The National Labor Relations Board (NLRB) decision in Browning-Ferris Industries of August 27, 2015 has broad implications, because it redefines who the employer is under the National Labor Relations Act (NLRA). This decision involves a recycling company Browning-Ferris, whose workers brought their initial claim. Actually they were employees of a contractor and not of the parent company. The NLRB decision says that contract does not shield the parent company from responsibility to workers who work for the contractor.
The so-called “joint employer’ decision has very important implications for people who work for the company but who are not considered to be employees. It affects a lot of franchise operators and contract workers. Basically the ruling says that when companies delegate their work they cannot delegate their responsibility. They still are accountable for what’s going on in the workplace.
The decision makes both the parent company and its franchisee/contractor jointly responsible for employment terms and conditions. It means that a claim brought by a worker against his or her contractor or franchisee can be also brought against the parent company.
Besides fast-food chains there are many other industries that will be affected by this decision. It will affect virtually every business where franchise, contracting or subcontracting is common. It includes, for instance, janitorial and cleaning workers, delivery truck drivers, construction and warehouse workers, home care staffing agencies .
Unions like this decision, because it makes it easier for them to approach such companies as MacDonald’s, or Subway with collective bargaining agreements. On the other hand, collective bargaining will drive up the franchise chain costs. Business reaction to this decision is negative. According to the National Federation of Independent Business (NFIB) the decision could “blow up” longstanding business model.
Big companies argue that the decision does not account for the fact that franchisees and contractors hire their own workers and supervise them; that they are separate companies and the parent company should not be held responsible. The smaller companies, franchisees don’t like this decision either, arguing that it deprives them of their ability to make their own decisions, and it will make it much harder for self-employed subcontractors to get jobs. A legal challenge backed by different business groups is likely.