Browning Commentary

There was a lot of good commentary late last week to the NLRB decision in the Browning-Ferris case, ruling that joint employer status applied to this contractor for the purpose of unionization and other labor law, potentially repealing some of corporations’ favorite strategies for protecting themselves from legal accountability. Let me link to a couple. First, Catherine Fisk:

The most interesting implication, given the recent strikes in the fast food industry, is whether the decision means that corporate restaurants like McDonald’s are the joint employer with their franchisees. The Board has cases pending that will present this issue and it will decide them in due course. The test the Board articulated in Browning-Ferris is that two entities are joint employers “if they share or codetermine those matters governing the essential terms and conditions of employment” which includes “hiring, firing, discipline, supervision, and direction,” as well as “wages and hours,” “the number of workers to be supplied, controlling scheduling, seniority, and overtime, and assigning work and determining the manner and method of work performance.” And the Board said the codetermination of these matters need not be done “directly and immediately, and not in a limited or routine manner” but it is enough if the control is exerted in an “indirect” or “routine” way so long as the user employer “affects the means or manner of employees’ work and terms of employment, either directly or through an intermediary.”

What the dissent is anxious about is precisely what workers’ rights advocates have been talking about for decades. Should companies that effectively dictate working conditions by the price they are willing to pay suppliers (whether it is suppliers of labor, as in Browning-Ferris, or suppliers of goods, as in supply chain cases) be obligated to bargain with the employees who supply that labor or those goods? Should janitors or security guards in an office building or warehouse workers be able to pressure the building manager or the logistics company (as opposed to the labor contractor for which they work) for a pay raise or safety protections?

One issue the Browning Ferris case does not decide but the dissent talks about at some length is whether the common law right of control test adopted by the majority also has implications for a different issue, which is the difference between employees (who are workers that a hiring entity has the right to control) or independent contractors (workers that the hiring entity does not control). The majority said little about this, but the dissent lambastes the majority for adopting a version of the common law test that might narrow the definition of independent contractor, making more workers employees. If the dissent is right, then the years long effort of Federal Express to run a huge package delivery service without employing any drivers might fail, and so, too, might Uber’s argument that it’s become the country’s fastest-growing taxi service by simply being a technology company that employs no drivers.

Great! Republicans’ worst nightmares are precisely what I and so many other labor supporters hope happens. These follow-up NLRB cases are going to be incredibly important and I think the fears of the dissent point the way they are probably going to go. Of course, there is a legal appeal as well that conservatives will push, which rationally should allow the NLRB jurisdiction but given conservative judicial activism may well not. E. Tammy Kim interviews people on both sides of this issue that lay out the stakes.

“The Board’s tortured analysis will undoubtedly be met with skepticism and will be rejected by local franchise owners, legislators and, ultimately, the courts,” said Steve Caldeira, president and CEO of the International Franchise Association. “IFA and its allies are asking Congress to intervene to halt these out-of-control, unelected Washington bureaucrats to preserve the established joint employer standard relied upon by America’s 780,000 franchise businesses and the 8.5 million jobs they directly create.”

While groups like the IFA accused the NLRB of ignoring the economic reality of the franchise structure, the Fight for $15 fast-food movement applauded the Board’s recognition that large corporations exert control over individual stores and restaurants.

“McDonald’s is the boss — that’s true by any standard,” said Kendall Fells, organizing director of Fight for $15. “The company controls everything from the speed of the drive-thru to the way workers fold customers’ bags. It’s common sense that McDonald’s should be held accountable for the rights of workers at its franchised stores.”

Although the NLRB’s ruling only applies to labor law and not employment cases — minimum wage, overtime or discrimination — it could influence other venues. Several such cases brought by Fight for $15 workers are pending in federal court.

“The Board has been out of whack with federal and state laws with respect to employment,” said attorney Moshe Marvit, fellow at the liberal think tank the Century Foundation. “The decision is influenced by other agency decisions, and OSHA (the Occupational Safety and Health Administration), for example, will follow the Board’s lead.”

The potential for that influence is real and could be meaningful, albeit pretty reliant on the Democrats winning the election in 2016. Meanwhile, what are conservatives saying? It’s pretty comic!

For example, the NLRB’s new standard could force Silicon Valley startups to hire the receptionists and cleaners they currently get from staffing or property management companies. It will adversely impact the innovative sharing economy, where technology has drastically lowered transaction costs, enabling people to come together to share services in novel new business relationships. In the end, some jobs will be absorbed by companies’ corporate headquarters, to minimize unexpected liability; some jobs will be eliminated. The NLRB has set back the clock 40 years, to an era of corporate giants when few people had the option of being their own bosses while pursuing innovative employment arrangements.

Also great! Outside of the double speak that claims exploitative working relationships is freedom.