Guest Post: N.L.R.B.’s Browning-Ferris Decision Could Reshape Contract and Franchise Labor

Catherine Fisk is Chancellor’s Professor of Law at the University of California, Irvine.

In the much-anticipated Browning-Ferris Industries case, the National Labor Relations Board yesterday decided in a split 3-2 vote to return to the common law test for when two corporations are joint employers, and therefore may be jointly responsible to bargain with the union representing employees who work under the control of both.  The facts make the case relatively easy, but the strident tone of the dissent reveals that the possible implications of the decision alarm some companies who have outsourced labor but who have retained enough control over labor as to make them possible joint employers.

Browning Ferris (BFI) runs a recycling plant and contracts with Leadpoint to supply the workers who sort garbage and recyclable materials.  BFI and Leadpoint both employ supervisors in the plant who direct the work, with BFI establishing the work process and setting the working hours, Leadpoint doing the hiring and firing and payroll, and BFI paying Leadpoint the cost of each worker’s labor plus a markup.  This was a conventional labor supply contract, of the sort that are frequently used in janitorial, agricultural, security, maintenance, warehouse, and other sectors.  A company runs an office building, a farm, or a warehouse and contracts with a staffing companies to provide all the janitors and security guards who work in the building, or all the farmworkers who pick and pack the crops, or all the workers who load and unload, pack and unpack the boxes in a warehouse.

The Board majority decided that BFI and Leadpoint are joint employers of the recycling plant workers such that, if in the union election conducted in April 2014 a majority of the workers voted to unionize (the ballots were impounded so the outcome of the election is not publicly known), both BFI and Leadpoint would be obligated to bargain with the union.  This matters because if the union wishes to negotiate for a pay increase, for changes in the safety procedures or the speed at which the conveyor belts operate, for protections against unfair discipline, or for employer-provided health insurance, both BFI and Leadpoint would be required to negotiate.  A union could try to negotiate for improved conditions only with Leadpoint, but if BFI refused to change its practices, the agreement with Leadpoint would accomplish nothing.  Or, worse, if Leadpoint agreed to a pay raise or to a different work schedule and BFI would not agree to revise its agreement with Leadpoint to cover the additional cost, BFI would just terminate its agreement with Leadpoint.  Leadpoint would then fire all the workers (because it would have no jobs for them), and BFI would probably find some other labor contractor to hire the workers and send them right back to the BFI plant without the union they chose and without the improved conditions they negotiated for.

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Today’s News & Commentary — August 28, 2015

The National Labor Relations Board released its groundbreaking ruling in Browning-Ferris, which considers a company that hires a contractor to staff its facilities to be a joint employer of the workers at that facility. According to the New York Times, a union at a franchisee would now be immediately entitled to negotiate not only with the franchise owner but also with corporate headquarters. The decision may also make it easier for unions to form at all, as parent companies (now joint employers) will no longer be able to use the tactic of shutting down franchises on the verge of unionizing. The 3-2 decision fell along partisan lines and, according to the Washington Post’s Lydia DePillis, “created sharp disagreements within the labor board,” in which the dissent accused the majority of going beyond the Board’s authority. DePillis writes that the NLRB’s action is “just the latest to tackle the trend” of employers misclassifying workers as independent contractors.

One St. Louis resident and outspoken #BlackLivesMatter supporter is less enthusiastic about an increase in the minimum wage. Lydia DePillis writes that Democratic Alderman Antonio French fears that a minimum wage increase will push businesses to relocate. For French, low-paying jobs are better than none, and the city needs to conduct a formal study to determine how an increase will impact on the local economy. But for other activists, French’s concerns about the increase are unwarranted and inconsistent with his other statements. Community organizer Ashli Bolden told the Washington Post, “He’s screaming black lives matter, but we don’t deserve higher wages?”

As the California legislature draws to a close, the assembly members voted to shelve the bill on an increase in state minimum wage. The Los Angeles Times reports that the Appropriations Committee plans to keep the minimum wage increase on the agenda for next year, and may raise wages by region rather than across the state. The Legislature also tabled the vote to provide work permits to agricultural laborers in the country without documentation. “I am deeply disappointed that thousands of undocumented farmworkers throughout the state will continue to live in limbo and fear, despite their significant contributions to California and its economy,” Assemblyman Luis Alejo of Watsonville said.

Vikas Bajaj of the New York Times commented on the Bangladeshi Dhaka High Court’s ban of the the release of a film about the collapse of the building that killed more than 1,100 garment workers in 2013. A labor leader brought the case against the movie, Rana Plaza, out of concern that the film did not sufficiently credit labor unions for trying to protect workers. The court feared that the documentary would “negatively portray” the Bangladesh’s garment industry.

N.L.R.B. Broadens Joint-Employer Status in Browning-Ferris Decision

Today, the National Labor Relations Board ruled in the long-awaited Browning-Ferris Industries of California case that companies can be held responsible for labor violations committed by their contractors.  The decision can be found here.

According to The New York Times, the ruling means that “a company that hires a contractor to staff its facilities may be considered a so-called joint employer of the workers at that facility, even if it does not actively supervise them.”  As a result, “a union representing those workers would now be legally entitled to bargain with the upstream company, not just the contractor, under federal labor law.”  The decision opens the door to collective bargaining between workers and franchisors, such as McDonald’s, and may radically change how companies use contracted labor.

Guest Post: Should Workplace Supervisors Wear Body Cameras?

Andrew Strom is Associate General Counsel of SEIU Local 32BJ.

In the wake of several high profile incidents of police misconduct, there is growing support for proposals to require police officers to wear body cameras when they interact with the public.  This call for body cameras has resonated because in several high profile cases, bystanders happened to catch the incidents on video.  People have recognized the imbalance of power when police interact with the public, and they have recognized that body cameras promote police accountability by serving as a check against potential abuse of power.

