How the NLRB Just Radically Changed Labor Relations

How the NLRB Just Radically Changed Labor Relations

Yesterday, the National Labor Relations Board finally released its much-anticipated decision on a case that sets a new paradigm for labor relations and will likely send ripples through the workforce, particularly in the contracting and franchise sectors of the economy.

“The decision today could be one of the more significant by the NLRB in the last 35 years,” a labor lawyer who helped the Chamber of Commerce try to oppose the case told The New York Times.

The case pertained to whether the company Browning-Ferris was legally a joint employer of people hired by a contractor to staff the company’s recycling center. Ruling 3-2 along partisan lines, the NLRB answered with a resounding “absolutely.”

“It is not the goal of joint-employer law to guarantee the freedom of employers to insulate themselves from their legal responsibility to workers, while maintaining control of the workplace,” the Democratic majority wrote. “Such an approach has no basis in the act or in federal labor policy.”

The decision overturns decades of precedent that was set by the business-friendly Reagan-era NLRB. Defining a company and its contractors or franchisees as joint employers removes a shield that has been used by businesses to minimize costs, and in doing so, leave many workers with lower pay and limited protections.

As the Times explains, this decision will require parent companies, in addition to the contractor, to come to the bargaining table if its workers unionize. Previously, companies have fired contractors when their workers unionize, which would now be illegal.

While this case directly applies to contractors and the companies who hire them, labor experts are more interested in the pathways that this opens up for current efforts to organize fast-food workers. Companies like McDonald’s have long argued that they have no substantive influence over how its numerous franchisees operate their businesses, and thus aren’t the actual employers of the franchise workers. This ruling substantively means that McDonald’s, with its 12,500 franchise operations, is now a joint employer of 660,000 people.

Union organizers with the Fight for 15 and SEIU now have a considerable amount of leverage against McDonald’s headquarters. If one franchise store unionizes, corporate must come to the table as well. As Steven Greenhouse writes in The Atlantic, there are a number of pathways that union-organizing strategists are considering. They could get McDonald’s to sit down and agree to higher wages for both its corporate and franchise stores. Or they could launch a union push at so-called “hot shops” that are primed to unionize, which could feasibly result in dozens of unionized stores within a year.

The question then is how to avoid drawn-out contract negotiations. But still, it’s a breakthrough for the most vibrant labor-organizing movement in the country, and it gives organizers many more strategic options.

Apart from fast food, the decision will also have a profound impact on companies that outsource many functions to contractors. There’s been an uptick of union organizing among workers at staffing agencies or contractors hired by big tech companies like Microsoft, Facebook, and Google. For instance, software-bug testers contracted by Microsoft recently voted to unionize. The NLRB decision would now require these tech giants to join its contractors at the bargaining table if workers unionize.

This is huge because it gives the ever-growing amount of temp, contingent, and contract workers a way to hold big companies more accountable for pay, benefits, and working conditions.

Not surprisingly, big business has been bracing for the decision and is not happy with the outcome. Lobbyists for the Chamber of Commerce and others in the big-biz lobby are pushing Republicans to overturn the NLRB ruling.

A vice president for the National Retail Federation had this to say: “This is further evidence that the NLRB has given up its position as an objective arbiter of workplace issues and sees itself as an advocate for organized labor as a means of imposing new workplace obligations and legal liabilities on well-known corporations.” Because, you know, increasing accountability for harmful business practices ain’t really copacetic with the corporate agenda.