WASHINGTON -- McDonald's, Burger King and every other company that relies on a franchise business model just suffered the legal setback they've been fearing for years.
The National Labor Relations Board ruled on Thursday that Browning Ferris Industries, a waste management company, qualifies as a "joint employer" alongside one of its subcontractors
That's a big deal. In the case of McDonald's, roughly 90 percent of its locations are actually run by franchisees, who are typically considered the workers' employers. One of the main reasons companies choose to franchise or to outsource work to staffing agencies is to shift workplace responsibilities onto someone else. But if a fast-food brand or a hotel chain can be deemed a "joint employer" along with the smaller company, it can be dragged into labor disputes and negotiations that it conveniently wouldn't have to worry about otherwise. In theory, such a precedent could even make it easier for workers to unionize as employees under the larger parent company.
The Democratic-majority board, whose members were appointed by President Barack Obama, ruled 3-2 along partisan lines, with the two Republicans dissenting.
In their decision, the Democratic members wrote that parent companies shouldn't be absolved of their obligations to workers at the bottom of the contracting chain.
"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," they wrote. "Such an approach has no basis in the [National Labor Relations] Act or in federal labor policy."
Labor unions and worker advocacy groups have been hoping for just such a decision. In their view, since companies like McDonald's influence the working conditions in their franchised stores, they should be legally accountable to the workers who wear their logos, even if it's a franchisee that's technically signing the paychecks. Bringing companies at the top of the contracting chain to the table will help restore corporate responsibility in a "fissured" economy, advocates say.
The franchise lobby, meanwhile, has been warning for months that a ruling like this one would doom the business model. Franchisers argue that naming parent companies as joint employers would force them to take more control from their franchisees to contend with new liabilities. The lobby has worked hard to paint the "joint employer" standard as something that will hurt small business owners, not fast-food giants and other name brands.
The negative reactions from the business community were swift. The National Restaurant Association, a leading lobby for the industry, issued a statement Thursday saying the ruling "is overturning years of established law that has worked to help grow business and feed our economy." The Competitive Enterprise Institute, a libertarian think tank, said the ruling would have a "devastating economic impact."
The Browning Ferris case grew out of an organizing effort by the Teamsters. The union sought to have the waste management company named as a joint employer for workers employed by the staffing firm Leadpoint Business Services, a subcontractor for Browning Ferris. If Browning Ferris were deemed a joint employer, it would have to join Leadpoint in bargaining with the Teamsters. Such a determination could also make it easier for the Teamsters to organize workers at other staffing agencies that do work for Browning Ferris.
A regional director for the NLRB ruled that Browning Ferris did not exert enough control over Leadpoint workers to be considered a joint employer under current standards, but the Teamsters appealed that ruling to the federal board. Thursday's ruling will change those standards for future cases.
The decision will no doubt agitate some powerful business lobbies and Republicans on Capitol Hill. The ruling will likely spur congressional Republicans to renew their calls to defund an independent agency they view as having been too friendly to labor unions in the Obama era.
McDonald's and other franchisers have been bracing for a ruling like this for years. The board's general counsel, who functions as a kind of prosecutor, has already named McDonald's as a joint employer alongside some of its franchisees in several cases involving alleged unfair labor practices. Many observers took that move as a sign that the board would soon revise its standards for what makes a company a joint...
Gap Inc. announced Wednesday that it would end on-call scheduling for employees at its stores by the end of September, making it the latest retailer to drop a practice increasingly seen as unfriendly to working families.
In a post on a company blog, Andi Owen, global...
WASHINGTON -- Fast-food workers who are hoping to raise the minimum wage will find an ally in the Obama White House this week, with Labor Secretary Tom Perez traveling to Detroit on Tuesday to show his solidarity with the so-called Fight for $15.
On Monday, the National Labor Relations Board rejected a historic attempt by Northwestern University football players to unionize as employees of the school. The precedent-setting decision will make it extremely difficult, if not impossible, for college athletes to formally join labor unions in the future, forcing players...
The National Labor Relations Board announced Monday that it would not wade into the case of Northwestern football players who were seeking to unionize, meaning college football will remain union-free, at least for the time being.
In a statement, the five-member board in Washington said it did not feel it had jurisdiction in the case. Asserting such powers, the agency said, would not "promote stability in labor relations," as the board is tasked with doing.
"For now, it seems the idea that these young men will be able to organize themselves into a union is not on the horizon," said Robert McCormick, a former labor attorney at Michigan State University. "For the time being, it does seem to be the end of the line."
In setting the case aside, the board declined to take on its thorniest question -- whether or not scholarship athletes are controlled enough by their schools to be considered employees and not just student-athletes.
In a statement, Northwestern officials said they were "pleased" by the board's decision.
"Northwestern considers its students who participate in NCAA Division I sports, including those who receive athletic scholarships, to be students, first and foremost," the school said. "We applaud our players for bringing national attention to these important issues, but we believe strongly that unionization and collective bargaining are not the appropriate methods to address the concerns raised by student-athletes."
One of the main reasons the board declined to assert jurisdiction is the makeup of NCAA football. Many of the colleges with scholarship athletes are state schools and not private like Northwestern. That means players at those schools would be subject to state collective bargaining laws. But recognizing Northwestern players as employees, the board said, could rock all of college football.
