This post originally appeared on Workforce Freedom's blog.
The Workforce Freedom Initiative (WFI) on Friday released a report, “Opportunity at Risk: A New Joint-Employer Standard and the Threat to Small Business.” The report highlights the administration’s ongoing effort to redefine the concept of “joint-employment” relationships, which threatens to disrupt major sectors of the economy such as franchising and subcontracting.
As this blog reported, last summer the National Labor Relations Board (NLRB) informed the McDonald’s Corporation that the Board’s Office of the General Counsel would allow the company to be named as a joint employer of workers at its franchise-owned restaurants. This determination was the result of numerous unfair labor practice charges filed by union-backed “worker center” groups against both franchisees and the corporation. Last December, the General Counsel proceeded with its case against McDonald’s.
Meanwhile, in another case pending before the NLRB called Browning Ferris, the Board is considering whether to rewrite its joint employer standard in the context of a contractor-subcontractor relationship and last year invited public comments on the issue. Labor unions like the Service Employees International Union (SEIU) submitted briefs urging the Board to abolish its traditional joint-employer standard, and the reason for doing so is simple: it would facilitate unionization efforts.
If the Board can name a franchisor company such as McDonald’s as a joint-employer under a new standard, then a successful organizing campaign at a single franchise restaurant could force the franchisor to the bargaining table. If that happens, a union like the SEIU could attempt to negotiate national card check and or neutrality agreements covering all franchisees, which subsequently could be quickly picked off. The same thing potentially holds true in contractor-subcontractor relationships, which explains organized labor’s aforementioned briefs to the NLRB.
As WFI’s report outlines, historically, a joint-employment relationship has been understood to exist when two separate businesses both exercise significant control over the same employees. Moreover, over time a well-established body of case law has developed to define what it means to be a joint-employer. The NLRB’s actions seem to demonstrate that the Board is ready to upend these well-settled legal principles just as labor unions wish.
Unfortunately, this latest iteration of NLRB overreach threatens to undermine well-understood business models that have provided opportunities for literally millions of people. WFI’s report summarizes things well by observing that “a broadened joint-employer standard will result in the comprehensive restructuring of many business relationships, likely resulting in higher costs, fewer new businesses, less growth, and fewer new jobs.”
Policymakers at all levels of government continue to search for ways to foster economic growth after years of a sluggish recovery. Suffice it to say, expanding the joint-employer standard is not one of those ways, and it could, in fact, have quite the opposite effect.