NLRB's joint-employer ruling redefines client-contractor relationship

The National Labor Relations Board's (NLRB) ruling last week against Browning-Ferris, a waste-management firm, and redefined the employee-employer relationship, which affects a variety of industries.

In the decision, the board ruled that Browning-Ferris should be considered a “joint employer,” with a staffing agency contracted to support its California recycling facility. Under this new status, the company could be pulled into collective-bargaining negotiations or held liable for labor violations committed by the direct employer.

The new definition will make it more difficult for companies with franchises and independent contractors to avoid offering benefits and protections. The new definition also increases the vulnerability of contracting companies to legal actions because it gives unions greater negotiating power.

This new definition also changes the franchised-business model, adds greater uncertainty to the employee-employer relationship and raises labor costs. The International Franchise Association (IFA) is currently heading a charge against the NLRB. Congress will address the issue after returning from its August recess.

For AED members who contract services -- from janitorial support to sales or maintenance -- joint-employer status would mean increased possibility of lawsuits, employee unionization and the use of “economic weapons,” such as pickets and protests. Before the NLRB ruling, companies using contracted services were insulated from such hazards. If left unaddressed, the new standard could place distributors in danger of facing these labor issues whenever they have indirect or unexercised potential control over a contract employee. As a result, many businesses could bring currently-outsourced services in-house.

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