Can Big Business Dismantle the Joint Employer Standard?

AP Photo Ted S. Warren, File

The Microsoft Visitor Center in Redmond, Washington. 

Welcome to The American Prospect’s weekly roundup highlighting the best reporting and latest developments in the labor movement. 

(Compiled by Justin Miller—Edited by Harold Meyerson

As the National Labor Relations Board’s landmark Browning-Ferris Industries joint-employer standard nears its one-year anniversary, its potentially far-reaching implications have business interests and conservatives shaking (or at least, vibrating) in their boots. Republicans continue to take political aim at the Board, which they argue has a legal agenda to bolster organized labor’s interests. Meanwhile, the business lobby is ramping up efforts to get the ruling thrown out in federal court. 

The NLRB’s ruling declared that Browning-Ferris was legally a joint employer of the workers hired by a contractor to staff the company’s recycling center, because “it exercised control over terms and conditions of employment indirectly through an intermediary.” This overturned a joint-employer precedent that had required “direct” control. In short, it put businesses on the hook for their contractors’ treatment of their workers. The ruling, labor advocates say, is an important step in increasing employer accountability in a highly fragmented economy.

However, Browning-Ferris (the company, not the decision) has since refused to comply with the August 2015 ruling and a subsequent ruling by a NLRB panel in January that largely upheld the decision. The company has now brought its case before the D.C. Circuit, which is currently reviewing the appeal.  

With the business lobby worried that it could lose a legal shield that has been used by companies to minimize costs (by subjecting workers to lower pay and limited protections), it has sprung into action. Last week, Microsoft, Texas Governor Greg Abbott, and usual suspects like the Chamber of Commerce, the International Franchise Association, and the National Restaurant Association filed a friend-of-the-court brief asking for the ruling to be overturned.

Microsoft was particularly incensed, as Politico notes, because it has required its contractors to provide paid sick leave, a policy President Obama specifically applauded, but also one the corporation now worries could be used to compel them to negotiate with its suppliers’ unions. “On one hand, the United States President has praised Microsoft for its market-leading [corporate social responsibility] initiative," Microsoft wrote in the brief. “On the other hand, the NLRB has adopted a joint employment standard that encourages unions to use the same policy to bring an unfair labor practices claim against Microsoft.”

Republicans in Congress argue that the Browning-Ferris standard is already encroaching on business models—franchising, contracting, and subcontracting—that rely on arms-length labor relations. They hope to knock the wind out the joint-employer standard before it can be applied in other court cases.

Last week, the GOP-led Senate Small Business and Entrepreneurship Committee held a hearing that mostly served as a chance for the NLRB’s critics to slam the joint-employer standard as a jobs killer. Republican Chairman David Vitter said the action threatens the core of the franchise industry and “puts millions of jobs at risk.” 

“That’s yet another controversial example of the Obama administration’s push for aggressive labor policies that in my opinion will not only hurt small businesses but hurt workers,” Vitter said. “American entrepreneurs are under attack from an agenda-driven NLRB.”

This Tuesday, the Chamber of Commerce is holding an event on the heels of the Senate hearing that will argue that the NLRB’s ruling is already trickling through other levels of government, and crushing small businesses along the way.

Labor advocates like the AFL-CIO are confident that the D.C. Circuit will uphold the ruling because the Browning-Ferris standard is actually quite narrow. “What’s at issue specifically is whether this particular employer jointly employs [those specific contracted] employees,” says AFL-CIO general counsel Craig Becker. “That’s highly fact-specific.”

Advocates think that the opposition to the new standard and the claims that it is already impacting other industries is a dramatic overreaction.

“Much of the concern on the employer side is about cases that haven’t been adjudicated yet,” Becker explains. “The franchise industry is obviously very concerned that this means something categorical for the industry, which it clearly doesn’t.”

While the Browning-Ferris ruling is important, the real test of whether this new standard applies to the franchise industry is already underway as the NLRB investigates whether the McDonald’s corporation is jointly responsible for employees at franchise stores—a question that will likely have much broader ramifications for business than Browning-Ferris.

Though the answer to that question is as yet unclear, one thing is very clear: The battle over the Browning-Ferris standard is merely setting the stage for a much larger political fight that will encompass the courts and the political arena in more dramatic ways. 

“Ultimately, this case will be decided by an appeals court, or perhaps even the U.S. Supreme Court,” labor lawyer Daniel H. Handman predicts, “which will have to determine whether this New Deal-era law is flexible enough to be interpreted in a way that conforms to our ever-changing economy.” 

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