12/7/2015 – by Jeff Schervone
Congress is advancing legislation to push back against a July, 2015 ruling by the National Labor Relations Board (NLRB).
In BFI Newby Island Recyclery, a partisan and divided NLRB expanded the Joint-Employer Rule, a judicial interpretation of the National Labor Relations Act (NLRA). Up to now, the rule limited application of the NLRA, i.e. collective bargaining rights, to “employees” of an “employer.” An entity was considered a joint employer “only if each employer shares and exercises control over essential terms and conditions of employment and such control over these matters is actual, direct, and immediate.” In BFI, the NLRB extended collective bargaining rights to 260 temporary staffing agency employees and required the staffing agency to “sit at the bargaining table” alongside the facility that contracted with it for labor. The NLRB ruled that “two or more statutory employers are joint employers of the same statutory employees if they share or codetermine those matters governing the essential terms and conditions of employment.” The mere existence of those rights, not the exercise of those rights is sufficient. The NLRB ruled that the staffing agency was a joint employer and its employees could unionize under the NLRA. There was a scathing dissent. The case was appealed and is pending.
Proponents and critics agree that the NLRB’s Joint-Employer ruling, if sustained, will have ripple effects across a number of private sectors most notably in the franchise industry. There, application of the NLRB’s rule purportedly means that a franchisor by virtue of contract and brand consistency shares or codetermines essential terms and conditions of employment. For example, there are hundreds of actions pending against McDonald’s by fast-food workers and unions across the country alleging unfair labor practices, i.e. frustrating collective bargaining rights in violation of the NLRA. The NLRB and the Service Employees International Union (SEIU), are banking on the courts to sustain the new joint employer rule. That would mean that fast-food workers could force unionization at the franchisor level and demand, among other things, a $15.00 minimum wage from the franchisees. The ruling could also implicate liability allocation for private parties that contract for labor.
The NLRA was passed in “1935 to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy.” In 1935, there were no child labor laws, no Occupation Safety and Health Administration (OSHA) (adopted in 1970), no employee Title VII protections (discrimination, civil rights, adopted 1969), no federal Fair Labor Standards Act (FLSA)(wage and hour laws, minimum wages, overtime wages 1938), no Americans with Disabilities Act (adopted 1990) and a raft of state laws that meet or exceed these standards from the employee protection perspective. We have all those things today in 2015. While the NLRA and unions have a storied history (any story involving a 20-foot inflatable rate is a good one), it does not mean that collective bargaining under the NRLA is appropriate in every employee-employer relationship, such as fast-food employees that are not employed by franchisors, like McDonald’s. In 2015, such employees have many protections under federal and state law to promote the “general welfare of workers.”
This politically charged policy fight reached Congress and Congress has decided to act. House bill H.R. 3459 (complimentary legislation in Senate, S.2015) was introduced in September, 2015 and passed out of the Committee on Education and the Workforce on December 1, 2015. Known as the “Protecting Local Business Opportunity Act,” the bill amends the NLRA to simply codify the prior Joint-Employer rule: Section 2(2) of the National Labor Relations Act (29 U.S.C. § 152(2)) is amended by adding at the end the following: ”Notwithstanding any other provision of this Act, two or more employers may be considered joint employers for purposes of this Act only if each employer shares and exercises control over essential terms and conditions of employment and such control over these matters is actual, direct, and immediate.” This amendment would effectively end the joint employer rule issue in BFI, and the McDonald’s cases pending before the NLRB.
Passage of the NLRA amendment is certainly not a foregone conclusion and the courts are no guarantee one way or the other. Businesses are holding their breath and unions are licking their chops. In the meantime, your burger is still affordable and does not contain a union label, so don’t look for it just yet.
JHS
SCHERVONE LAW 