New Labor Ruling Changes the Game for Millions

The days of companies hiding behind subcontractors and taking an intentional arms-length approach to employment matters appear to be numbered, following an Aug. 27 ruling by the National Labor Relations Board.

The decision means that if a parent company has a significant amount of control over conditions of employment – i.e. McDonald’s Corp. over restaurants owned by franchises – they also share in employer responsibility.

For contract workers, temporary employees and just about anyone who works for an employer contracted under a parent company, this could have far-reaching implications.

“This is a victory for working families,” said International President Lonnie R. Stephenson in response to the ruling. “The significance of this cannot be underestimated.”

In a statement on the ruling the Board wrote, “With more than 2.87 million of the nation’s workers employed through temporary agencies in August 2014, the Board held that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances.”

The new standard for determining a joint-employer relationship says that, if a parent company contracts work and exercises a substantial amount of control over the conditions of employment, that company will now be considered a “joint employer” and therefore subject to the standards and laws that come with that. It also applies even if the parent company doesn’t necessarily exercise control but reserves the right to do so.

“The decision by the National Labor Relations Board could upend the traditional arms-length relationship that has prevailed between corporate titans such as McDonald’s and its neighborhood fast-food franchises,” wrote Lydia DePillis for the Washington Post. “And it comes as concerns are growing about a generation of new Internet-fueled business such as Uber and Lyft that depend heavily on independent contractors.”

As for how this will affect IBEW members, much remains to be seen. Since many in construction already have agreements for contracting, there may not be much change in that sector, said Virgil Hamilton, director of construction organizing. For others however, this could give more power to workers and force more accountability on parent companies.

“Any time workers can organize and influence the party affecting working conditions, it’s a good thing,” said Elizabeth Bunn, director of the AFL-CIO’s organizing department.

The ruling resulted from a 2013 case brought by Teamsters Local 350 in Daly City, California, against Browning-Ferris Industries of California, a waste management company. The company used a temporary staffing agency called Leadpoint to provide workers for various jobs. When the local tried to organize those employees, it wanted to so with both Leadpoint and Browning-Ferris. The union argued that it was the larger company that determined the working conditions and consequently should be involved.

“Today’s decision is another step to show that companies can no longer claim they are not employers when problems arise,” said Ron Herrera, director of the Teamsters Solid Waste and Recycling Division. “Instead of pointing fingers if a worker gets hurt, companies will now be accountable. It’s the decent and reasonable expectation that workers should have at work.”