AIMBlog_Logo_Resized

NLRB Ruling Alters Workplace Landscape

Posted by Michael Rudman on Aug 28, 2015 1:55:00 PM

The National Labor Relations Board (NLRB) has fundamentally altered the workplace landscape for companies that hire contractors to staff their facilities.

ManufacturingWorkerSmallThe NLRB ruled in a 3-to-2 decision yesterday that a company that hires a contractor to staff its facilities may be considered a joint employer of the workers at that facility, even if the company does not actively supervise them. A union representing those workers would therefore be legally entitled to bargain with the parent company, not just the contractor, under federal labor law.

The ruling, which is likely to be challenged in court, could also expose employers to regulatory and legal liability based upon the actions of contractors.

“The ruling is bad news for employers in many industries who use third-party labor providers. Companies use labor contractors to staff up during busy times or to permit themselves to concentrate on their core business, but the NLRB ruling may change that,” said Gary MacDonald, Executive Vice President of the Employers Resource Group at Associated Industries of Massachusetts.  

NLRB Chairman Mark Gaston Pearce was joined by fellow Democrat-appointed members Kent Y. Hirozawa and Lauren McFerran in the majority opinion; Republican members Philip A. Miscimarra and Harry I. Johnson III dissented.  

"The majority’s decision will have the effect of disturbing legitimate business relationships and cause businesses to become embroiled in the labor disputes of their commercial partners," said Rob Fisher, a labor lawyer for the Boston law firm Foley Hoag LLP and chair of the AIM Human Resources Committee.

"What is disingenuous about the decision is the majority’s repeated insistence that it merely restated the existing joint employer test.  As the dissent correctly points out, the majority’s approach removes all limits on the kind or degree of control necessary for joint employer status.  This a major shift in federal labor law."

The NLRB applied what it called long-established principles to find that two or more entities are joint employers of a single work force if (1) they are both employers within the meaning of the common law;  and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the NLRB said it will - among other factors - consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so. 

The consequences of the ruling could be far reaching. Here are a few examples:

  • A contractor that provides laborers to a distribution center is charged by the NLRB with an unfair labor practice. Any judgement could be entered against the distribution center operator as a joint employer.  That judgement could in very rare instrances include a so-called Giselle ruling against the third party requiring them to recognize a union in lieu of a vote.  The distribution center operator could be compelled to continue to use the third party employees even though they now may be no longer cost effective.
  • A union organizes a single unit of a franchised fast-food operator.  The parent company could be compelled to negotiate with the union and, by extension, provide financial support if the economic circumstances of the franchisee prohibit funding the new contract. If the corporate parent were to agree to pay higher wages or provide better benefits, it would apply only to that particular restaurant, in the same way that concessions granted to employees in a single unionized portion of a national company that is not franchised apply only to that portion. At the same time, however, the concessions may give unionized employees at other locations practical leverage in their negotiations with the company.

“This change will subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts, and picketing,” Miscimarra  and Johnson wrote in their dissent.

Employers believe they should not be required to bargain with employees of their contractors or franchisees, and should not be held liable for labor-law violations involving workers over whom they exert only indirect supervision. The NLRB rejected that logic.

“It is not the goal of joint-employer law to guarantee the freedom of employers to insulate themselves from their legal responsibility to workers, while maintaining control of the workplace,” the labor board majority wrote.

Fisher at Foley Hoag warns that businesses with existing contracts for the supply of workers or subcontracting arrangements should not assume that the decision is stayed pending the outcome of any court challenges.

"The NRLB’s position is usually the opposite, so we can assume that unions will now be asserting the new joint employer test and that the NLRB will be applying it.  I certainly encourage businesses to review their contractual relationships and to identify potential areas of risk.  However, the Board’s apparent emphasis on indirect control as being sufficient to establish joint employer status means that normal contractual demands relating to the timing, manner and quality of performance by a vendor may be enough," he said.     

Topics: Unions, National Labor Relations Board, NLRB

High Court Expands Employer Rights; Restricts Union Dues

Posted by Christopher Geehern on Jun 30, 2014 1:34:14 PM

The United States Supreme Court ruled this morning that public-employee unions cannot compel non-members to pay union dues and that some companies with religious objections may opt out of the contraceptive requirement of federal health reform.

The twin 5 to 4 decisions on the final day of the Court session are broadly seen as beneficial for employers and a major setback to fast-growing public labor unions.

The Court ruled in Burwell versus Hobby Lobby that the government may not require closely held corporations where owners maintain religious objections to contraception to provide contraception coverage to employees as part of their insurance benefit. The government may, the justices ruled, provide that coverage itself.

Religious employers, such as churches, and religious non-profit organizations that object to contraception are already exempt from the contraceptive mandate of the Affordable Care Act (ACA). Such accommodation require the insurance issuer to exclude contraceptive coverage from the employer’s plan and provide plan participants with separate payments for contraceptive services without imposing any cost.

