The new standard is significant because corporations could be held liable for labor-law violations by subcontractors and could be forced to the bargaining table by unions seeking to organize the employees of a subcontractor or franchisee.
WASHINGTON — The National Labor Relations Board (NLRB) made it easier Thursday for unions to negotiate on behalf of workers at fast-food chains and other companies relying on contractors and franchisees.
The ruling could have an impact on future union talks involving contractors at companies in the Puget Sound region. Many of the Seattle area’s major employers, including Microsoft, Amazon.com, Boeing and Starbucks, use contract workers.
With its ruling in a case involving Browning-Ferris Industries and employees at one of its subcontractors, the labor board redefined what it means to be a “joint employer.”
The new standard is significant because corporations could be held liable for labor-law violations by their subcontractors and could be forced to the bargaining table by unions seeking to organize the employees of a subcontractor or franchisee.
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The ruling, adopted in a 3-2 vote along partisan lines, was immediately attacked by business groups, which called on the Republican-controlled Congress to overturn it.
Employers such as 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.
The labor board, which is charged with protecting workers’ rights to organize, changed the definition of a crucial employer-employee relationship that had held in some form since the Reagan era of the 1980s.
Now, a company that hires a contractor to staff its facilities may be considered a joint employer of the workers at that facility, even if it does not actively supervise them.
A union representing those workers would be legally entitled to bargain with the parent company, not just the contractor, under federal labor law.
In Microsoft’s case, one of the company’s contractors, Lionbridge Technologies, last year was the subject of a successful union drive by workers seeking paid time off.
“It has pretty huge implications,” said Danielle Franco-Malone, a labor lawyer with Schwerin Campbell Barnard Iglitzin & Lavitt in Seattle. Her firm this year represented the union of Lionbridge employees, the Temporary Workers of America, in collective-bargaining talks with Lionbridge.
“The new framework is going to dramatically expand who is going to be considered an employer,” Franco-Malone said. “It’s going to make it harder for companies to use temporary staffing agencies and other intermediaries that insulate themselves from being an employer for labor-relations purposes.”
Marshall Babson, a lawyer who helped write a brief opposing the rule for the U.S. Chamber of Commerce, said: “The decision today could be one of the more significant by the NLRB in the last 35 years. 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 were to unionize, they would immediately be entitled to negotiate not just with the owner of the individual restaurant but also with the corporate headquarters.
Many large companies maintain that they should not be required to bargain with employees of their contractors or franchisees and that they should not be held liable for violations of those workers’ rights, if they only exert control over the employees’ work conditions in indirect ways, such as laying out circumstances in which workers should be disciplined or fired.
The labor board explicitly rejected that logic Thursday. “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, addressing the purpose of the National Labor Relations Act. “Such an approach has no basis in the act or in federal labor policy.”
The far-reaching implications of the decision stem from a 2013 election petition by the Teamsters union, which sought to represent workers at a Browning-Ferris recycling facility in Milpitas, Calif. The workers were employed by Leadpoint Business Services, a subcontractor, to sort recyclable items and clean the facility.
The petition triggered the question of whether Browning-Ferris and Leadpoint were joint employers. An NLRB regional director found that they were not joint employers because they did not share direct and immediate control over conditions of employment, such as hiring, firing and disciplining workers.
The union appealed the decision, which led to the board decision Thursday. The ruling means that ballots cast in a union election will now be unsealed and counted.
Experts say the case will eventually be appealed and could reach the Supreme Court.
Business representatives said the labor board was making it much harder to operate franchises in the future, undermining a popular path for many entrepreneurs.
Before the ruling Thursday, the prevailing doctrine typically required the parent company to exert “direct and immediate” control over working conditions of employees at its franchisees or contractors to be considered a joint employer.
Under the new test, a company can be considered a joint employer even if it has only indirect control over working conditions, say, by requiring the use of certain scheduling software that locks in the timing and length of workers’ shifts — or if it has the right to control certain conditions even if it doesn’t exercise that right.