers hired by another business if they had "direct and immediate" control over working conditions.