WASHINGTON — The National Labor Relations Board made it easier Thursday for unions to negotiate on behalf of workers at fast-food chains and other companies that rely on contractors and franchisees.
The ruling, in a 3-2 vote along partisan lines, was attacked by business groups, who called on the GOP-controlled Congress to overturn it.
Employers like McDonald’s and Yum Brands are also likely to challenge the decision if unions manage to organize a group of employees at one or more of their franchises, if not well before that.
The labor board changed the definition of a crucial employer-employee relationship that had held in some form since the 1980s. Now, a company that hires a contractor to staff its facilities may be considered a joint employer at that facility, even if it does not actively supervise workers.
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A union representing such workers would be entitled to bargain with the parent company, not just the contractor, under federal labor law.
“The decision today could be one of the more significant by the NLRB in the last 35 years,” said Marshall B. Babson, a lawyer who helped write a brief opposing the rule for the US Chamber of Commerce. “Depending on how the board applies its new ‘indirect test,’ it will likely ensnare an ever-widening circle of employers and bargaining relationships.”
For example, if employees at a fast-food restaurant run by a franchisee unionize — something almost none have succeeded in doing — they would be entitled to negotiate not just with the owner of the individual restaurant but with the corporate headquarters. If the corporate parent agreed to higher wages or better benefits, it would apply only to that particular restaurant. At the same time, the concessions may give unionized employees at other locations practical leverage in their negotiations with the company.
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Many large companies say they should not be required to bargain with employees of their contractors or franchisees and should not be held liable for violations of their rights if they exert control over the employees’ work conditions only in indirect ways.
The labor board explicitly rejected that logic. “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, regarding the National Labor Relations Act. “Such an approach has no basis in the act or in federal labor policy.”
Wilma B. Liebman, a former NLRB chairwoman who wrote a crucial dissent in a 2002 case on the subject, said the ruling was especially important because “sometimes the contractor is such a small entity, it exists on such a shoestring, that you have to get the lead firm to the table.”
The case the board ruled on involved Browning-Ferris Industries, which the NLRB found was a joint employer of workers hired by a contractor to help staff the company’s recycling center. Unions are expected to seek to apply the ruling beyond the circle of companies that rely on contractors and staffing agencies, extending it to companies with large numbers of franchisees — even, some argue, to money managers who own significant stakes in corporations.
The joint employer designation could also make it easier to unionize in the first place.
The ruling may have an immediate effect on a case the labor board is litigating against McDonald’s and several of its franchisees. It asserts the company is a joint employer along with a number of franchisees, making it potentially liable for numerous alleged violations of workers’ rights.
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