Labor Board Limits Workers’ Ability to Fight Service-Industry Employers

(CN) – A divided National Labor Relations Board voted along party lines Thursday to overturn an Obama-era precedent that allowed workers to hold companies responsible for labor law violations committed by their contractors or franchises.

The 3-2 vote restores a pre-2015 standard that said a fast-food corporation is a joint employer only if it exercises direct, unfettered control over workers at a franchise. The standard applied to hotel chains, construction companies and many other service-industry corporations.

The case that led Thursday’s decision involved two Iowa construction companies, Brandt Construction Company and Hy-Brand Industrial Contractors, that are owned by the same four individuals.

In 2015, two employees of Brandt and five employees of Hy-Brand went on strike complaining about their pay anad benefits and what they said were safety issues they encountered while working for the companies.

The owners of the companies fired all seven of the workers.

An administrative law judge later ruled that the seven firings were illegal, and that the same ownership was responsible for all of them.

The National Labor Relations Board on Thursday actually agreed with both elements of that ruling. However, a majority on the board said the administrative law judge reached the right conclusion while applying the wrong standard for determining joint employment.

The board majority’s decision overruled the NLRB’s 2015 decision in Browning-Ferris Industries.

“In all future and pending cases, two or more entities will be deemed joint employers under the National Labor Relations Act … if there is proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine,” Thursday’s decision said.

“Accordingly, under the pre–Browning Ferris standard restored today, proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine will not be sufficient to establish a joint-employer relationship.” it continued.

The board gained a Republican majority in late September. That majority, consisting of Chairman Philip Miscimarra Marvin Kaplan and William Emanuel, voted to Toss the Obama-era standard. Board members Mark Gaston Pearce and Lauren McFerran, both Obama appointees, dissented in the case.

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