“(The Religious Freedom Restoration Act)’s text shows that Congress designed the statute to provide very broad protection for religious liberty and did not intend to put merchants to such a choice,” Justice Samuel Alito wrote for the majority.

“It employed the familiar legal fiction of including corporations within RFRA’s definition of ‘persons,’ but the purpose of extending rights to corporations is to protect the rights of people associated with the corporation, including shareholders, officers, and employees. Protecting the free-exercise rights of closely held corporations thus protects the religious liberty of the humans who own and control them.”

The decision on union dues came in a case out of Illinois called Harris versus Quinn.

The Court ruled that the First Amendment prevents the Service Employees International Union (SEIU) from charging a fee to home services personal assistants who choose not to join the union. The decision turned on the fact that the personal assistants are not full-fledged state employees, but rather answer to the customer.

“PAs are almost entirely answerable to the customers and not to the State, do not enjoy most of the rights and benefits that inure to state employees, and are not indemnified by the State for claims against them arising from actions taken during the course of their employment,” the Court wrote.

Topics: Unions, Religious Objections, Union Dues

Supreme Court Affirms Limits on Union Assessments to Non-Members

Posted by Christopher Geehern on Jun 21, 2012 10:54:00 AM

The United States Supreme Court affirmed today that unions may not force non members to fund political activities without permission.

UnionsThe high court ruled 7-2 in Knox vs. SEIU that the Service Employees International Union violated the First Amendment rights of government employees in California by assessing them for the cost of two political campaigns without seeking their affirmative consent. The employees were part of an “agency shop” where all workers are represented by a union, but where employees could decline to join the union as long as they pay the union a fee to cover non-political expenses.

Unions are required to provide a so-called Hudson notice to non-members allowing them to opt-out of contributions to be used for political activities with which they disagree.

“There is no justification for the SEIU’s failure to provide a fresh Hudson notice. Hudson rests on the principle that nonmembers should not be required to fund a union’s political and ideological projects unless they choose to do so after having ‘a fair opportunity’ to assess the impact of paying for nonchargeable union activities,” Associated Justice Samuel Alito wrote for the majority.

“The SEIU’s procedure cannot be considered to have met Hudson’s requirement that fee-collection procedures be carefully tailored to minimize impingement on First Amendment rights."

The Court did not accept the SEIU’s broad definition of non-political activities that could be charged back to employees who elected not to join the union.

“First, the SEIU’s understanding of the breadth of chargeable expenses is so expansive that it is hard to place much reliance on its statistics. ‘Lobbying the electorate,’ which the SEIU claims is chargeable, is nothing more than another term for supporting political causes and candidates,” the decision states.

Alito was joined in the majority by Chief Justice John Roberts and Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, Sonya Sotomayor and Ruth Bader Ginsburg.

The Knox decision echoes a ruling in the private sector from the 1980s - Beck vs. Communication Workers of America - in which the Court ruled that objecting nonmembers may not be required to pay union dues. Rather, the Court found that objecting employees may only be compelled to pay an agency fee, an amount that encompasses only costs associated with collective bargaining, contract administration, or grievance adjustment.

Topics: Unions, Issues, Human Resources, U.S. Supreme Court

House Bill Would Make Private Day-Care Providers Public Employees

Posted by John Regan on May 31, 2012 10:28:00 AM

Don’t be surprised to see your neighborhood day-care provider wearing a union tee-shirt the next time you drop your children off for the day.

Day CareThe Massachusetts House of Representatives passed legislation yesterday under which every private-sector family child-care provider receiving public funds to provide service to low-income or at-risk children would be declared a “public” or “state” employee. These new “public employees” would then be subject to a “card check” system and be “represented” by a single labor union.

Yesterday’s 117-32 vote came several weeks after legislators effectively killed a similar measure aimed at institutional child-care facilities.

AIM opposed both measures because they benefit unions rather than children. The proposals represent a clear and unprecedented intrusion by government into private business.

The bill says it would move private-sector employees into a collective bargaining unit for the following stated purposes:  

  • Develop and encourage education and training opportunities for family child care providers;
  • Improve the recruitment and retention of qualified providers;
  • Reimbursement and payment procedures;
  • The rate structure for family child care providers;
  • The rate structure for voucher and contracted payments for family child care services on behalf of low-income and other at risk children.

These duties are already the responsibility of state government, either the Department of Early Education and Care or the legislature. There is no need to create a “public employee” union to address the issues enumerated in the bill.  

AIM is not anti-union.  And we have been strong and visible supporters of efforts to improve early education opportunities in Massachusetts.

But this bill lacks logic and does nothing to advance the interest of children.

How did your legislator vote?

Topics: Unions, Associated Industries of Massachusetts, Labor

Subscribe to our blog

Browse by Tag