NEW YORK/LOS ANGELES (Reuters) — The National Labor Relations Board (NLRB) is expected to rule soon on if, and how, companies can be held responsible for labour violations carried out by their contractors or franchisees — a move that could have far-reaching implications for businesses.
If the five-member board decides to broaden the theory known as "joint employer," industry groups say it will harm businesses and could potentially set in motion a number of legal battles.
Such a ruling by the NLRB, which oversees union elections and rules on labour disputes, would likely affect a wide swath of industries, including hotel chains, manufacturers, construction firms and fast food chains like McDonald's.
Businesses groups are poised to strongly contest any change in the joint employer definition, employment lawyers said. In fact, if a conflict is found between the NLRB's stance and findings from other state and federal courts, the dispute could find its way to the Supreme Court.
At issue is a petition filed last year by International Brotherhood of Teamsters union against the waste management company Browning-Ferris Industries of California. Browning-Ferris hired a sub-contracting firm to staff a recycling plant in the Golden State. So, union officials requested to negotiate with both the subcontractor at the recycling plant — Leadpoint Business Services — and Browning-Ferris. The union argued that the two firms were joint employers.
In a "friend of the court" brief filed earlier this year in the case, NLRB General Counsel Richard Griffin wrote that the board needs to shift its thinking to adapt to changing economic realities.
Worker rights groups contend that as more businesses sub-contract labour, wages are driven down and working conditions decline — with little accountability, said Rachel Aleks, a labour law professor at Cornell University. If the NLRB shifts how it applies the joint employer doctrine, workers could name the hiring companies in lawsuits, she added.
The joint employer standard is also central to dozens of allegations of labour violations related to worker protests pending at the board against at McDonald's Corp.
Griffin, the NLRB General Counsel, issued guidance earlier this year that McDonald's could be held liable as a joint employer if the complaints against its franchisees are found to have merit. Those cases are still ongoing with an official complaint yet to be issued by any of the NLRB's regional offices.
McDonald's declined to comment on the possibility of the upcoming NLRB decisions.
Griffin's stance has inflamed franchise-industry groups and Republican congressmen that say the NLRB, controlled by Democrats, has a pro-union bias.
A ruling in the Browning-Ferris case that follows Griffin's approach could have a "cataclysmic" effect on how businesses operate and calculate risk, said Michael Lotito, an attorney from Littler Mendelson. Lotito's firm has represented the companies involved in the Browning-Ferris dispute.
NLRB opinions can be appealed to federal appeals courts. Lotito said a new finding by the board could sow more confusion, partly because judges have applied the joint employer test in different ways.
Griffin, for his part, has said that the board would only be returning to a previously-used standard that was applied before the mid-1980s.