The National Labor Relations Board issued a ruling Thursday making it easier for temporary, contract and restaurant workers to unionize and get into collective bargaining negotiations by counting staffing companies, the businesses that hire them, as well franchises and franchisers, as joint employers.
The NLRB ruling, which was along party lines and opposed by businesses, could represent a sea change for the temporary and contract staffing as well as franchise businesses such as McDonald’s Corp., Subway and Scottsdale-based Kahala Corp.
The action allows unions to collectively bargain with both staffing firms and the businesses they provide workers for and looks to include parent franchise businesses in the same mix as their franchisees. Close to 3 million U.S. workers are employed via temporary agencies.
A Phoenix company and its two founders are at the center of the federal labor board’s ruling
The NLRB decision is based on a case involving Phoenix-based Leadpoint Business Services, its staffing of 150 to 200 workers to Browning Ferris Industries recycling plant in Milpitas, California, and International Brotherhood of Teamsters efforts to unionize there.
Browning Ferris is owned by Phoenix-based Republic Services.
Republic-owned BFI hired Leadpoint to provide workers for the plant. The NLRB upended previous policy and a regional ruling says the two Phoenix-based companies count as joint-employers. So they are both on the hook for union organizing and other workplace issues.
Steve Suflas, an employment and labor law expert with Ballard Spahr LLP and managing partner of the firm’s Denver office, said right now temporary staffing firms are the ones who deal with employees they provide. Suflas said the businesses could appeal the case in federal court. But he’s also watching to see if other federal regulatory agencies seize upon the NLRB ruling to expand workers' rights and joint employers definitions that could alter U.S. companies' penchant for hiring temp workers.
“This is a pretty big step,” Suflas said.
Leadpoint was established by husband and wife Frank and Diana Ramirez in 2000. The company employs approximately 2,000 workers in 16 states including California, New York, Arizona and Texas.
Frank Ramirez said in a telephone interview the NLRB decision could drastically change the staffing sector.
“It turns it upside down, I think,” he said.
Ramirez said he’s not sure how the federal ruling will impact seasonal workers and other employees.
He isn’t sure whether they can appeal the ruling and said he’s also waiting to see what happens with unionization efforts at the plant.
The decision changed previous federal policies that said temp workers work for staffing agencies. The 3-2 NLRB vote expands that to include joint employers.
The Teamsters welcomed the decision.
“This decision will make a tremendous difference for workers’ rights on the job. Employers will no longer be able to shift responsibility for their workers and hide behind loopholes to prevent workers from organizing or engaging in collective bargaining,” said James Hoffa, Teamsters general president in a statement.
Republic Services officials said in a statement they disagree with the NLRB vote and could appeal.
"In its recent ruling, a narrow 3-2 majority of the five-member National Labor Relations Board (NLRB) has overturned over 30 years of settled law on the subject of when two totally separate companies constitute “joint employers” of persons employed by only one of those entities,” the statement reads “This unnecessary change to decades-old law is legally wrong and disappointing, and could have an unwarranted impact on existing business relationships across many industries.”
Republic officials said they are weighing various options in the case.
“We are currently evaluating all of our available options regarding this matter with the objective of not being unlawfully forced into collective bargaining negotiations with another employer’s employees, should they decide to become union represented,” the company statements continued.
Suflas said if the companies appeal they will likely do so in a federal appeals court in Washington D.C. which is friendlier toward business interests than the traditionally more liberal appeals panel in San Francisco.
The decision coincides with the Obama administration’s move to offer contractors more workplace protections and classifying more of them as direct employees and to expand workplace protections for LGBT workers.