News & Commentary

August 21, 2022

Kevin Vazquez

Kevin Vazquez is a student at Harvard Law School.

In California, AB 257—a bill that could nudge the U.S. labor market closer to a form of sectoral bargaining—is inching toward becoming law. The bill, which is advancing through the state legislature, has two components. First, it would dramatically alter the franchise model by making corporate franchisors—such as McDonald’s—automatically liable for their franchisees’ violations of state employment laws, regardless of the franchisors’ direct control over the workers or their working conditions. This is a substantial departure from prevailing joint employment rules, which generally require that a franchisor exert direct control over a franchisees’ employment policies or practices in order to be held liable for violations. Second, and perhaps even more importantly, the bill would inaugurate a form of bargaining by sector into California by creating a council that sets workplace standards, including wages, hours, health and safety, and other terms and conditions of work, that cover the state’s entire fast-food industry. It envisages a distinctly American style of tripartism—or corporatism—which involves bargaining between a representative of employers, employees, and the “public” (or government). This scheme is not a true form of sectoral bargaining, through which union negotiate industry-wide standards that apply to all workers performing labor in a given sector directly with major employers within that sector, because NLRA preemption prevents states from mandating a true sectoral bargaining system. Barring an update to federal labor laws, a tripartite sectoral council is the best option remaining to innovative states seeking to expand workers’ bargaining power in low-wage industries.

Nonetheless, AB 257 contemplates a significant deviation from the traditional principles of U.S. labor law—and most particularly the National Labor Relations Act (NLRA)—which, of course, envision bargaining at the individual work-site level. Even so, such a system has a history in American labor relations, even at the federal level—though, if passed, AB 257 would establish by far the most significant sectoral council system in modern American history. Most notably, the bill is broadly analogous to the largely forgotten “industry committees,” or wage boards, which existed in the early years after the Fair Labor Standard Act’s (FLSA) enactment. FLSA’s short-lived industry committees also established a tripartite bargaining system: a council comprising representatives of unions, business associations, and the “public” negotiated to set wages on an industry-by-industry basis, which successfully raised wages for hundreds of thousands of American workers. If enacted, AB 257 could have a similar impact, transforming the fast-food labor market in California and shifting power toward workers and unions, the consequences of which could be especially stark in a sector that is particularly exploitative and has traditionally proven so invulnerable to labor organizing.

Business groups, such as the Chamber of Commerce and conservative thinktanks, in addition to individual franchisees and restaurant owners, have launched a predictable campaign in opposition to AB 257, arguing that its standards are “anti-competitive” and will make it no longer financially viable to franchise or operate restaurants within the state, and many small business owners descended on the State Capitol to broadcast their opposition to the bill. Their staunch opposition to the bill highlights its potential to dramatically alter the balance of power between capital and labor within the state, which could serve as a blueprint that could be exported to other states and, eventually, even nationwide, as Rep. Ro Khanna—a California Democrat who has been a major supporter of the bill—noted earlier this month, saying it “would help lay the groundwork to expand sector councils not only in California but across the United States—a watershed moment for the low-wage workforce nationwide.” Whether such a broader impact will in fact occur remains to be seen, but, in any event, the first step is for the bill to advance through the state legislature and end up on Governor Newsom’s desk.

In other news, the NLRB vacated a 2020 decision on Friday, ExxonMobil Research & Engineering Co., in which former Board member (and Littler Mendelson attorney) William Emanuel—appointed by President Trump in 2017—participated despite an alleged conflict of interest. The Board, in its order to vacate the decision, cited Emanuel’s extensive stock holdings in Exxon Mobil Corp.—which allegedly totaled more than $50,000—that were not disclosed to federal regulators as he decided the case. Although the Justice Department declined to bring charges against Emanuel for violating the ethics agreement he signed upon joining the NLRB, the Board nonetheless concluded that “[v]acatur eliminates any possibility that a decision tainted by bias based on a financial conflict of interest will have legal effect,” and it “adds a further, appropriate disincentive to violate the statute.” The Board is reviewing four other cases in which Emanuel may have had financial conflicts, though he has denied any wrongdoing in a 2021 statement.

A Saturday piece in the New York Times, featuring interviews with members of Teamsters Local 804 in New York City and Local 767 in Texas, details the life-threatening conditions endured by many UPS workers as record-breaking heat waves have swept across the U.S. this summer. As millions have been placed under heat advisories and warnings throughout the country, UPS workers, and others who haul freight and deliver packages, have been forced to work in trucks that often have no colling mechanism—and whose blistering internal temperatures can climb beyond 150 degrees. These conditions have endangered workers’ lives and led to a string of heat-related illnesses among drivers, including heat exhaustion, and some drivers have even died because of heat exposure—a number that, according to the Teamsters, is severely underreported. These dire conditions have led to renewed public interest in UPS drivers’ working conditions, and they will certainly be at the forefront of negotiations when the Teamsters begins to negotiate its new contract with the company later this year.

Finally, for those in the Greater Boston area, Bernie Sanders, along with AFA President Sara Nelson and Teamsters President Sean O’Brien, will be hosting a rally in Cambridge Common Park at 1:00 p.m. this Sunday to support the working class and “fight back against corporate greed.”

Enjoy OnLabor’s fresh takes on the day’s labor news, right in your inbox.