In what is being described as "one of the biggest labor decisions of the Obama administration," the National Labor Relations Board (NLRB) on Thursday expanded its "joint-employer" standard, paving the way for unions to organize on a much broader scale—and striking fear into the hearts of corporations that have used previous labor laws to shift workplace responsibilities elsewhere.
While the ruling dealt specifically with a California waste-management company, observers said its implications could go much further. "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," wrote Huffington Post labor reporter Dave Jamieson on Thursday afternoon.
In its 3-2 ruling, the NLRB held that Browning-Ferris Industries of California was a joint employer of workers hired by a contractor, Leadpoint Business Services, to help staff the company's recycling center.
As the New York Times explains:
The ruling, which may eventually be challenged in court in a variety of individual disputes, changes 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 so-called joint employer of the workers at that facility, even if it does not actively supervise them.
A union representing those workers would now be legally entitled to bargain with the upstream company, not just the contractor, under federal labor law.
The Hill notes that the ruling "is a sharp departure from previous labor laws that help companies be responsible only for employees over whom they have direct control by setting their hours, wages, or job responsibilities. They could get around the requirement by hiring staffing agencies and subcontractors that deal more closely with the workers."
The decision stemmed from a 2013 case brought by Teamsters Local 350 in Daly City, California, against Browning-Ferris. The union maintained that Browning-Ferris had control over wage and working conditions for its workers employed through Leadpoint and counted as a joint employer with that agency, and should therefore be at the bargaining table.
The NLRB, in its ruling, agreed.
"This decision will make a tremendous difference for workers' rights on the job," Jim Hoffa, general president of the Teamsters union, said Thursday. "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. This is a victory for workers across America."
On Thursday, experts were quick to note how the decision could affect the fast-food industry, which has been under pressure from organized labor to raise wages and expand benefits.
"In the case of McDonald's, roughly 90 percent of its locations are actually run by franchisees, who are typically considered the workers' employers," HuffPo's Jamieson explained. "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."
And a statement from Kendall Fells, organizing director for the Fight for $15 movement, further indicated that the growing fast-food worker movement sees Thursday's ruling as a big win.
"McDonald's is the boss—that's true by any standard," Fells said. "The company controls everything from the speed of the drive-thru to the way workers fold customers' bags. It's common sense that McDonald's should be held accountable for the rights of workers at its franchised stores."