"Asserting jurisdiction over the single team in this case would likely have ramifications for those other member teams," the agency said.
Even if the players won't be unionizing under federal law anytime soon, that doesn't mean the organizing campaign is scuttled, said Fred Feinstein, a former general counsel for the NLRB. Players at state schools could still try to be recognized as union members under state law, he noted.
"If they make inroads in one state, it's conceivable others would follow," he said.
Feinstein also noted that they could bargain collectively outside the framework of labor law to have their grievances addressed, much like fast food workers have been doing.
"They can still organize, and they can still try to figure out the kinds of influence and leverage they might have to address some of the concerns that led them to file this petition in the first place," he said.
The Northwestern players filed their precedent-setting union election petition in January 2014. Two months later, Peter S. Ohr, the board's regional director in Chicago, ruled that the players qualified as employees who could organize, allowing them to cast ballots in a union vote. Those ballots were impounded pending an appeal by the school, but the results of that election would now be moot.
The College Athletes Players Association, which backed the union drive, did not immediately respond to a request for comment. Kain Colter, the former Northwestern quarterback who led the organizing push, tweeted that he was "disappointed by the NLRB ruling."
NCAA chief legal officer Donald Remy called the decision "appropriate" in a statement.
"This ruling allows us to continue to make progress for the college athlete without risking the instability to college sports that the NLRB recognized might occur under the labor petition," Remy said.
Noting that the union drive helped force some changes that benefit players, Rep. Jan Schakowsky (D-Ill.), whose district includes Northwestern, still said she is "sorry that the NLRB has decided against college athletes seeking a seat at the table."
"These athletes dedicate 40-plus hours a week to their sport, helping to raise millions of dollars for the University each year," Schakowsky said in an email statement. "They deserve to stand on an even playing field with the University in negotiating for better health coverage while they are playing for their school and after their careers end, for guaranteed 4-year scholarships, and for a say in practice time and intensity. This decision denies them that opportunity."
Correction: This post originally said the players could take their case to federal court. That is not an option in a representation case such as...
WASHINGTON -- The International Association of Machinists and Aerospace Workers union endorsed Hillary Clinton for president on Friday, giving the front-runner for the Democratic nomination another boost from a major labor union.
IAM, which represents more than 700,000 workers in North America, said Friday that Clinton had garnered...
Last year, Vanessa Pettit and many of her colleagues at the Guitar Center store in Independence, Missouri, declared their intention to unionize. The workers had read articles online about a labor group, the Retail, Wholesale and Department Store...
A national labor union of registered nurses provided another big boost to the presidential campaign of Bernie Sanders...
Asked if his flat tax plan would further separate the haves from the have-nots, GOP presidential hopeful Sen. Rand Paul (Ky.) said Sunday that income inequality is the result of some Americans working harder than others, rather than economic policies.
"The thing is, income inequality is due to...
Donald Trump struggled on Sunday to explain his now-infamous comment about Fox News host Megyn Kelly following...
Republican presidential hopeful Carly Fiorina said Sunday that she would oppose a government requirement to give workers in the private sector paid maternity or paternity leave.
"I don't think it's the role of government to dictate to the private sector how to manage their businesses," Fiorina told...
Staffers at Salon.com have successfully joined the Writers Guild of America, East, with management at the news site voluntarily recognizing their employees' union.
Lowell Peterson, the union's executive director, said in a statement Saturday that the two sides have agreed to start working toward a contract.
"For twenty years Salon...
The effort to unionize Salon is apparently off to a rockier start than some staffers had hoped.
WASHINGTON -- Putting some distance between herself and other Democratic presidential hopefuls, former Secretary of State Hillary Clinton voiced support Thursday for a proposal to raise the federal minimum wage to $12, suggesting that a more ambitious proposal of $15 wouldn't be realistic on Capitol Hill.
Speaking to reporters after...
SILVER SPRING, Md. -- Sen. Bernie Sanders (I-Vt.) and former Maryland Gov. Martin O'Malley (D) presented themselves to the executive council of the AFL-CIO labor federation here Wednesday afternoon, ready to field questions on the president's mammoth trade deal, the prospect of a $15 minimum wage and other...
WASHINGTON -- Unpaid interns in most states aren't covered by the same workplace discrimination and harassment laws as employees, but some House Democrats are trying to change that.
Three lawmakers introduced a trio of bills Tuesday aimed at closing loopholes that exclude unpaid interns from protection. The...
A panel convened by New York Gov. Andrew Cuomo (D) recommended Wednesday that the state set a minimum wage of $15 expressly for New York's fast-food workers, a novel regulatory maneuver that would impact many of the lowest earners in the state.
WASHINGTON -- Perhaps Richard Trumka has already said everything he needs to say about Wisconsin Gov. Scott Walker (R).
On Monday morning, Walker officially declared his expected candidacy to become president of the United States. Trumka, head of the AFL-CIO labor federation and longtime Walker foe, had a...
WASHINGTON -- Faced with its gravest threat in years from the Supreme Court, one of the country's largest labor unions is preparing for a ruling that could make it much more difficult to collect fees from the workers it represents.
This weekend, the American Federation of Teachers passed a resolution...