New NLRB rule undermines American workers

When workers come together to stand up for their rights — including decent pay and benefits, a safe workplace free from harassment and discrimination, and the ability to bargain over work conditions — the government should be on their side and hold accountable corporations with the power to fix problems and raise standards. Yet, the National Labor Relations Board, the federal agency charged with policing U.S. workplace relations, is preparing changes that threaten the power of workers to exert these rights.

The board recently published a draft rule to undermine “joint-employer liability” safeguards which recognize that the company that signs a worker’s paycheck may not be the company that controls workplace conditions. While the NLRB was forced to vacate a previous effort to weaken these standards due to one member’s conflict of interest, Trump’s NLRB appointees have not given up on this effort.

{mosads}Ordinary Americans will face consequences if the board is successful. In September, McDonald’s workers in 10 cities staged a day-long #Metoo strike. The workers say that sexual harassment too often goes unchecked and that workers who speak out against these abuses have been punished with reduced hours and even illegal firings. While McDonald’s released a statement arguing that the company has “policies, procedures and training in place that are specifically designed to prevent sexual harassment” and it believes its franchises “share this commitment,” workers are demanding the formation of a committee to address sexual harassment company-wide that would include workers, franchises and McDonald’s corporation. By weakening the NLRB rule, workers’ freedom to engage in strikes without facing illegal retaliation is jeopardized and corporations with the power to improve conditions will have less incentive to come to the table.

Indeed, corporations can cut pay, lower workplace standards, and increase their own profits by outsourcing their workforce — a practice increasingly common in working-class jobs, including restaurant and hotel workers, janitorial positions and security officers, homecare workers, farm laborers, coal miners, and construction and warehouse workers.

Studies show that outsourced workers earn lower pay than non-outsourced workers; experience more workplace injuries and deaths in some industries; and are frequently cheated out of minimum wage and overtime. Government investigations of the heavily-franchised fast food industry found violations of the federal minimum wage law 75 percent of the time in recent years.

To be sure, most corporations do not outsource workers with the aim of violating workplace laws nor would they be found to liable under existing regulations. However, some corporations may be relinquishing the official title of employer but not the power to control their labor suppliers’ business decisions or workplace conditions.

During the Obama administration, the NLRB strengthened the joint-employer standard to help ensure workers are free to engage in collective protest and come together in unions no matter their employer’s corporate structure. This protection, enumerated in Browning-Ferris Industries of California, also helps ensure that corporations respect the rights of small businesses to operate independently.

The NLRB initiated the latest rulemaking to undo Obama-era protections only after it failed to achieve the same goal through adjudication. In December 2017, the Board voted to weaken joint-employer protections in a ruling on construction contractor Hy-Brand Industrial Contractors, Ltd. However, it was forced to vacate that decision after NLRB Inspector General David Berry found that member William Emanuel broke President Trump’s own ethics rules.

As a former employee of a firm that represented a party in the Obama-era case, Berry found that Emanuel should have recused himself from the Hy-Brand vote and noted that rather than engaging in a new deliberative process, the board relied on the “wholesale incorporation of the dissent in Browning-Ferris into the Hy-Brand majority decision.”

Yet little has changed in the board’s regulatory approach. The draft rule is again “almost verbatim the same standard articulated in Hy-Brand,” according to former NLRB member Sharon Block.

Moreover, the board fails to present compelling evidence of a need for the change. Outsourcing firms are doing just fine. Employment growth in the franchise industry is outpacing the private sector and the temporary staffing industry continued to grow in the years after the Browning-Ferris decision.

Indeed, some small businesses oppose measures to weaken joint-employer protections, arguing that doing so may harm their competitive edge since lawbreaking companies could cut labor costs by violating workers’ rights.

And, while opponents of worker protections claim that ensuring subcontractor compliance with the law is too confusing, large companies often review their subcontractors’ workplace records. For example, at least eight of the top 10 U.S. Department of Defense contractors in 2016 had experience reviewing their contractors’ records.

The NLRB’s joint-employer safeguard provides an important check on corporate power by helping to ensure leading firms bargain over decent pay and work conditions. Without strong protections, workers will be vulnerable to violations of their rights, and small businesses will have less control over their own business decisions.

Karla Walter is the director of Employment Policy at the Center for American Progress.

Tags Donald Trump joint-employer liability joint-employer standard National Labor Relations Board

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