NLRB reverses Browning-Ferris, makes it harder for workers to bargain with their employers

Yesterday, the National Labor Relations Board (NLRB) made it more difficult for millions of workers to join together and form a union, by overturning its joint-employer standard established in 2015’s Browning-Ferris Industries case.

It is hard in today’s economy to bargain for higher wages or better working conditions, especially if your direct employer doesn’t really make those decisions. Under President Obama, the NLRB tried to make it easier for employees by holding each employer responsible when they co-determine what a worker’s wages, hours, and working conditions will be. In yesterday’s decision, the Trump NLRB decided to make it harder than ever.

The NLRB’s latest decision is bad law resulting from a bad process. Ordinarily, before overturning major precedent, the Board invites the public to comment by filing amicus briefs. However, this time, they did not, and instead announced this reversal with no warning or notice. President Trump’s appointees to the Board were so keen to respond to the demands of the franchising industry, which wants a rule that franchisors like McDonald’s aren’t responsible unless they exercise direct control over a franchisee’s labor relations, that they reversed the joint-employer standard in a case where the standard wasn’t even an issue, and where the public had no opportunity to weigh in.

What is the joint employer standard? When two or more businesses co-determine or share control over a worker’s terms of employment (such as pay, schedules, and job duties), then both businesses may be considered to be employers of that worker, or “joint employers.” Consider a common employment arrangement in which a staffing agency hires a worker and assigns her to work at another firm. The staffing agency determines some of the worker’s terms of employment (such as her hiring and wages), but the other firm directs her daily tasks and sets her schedule and hours. Because both entities co-determine and share control over the terms and conditions of her employment, both businesses may be found to be joint employers. As joint employers, both companies are responsible for bargaining with the employees under the NLRA.

By weakening its joint-employer standard, the NLRB has made it nearly impossible for working people caught in contracted-out, staffing, or other alternative working arrangements to join together and negotiate for better pay and working conditions. If these workers wanted to negotiate over their work schedules, safety precautions on the job, or pay rates, the staffing agency could simply shrug their shoulders, telling the workers that it is the larger firm that owns and operates the business that determines all of those rules. But if the workers tried to negotiate with the larger firm (where they actually give their labor every day) the larger firm could avoid the bargaining table as well, by claiming that the staffing agency is the workers’ only employer.

Even though both the staffing agency and the larger firm jointly determine the workers’ conditions of employment, without a strong joint-employer standard, the workers could find themselves stuck in the middle, without any employer to bargain with or address their concerns at work.

Moreover, the only liability employers face under the NLRA is the requirement that they respect their workers’ rights to organize, join a union, and negotiate over pay and working conditions. The act does not provide for monetary penalties against an employer. At most, the NLRB can order an employer to bargain with workers, to reinstate an employee fired in violation of the act, to pay back wages to a wrongfully fired employee (reduced by the employee’s interim earnings), or to cease and desist from engaging in conduct that violates the act. All this weakened joint-employer standard does is keep the smaller employer on the hook for these labor law violations, and allow the larger company, including franchisors, to escape liability and avoid having to negotiate with workers’ unions.

Congress has also tried to further weaken joint-employer standards by introducing the so-called “Save Local Business Act,” which would roll back the joint employer standard under both the NLRA and the Fair Labor Standards Act. But this law would do nothing to protect small businesses. Instead, the bill would ensure that small businesses are left with sole responsibility for business practices often mandated by large corporations like franchisors. It would establish a weak joint employer standard that lets big corporations avoid liability for labor and employment violations and leaves small businesses on the hook.

Weakening the joint employer standard hurts working people. By weakening the joint-employer standard, the Trump appointees to the NLRB have given in to the corporate lobbyists seeking to keep the cost of labor low by eroding workers’ rights to organize and bargain collectively—letting employers avoid the bargaining table by contracting for services rather than hiring employees directly. Firms will be able to retain influence over the terms and conditions of employment while evading the obligation to bargain with employees under the NLRA.

Since contingent and alternative workforce arrangements (reliance on temporary staffing firms, contractors, and subcontractors to outsource services traditionally performed by in-house workers) have grown dramatically, this change in the law will undercut the ability for millions of workers to form and join unions. The most rigorous recent estimates find that the share of workers engaged in alternative work arrangements was 15.8 percent in late 2015. In today’s labor market, that translates into roughly 24 million workers.

The majority of American workers would vote for union representation if they could. However, the intensity with which employers have opposed organizing efforts, and the continuing tilt of the legal and policy playing field against workers seeking to bargain collectively, has led to a decline in union membership. Yesterday’s decision makes it clear the Trump board will work to further rig the system against working people.