NLRB ruling sets new thresholds for indirect, franchise labor relations

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A National Labor Relations Board (NLRB) ruling threatens to set new and onerous labor relations standards on franchise and contracting businesses, after it determined that Browning-Ferris Industries is a “joint employer” obligated to negotiate with the Teamsters union over  workers supplied by a contract staffing firm within one of its recycling plants.

Forbes reported that, “in so doing, the board’s Democratic majority reversed several decades of practice where companies had to exercise “direct and immediate” control over workers with a new regime in which regulators will examine each case for signs a company has the potential to affect pay and working conditions. It will have a large impact on how franchisers like  do business, since they can potentially be held liable for hiring and firing decisions by any of their thousands of individual franchisees. Even routine business decisions, like whether to fire a contractor or how to structure operations, will now be examined in light of how they affect union organizing efforts.”

“If this goes into effect then the franchiser has to step in and have a standard for hiring, human resources, payroll, everything,” Forbes quoted Jania Bailey, a board member of the International Franchise Association and chief executive of FranNet, a consulting firm that matches franchisees and franchisors. “It basically nullifies this independent business model.”



The “ruling uproots decades of standards that have worked both for business owners and employees,” said Geoff Burr, the Associated Builders And Contractors (ABC)‘s vice-president of government affairs. “It is also imposes unnecessary barriers to and burdens on the contractor and subcontractor relationships throughout our industry.

“This ruling threatens both responsible contractors who have established sound workplace protocols and subcontractors by deeming them joint employers of the subcontractors’ employees,” said Burr. “Contractors may find themselves vulnerable to increased liability making them less likely to hire subcontractors, most of whom are small businesses, to work on projects.”


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