This NLRB Ruling Could Adversely Impact Your Small Business

In a 3-2 decision involving Browning-Ferris Industries of California, the National Labor Relations Board refined its standard for determining joint-employer status.

The ruling is a follows:  the Board applies long-established principles to find that two or more entities are joint employers of a single workforce if (1) they are both employers within the meaning of the common law;  and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the Board will – among other factors -- consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so.

In this new ruling a company that hires a contractor to staff its facilities is considered a co-employer with the contracted company that provides the staff.  Hence, if those employees unionize, the union representing them could also bargain with the parent company.

If your small business hires temporary workers through a contractor who are represented by a union, your business could be brought to the bargaining table.

The ruling will hit franchises the most.  Industries such as restaurant, manufacturing, retail, construction, etc. will be most impacted.

The ruling is being fought by organizations such as the International Franchise Association and the National Federation of Independent Businesses (NFIB)

"International Franchise Association (IFA)  today filed a Freedom of Information Act request with the Department of Labor’s (DOL) Occupational Safety & Health Administration (OSHA) asking for the rationale behind questions OSHA inspectors are asking franchise owners, which appear specifically designed to presume a joint employer relationship between brand companies and local franchise small business owners."

The IFA stated that it has been aggressively fighting the NLRB’s attempt to expand the definition of joint employer liability.

“If this decision stands the economic rationale for hiring a subcontractor vanishes,” said Beth Milito, Sr. Legal Counsel for the National Federation of Independnet Business (NFIB) .  “It will make it much harder for self-employed subcontractors to get jobs and of course it will drive up operating expenses for the companies that hire them.  She said the ruling today will set off alarm bells in the small business sector."

Sources:
NLRB Ruling
International Franchise Association (IFA) 
National Federation of Independnet Business (NFIB)

By Wendy Stewart