Contract-Company, Franchise Employees Targeted

Obama NLRB Ignores 68-Year-Old Statutory Definition of ‘Employer’

(source: National Right to Work October 2015 Newsletter)

In the latest of a series of bureaucratic rewrites of federal labor law that are clearly intended to help union dons secure monopoly control over as many workers as possible, President Obama’s National Labor Relations Board is targeting millions of employees of contract companies and franchises.

On August 27, the Obama NLRB declared that, from now on, companies that employ subcontractors and temporary staffing agencies and franchisors may frequently be regarded as “joint employers” of subcontractor, staff agency, and franchise employees.

Radical Policy Shift Implemented by a 3-2 Labor Board Vote

This radical policy shift was implemented by a 3-2 majority of a bitterly divided board in deciding a case brought by Teamster union bosses against Browning-Ferris Industries (BFI).

nlrb-pearce-radicalPrior to this decision, remote companies were treated as “joint employers” under federal law only if their actions had a “direct and immediate impact” on workers’ terms and conditions, as legal commentator Walter Olsen explained in a blog post decrying the BFI decision.

In contrast, under the NLRB’s extraordinary new policy, remote companies may be regarded as “joint employers” if, in Mr. Olsen’s words, they have “the power, even the potential power, to significantly influence working conditions or wages at the subcontractor or franchisee.”

National Right to Work Committee Vice President Greg Mourad explained:

“Many businesses contract with other companies to clean their buildings, provide security, etc. so that they can focus on their core activities.”

Fearing Negative PR, Large Corporations Have Agreed to ‘Card Checks,’ ‘Neutrality’

“Franchisors,” Mr. Mourad continued, “often furnish small business owners with uniforms and store designs and set quality standards and operating hours. Under decades of NLRB and court precedents, they have never been regarded as the employers of workers at independently-owned stores.

“Union bosses have long desired to overturn all these precedents, because they know from experience that small companies are far more likely to stand up to Big Labor pressure and public vilification and refuse to sell out their employees who wish to remain union-free than are large corporations.

“In order to avoid negative publicity generated by union officials and their allies, large corporations have time and again agreed to so-called ‘card checks’ and ‘neutrality’ deals that actually help Big Labor gain monopoly-bargaining power over employees.”

And now the NLRB has made it far easier for Big Labor to corral employees into unions by finding that remote companies can be held liable when franchises and contract companies resist unionization.

As Iain Murray of the Competitive Enterprise Institute emphasized in his August 31 blog post about the BFI case, the majority opinion was “explicit” in acknowledging that its primary aim is to “make [monopolistic] collective bargaining easier for labor unions.”

Indeed, if companies like Burger King, Jiffy Lube and the Hair Cuttery respond to the BFI decision by replacing local franchises with corporate-owned stores and doing their own hiring, union organizers almost surely will benefit.

They will be able to acquire monopoly-bargaining power over thousands and thousands of employees in one fell swoop, instead of having to take over small franchises one by one.

“The fact is, in adopting the 1947 Taft-Hartley Act, Congress explicitly stated that ‘any individual having the status of an independent contractor’ shall not be considered an employee of the company doing business with the contractor,” noted Mr. Mourad.

“The Obama NLRB has simply chosen to ignore this statutory definition as well as several subsequent federal court decisions interpreting it. Fortunately, Congress can soon prevent the Obama NLRB from proceeding with its implementation of its redefinition of ‘joint employer’ by wielding lawmakers’ ‘power of the purse string.’”

Mr. Mourad vowed that National Right to Work and its members would do everything possible to ensure that the appropriations law funding the NLRB for the upcoming fiscal year includes a provision that blocks the agency from continuing to target employees of franchises and contract companies.