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Labor Board Overturns Ruling That Protected Fast-Food Workers

The NLRB’s latest decision under the Trump administration, explained

A McDonald’s employee prepares an order Photo by Justin Sullivan/Getty Images

On Thursday, the National Labor Relations Board overturned an Obama-era policy that made it easier for workers — including many employees of fast-food and other chain restaurants — to unionize and otherwise challenge their employers over labor practices. Here’s everything you need to know:

What’s happening?

• The National Labor Relations Board, the federal government agency in charge of enforcing labor laws as they relate to unions and unfair labor practices, has overturned its previous ruling on the 2015 case known as Browning-Ferris Industries. The case centered on the concept of joint employers — namely, who is held responsible for how workers are treated when more than one entity controls or supervises their work.

This decision has a far-reaching effect with implications for many businesses that operate with a franchise model, including big fast-food corporations. Under this new ruling, a company such as McDonald’s can essentially say it’s not responsible for how employees of its franchised locations are treated as it relates to labor law violations.

How did we get here?

• In 2015, under the Obama administration, the National Labor Relations Board handed down a controversial decision in a case known as Browning-Ferris Industries that essentially redefined what it meant to be classified as an employer.

• The Browning-Ferris Industries case involved a recycling center where the staff was comprised of contract workers, hired through a staffing agency. The case asked whether or not the recycling center could be held responsible for the treatment of contract workers. The 2015 ruling found that the workers were “jointly employed,” meaning that the recycling center itself, in addition to the staffing firm, could be held liable for any labor law violations.

• The labor board gained a Republican majority in September, so the overturning of the joint employer ruling did not come as a surprise — though many did not expect it to come so quickly.

What are the arguments?

• Labor groups and worker advocates argue that the new ruling will handicap franchise workers’ ability to unionize, and permit big corporations to look the other way when their franchisees commit labor violations.

“The reversal of the Browning-Ferris decision is just one more example of the Trump Administration favoring corporations over working people,” Christine Owens, executive director with the National Employment Law Project, said in a statement. “In this economy, employers are increasingly subcontracting out vital parts of their business to other contractors and/or using temporary employment agencies to fill vital positions. The Browning-Ferris decision recognized that in these arrangements, companies that contract out work may still retain control over the conditions and standards that govern the work and how the workers doing the jobs are treated. Browning-Ferris rightly held these companies responsible for the labor standards under their own control. With this reversal, the Trump NLRB has decided to let them off the hook.”

• Big corporations such as McDonald’s (which has vehemently opposed the joint employer ruling and previously found itself in a long and drawn-out court battle with the NLRB over it) have basically been pushing to overturn the joint-employer ruling since it was instated in 2015. They argued that the previous ruling hurt businesses by making it unclear who should be responsible for labor disputes over wages and working conditions.

• “The 2015 Browning-Ferris ruling stacked the deck against small businesses and inserted uncertainty into day to day operations,” National Restaurant Association executive vice president Cicely Simpson said in a statement. “Today’s decision restores years of established law and brings back clarity for restaurants and small businesses across the country.” The NRA previously expressed concern that the 2015 ruling threatened the franchisee model that many restaurants operate under.

What’s at stake?

• Under Thursday’s ruling, franchise workers will only be seen as employees of the parent corporation if the company has direct control over workers — which is not typically the case when dealing with independently owned franchises.

• Previously, employers could potentially be held responsible for labor law violations perpetrated by their franchisees or subcontractors even if it only had indirect control over their employees. The new ruling changes that standard and means that companies such as McDonald’s will likely be able to “pass the buck” when it comes to the treatment of employees at their franchises, whether in regards to unfair wages, union busting, or other violations of labor laws.

Labor Board Reverses Ruling That Helped Workers Fight Chains [New York Times]
NLRB Overturns Obama-Era Ruling on Jointly Employed Workers [Wall Street Journal]