While the consequences of police misconduct are obviously far more serious than the consequences of misconduct by workplace supervisors, recording interactions between supervisors and workers could similarly serve as a check on supervisors who misuse their authority.  When workers try to unionize, employers often enlist their supervisors to make the case against unionization.  But the argument that each individual worker is better off bargaining on her own rather than joining together with her co-workers is a tough sell, so supervisors often cross the line from lawful persuasion to unlawful threats.

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Today’s News & Commentary — August 27, 2015

Reuters reports that the 8th Circuit Court of Appeals has overturned an $18.77 million award to workers at a Tyson Foods meat processing plant in a wage and hour suit.  The court also rejected a $4.96 million award to workers at a different plant.  Workers alleged that Tyson did not pay them for time spent on activities before and after their shifts for activities “such as putting on and taking off required clothing; cleaning and maintaining equipment; and walking to and from the production line, lockers and wash stations.”  The court found there was insufficient evidence of an agreement to pay the workers for the activities, and so the claims failed as a matter of law.

According to The Wall Street Journal, the average union election time has fallen 40% since a new N.L.R.B. regulation for private-sector workplaces took effect earlier this year.  Since the regulation took effect in April, the average election process has taken 3 weeks, as opposed to 5 weeks or more during fiscal year 2014.

The Gap will become the most recent retailer to abandon the controversial practice of “on-call scheduling,” notes The New York Times.  Workers will no longer have to call ahead and be available for last-minute shifts, and will have 10 to 14 days’ notice of their shifts.  The lack of predictability of work schedules ensuing from the former practice drew criticism from regulators and advocates, and studies showed it had averse affects on families.

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Today’s News & Commentary — August 26, 2015

Business leaders have begun ramping up efforts to meet with legislators in anticipation of the NLRB’s Browning-Ferris decision, expected this week. According to Lydia DePillis at the Washington Post, an organization called the Coalition to Save Local Businesses, consisting of 20 associations including some of the biggest restaurant, hotel, retail, and construction lobby groups in the country, was formed earlier this year. Over the past few months, the Coalition has testified before Congress, run ads, and most recently, hosted a lunch for House minority whip Steny Hoyer (D-Md.). Their efforts are in anticipation of a potential ruling by the NLRB that would make franchisors and general contractors liable for legal violations of subcontractors, and allow workers to bargain directly with businesses at the top of the chain.

In the Browning-Ferris case, a Teamsters local tried to organize workers for the recycling company, hired through a temporary staffing agency called Leadpoint, and sought to bargain not only with Leadpoint, but also with Browning-Ferris as a joint employer. In a different case in 2014, the General Counsel of the NLRB stepped in to issue complaints against McDonald’s as a joint employer along with its franchisees. Catherine Fisk analyzed the two cases and their possible impact for OnLabor last year. According to Politico, workplace advocates and business groups all generally agree that the NLRB will loosen the “joint employer” standard in the decision expected this week, expanding liability for businesses.

According to The Wall Street Journal, a report by the Congressional Budget Office projects more American workers who have been out of the workforce temporarily will return in the coming years, at a faster rate than anticipated. The labor-force participation rate is already at its lowest level since 1970, and will continue to decline as baby boomers retire, but many think that the return to the job market that the CBO forecasts could explain why wages have remained low in spite of recent drops in unemployment. Continue reading

Today’s News & Commentary — August 25, 2015

Target has agreed to pay $2.8 million to more than 3,000 applicants for upper-level jobs at the company who were rejected due to tests that had disparate impact across race and gender groups, according to the Minneapolis Star-Tribune.  The EEOC’s acting director in Minneapolis, Julie Schmid, announced the company’s settlement with the agency.  “The tests were not sufficiently job-related,” Schmid said. “It’s not something in particular about the contents of the tests. The tests on their face were neutral. Our statistical analysis showed an adverse impact. They disproportionately screened out people in particular groups.”  The groups adversely affected by the tests were reportedly African-Americans, Asians, and women.

Labor Secretary Tom Perez expressed support for the Fight for $15 movement, according to the Huffington Post.  “I’m proud to stand with the Fight for 15 movement,” he said. “And it really is a movement. It’s for shared prosperity.”  This comment should not be confused with blanket support for a federal $15 minimum wage, something the Obama administration and the Department of Labor have shied away from.  Nevertheless, the statement did emphasize Perez’s support for collective action in advancing workers’ rights.  “People are increasingly understanding that they’re taking it on the chin at work,” he added. “If you battle your boss alone, it’s a heck of a lot harder to succeed. But when you work in concert with fellow workers not just in your workplace but across sectors, that’s how you succeed.”

Lydia DePillis at the Washington Post explored the possible fallout from the Chinese economic turmoil in the United States.  As America’s third-largest export market, a slowdown in Chinese consumption could hit some sectors of the U.S. economy hard.  Because the three largest exports to China are soybeans, aircraft, and passenger cars, negative effects are most likely to be felt in agricultural states, southern car-manufacturing communities, and Washington state, which sells $15.3 billion in airplanes and agricultural exports to the country.  If the Chinese slowdown continues to depress demand for oil, however, certain industries that have high energy costs could see benefits through lower oil prices.

The Los Angeles Times editorial board weighed in on the battle between taxi drivers and ride-sharing companies Uber and Lyft for access to riders at Los Angeles International Airport.  Staking out a middle ground, the board called on the Los Angeles city council to grant Uber and Lyft access to LAX due to the airport’s poor transportation options while also urging the the council to reform taxi regulations and provide more uniformity to laws affecting taxi and ride-sharing companies in order to level the playing field.