In recent decades, U.S. companies increasingly have sought to jettison workforce headaches by jettisoning the workforce, turning to staffing agencies to supply employees rather than employing them directly.
The ranks of temporary workers have swelled to more than 3.4 million nationwide, or more than 2% of total U.S. jobs, according to the National Employment Law Project. Temps are attractive to businesses because the workers often don’t get health benefits and can be cut quickly.
But that employment arrangement was dramatically altered last week when the National Labor Relations Board ruled that a Silicon Valley recycling center was a “joint employer” along with the staffing agency that provided that facility’s workers.
The ruling determined that companies using workers hired by another business — including temp agencies, contractors and fast-food franchisees — are also responsible for labor violations. Those firms could also to required to bargain with unions representing outsourced employees, along with the staffing agency or franchise that hires them.
The Times sat down with Victor Narro, project director at the UCLA Labor Center, to discuss possible ramifications of the NLRB decision. Here is an edited excerpt of that conversation.
Let’s start with the basics. What is the NLRB and what does it do?
The NLRB is the agency that regulates and implements the National Labor Relations Act. It’s also known as the Wagner Act, created in 1935. This is the act that covers labor laws relating to unions, and it covers most private sectors. The NLRB handles violations of anything from interfering with labor elections to interfering with the basic fundamental right to engage in concerted action to address workplace problems.
Other agencies also regulate labor. The Department of Labor’s jurisdiction is the Fair Labor Standards Act, which covers minimum wage, overtime laws. The Equal Employment Opportunity Commission handles discrimination. And each state has its own Department of Labor
The ruling altered the definition of a “joint employer.” What was it before, and how has the decision changed that?
Under the Reagan administration, the appointees to the National Labor Relations Board came up with a strict definition of what constitutes a joint employer. The definition focused on the degree of control. You had to have direct control over operations, hours, working conditions. Unless you were able to show that, you were not able to hold the parent company liable.
With this new definition, you no longer have to show direct control over operations. If you have a franchise agreement or a contractual relationship, depending on the industry, that is enough to show you have influence over working conditions.
What does that mean, practically speaking, for workers employed by a staffing agency or contractor?
The NLRB loosened the definition of a joint employer, and that is really how you hold employers or a company liable for unlawful violations of a staffing agency or contractor.
Over the last 25, 30 years, employers have used staffing agencies and subcontracting arrangements to evade liability. That way if there is a labor violation, companies can claim that they were not the employers and that you have to deal with contractors. The problem is many of these contractors are illegitimate. Going after the contractor, whether it’s for wage violations or labor violations, you are really not going to get anything. They just shut down and declare bankruptcy.
Now, that company is also liable, not just the contractor.
How could workers at franchises, say McDonald’s or Burger King, use this ruling to their benefit? Especially fast-food workers who have been protesting for better working conditions and a $15 an hour minimum wage?
Part of the strategy of that campaign is to bring McDonald’s and similar parent companies to the table as far as any issues dealing with labor violations. McDonald’s has been saying these issues have to be dealt with independently at franchisees.
Under the NLRB ruling, if there is an opportunity to engage in unionization, McDonald’s would have to come to the table to negotiate. It can’t just be franchisees. McDonald’s can also be held responsible for any attempt to stop workers from unionizing or any interference, including intimidating workers or retaliating against workers trying to unionize.
The NLRB also has the power to influence the Department of Labor and other federal agencies that cover other areas of worker law. It’s very easy to see a possible scenario where you are using the same joint liability standard. You could argue that in court and go before a judge, or you could try to get the Department of Labor to change its definition.
Could this decision boost union membership, which has been declining for decades?
Yes, it creates an incentive for workers to realize they have power. It creates an effective message for unions to relate to the workforce: that you no longer have to get caught up in just franchisees, there is now a way to bring the flagship corporation to the table to negotiate. The labor movement has been sparked by this decision, from what I’ve seen.