In blow to workers, labor board proposes redefining joint-employer standard

The National Labor Relations Board will publish a proposed rule Friday that would change its definition of a joint employer. The move would reverse an Obama-era decision that had made it easier to hold parent companies, such as restaurant chains, accountable for the labor violations of franchisees.

Under the new proposed definition, an employer would qualify as a joint employer “only if it possesses and exercises substantial, direct, and immediate control over the essential terms and conditions of employment,” says the NLRB press release announcing the rule. “Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship.”

If enacted, the rule could affect ongoing litigation from a worker-led minimum wage campaign against McDonald’s. The campaign has argued that McDonald’s should be held accountable for its franchisees’ labor violations because it qualifies as a joint employer under the NLRB standard. McDonald’s has argued that it does not qualify.

“The NLRB’s proposed rule is another step in the Trump administration’s efforts to gut protections for workers,” said Joann Lo, co-director of the Food Chain Workers Alliance, in an email. “It will pull back responsibility from employers who contract with temp agencies for their workers as well as from corporations that have franchises, such as McDonald’s and Wendy’s. These workers will be more vulnerable to low wages and unsafe working conditions.”

The proposed rule would overturn a 2015 decision by the NLRB that revised the definition of a joint employer to include employers with indirect control over another’s workforce, such as franchise restaurants. Because the decision allowed workers to collectively bargain with joint employers and hold them legally accountable for labor violations, it was applauded by unions and labor rights advocates.

The rule has particular bearing on the Fight for $15 campaign, which, since 2012, has argued that McDonald’s should be held accountable as a joint employer for labor violations by its franchisees. Workers at the fast-food chain were allegedly fired and retaliated against for protesting in favor of a $15 minimum wage and other benefits. McDonald’s moved to settle the case this year, but an NLRB judge rejected the settlement in July.

Pro-business members of Congress have worked to overturn the 2015 NLRB decision, most recently with H.R. 3441, the Save Local Business Act, which passed the House in November 2017. The legislation was opposed by a large coalition of labor, justice, and economic groups.

“Main street business owners and employees alike need certainty,” said Rep. Virginia Foxx, a North Carolina Republican, who was a co-sponsor on H.R. 3441, in a statement about the NLRB’s proposed rule. “We are pleased that the NLRB is working to clear up the confusion caused by the convoluted and extreme decision the Obama board made.”

The National Restaurant Association, the major U.S. restaurant lobbying group, has fought against the joint-employer designation, and filed an amicus brief in the case that expanded the joint-employer standard to include indirect control.

Next week, women who work at McDonald’s franchises in 10 cities across the country will participate in a one-day strike protesting the company’s process for addressing sexual harassment complaints. The walkout has been organized in coordination with the Fight for $15 campaign.

The proposed rule will be subject to a 60-day public comment period.

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