NLRB ruling could be boost for contract and franchise employees

The National Labor Relations Board on Thursday expanded its joint-employer standard, potentially making it easier for unions to organize employees of franchisees and subcontractors by dragging large corporations to the bargaining table.

The new standard is also significant because corporations could now be held legally liable for workers if franchisees or subcontractors violate labor law.

In a 3-2 decision, the five-member board said that the old standard no longer kept pace with the current workforce where the diversity of workplace arrangements has significantly expanded. For example, in 2014, 2.87 million workers were employed through temporary agencies, more than double from the 1.1 million in 1990.

Under its former standard, a company was considered a joint-employer if it had direct control over working conditions. In the new standard, which the board said was necessary to protect today's workers, a company is a joint-employer if it exercises indirect control over working conditions or if it reserves the authority to do so.

International Franchise Association President Steve Caldeira criticized the ruling as a "tortured analysis" and said the association and its allies are asking Congress to intervene in preserving the established joint-employer standard.

"The ruling jeopardizes small employers in numerous sectors and the future viability of the franchise model of doing business, which has been a hallmark of economic growth and small business ownership opportunities for thousands of aspiring entrepreneurs," Caldeira said in a statement.

Unions — including the Service Employees International Union, which is funding the Fight for $15 campaign — are the main force behind the push to broaden the joint-employer standard at the NLRB and other federal agencies.

The joint-employer issue gained momentum last year when the NLRB's general counsel issued complaints against McDonald's and its franchisees as joint employers without explicitly defining his reasons for that decision. Details are expected to emerge in hearings to be held around the country later this year.

The board decision stems from a 2013 election petition by the Teamsters union, which sought to represent workers at a Browning-Ferris Industries recycling facility in Milpitas, Calif. The workers were employed by Leadpoint, a Browning Ferris subcontractor, to sort out recyclable items and clean the facility.

The petition triggered the question of whether Browning Ferris and Leadpoint were joint employers. An NLRB regional director found that they were not joint employers because they did not share direct and immediate control over conditions of employment, such as hiring, firing and discipline.

The union appealed the decision, which led to the board decision on Thursday. Thursday's ruling means that Browning Ferris and Leadpoint are considered joint employers, and ballots cast in a union election will now be unsealed and counted.