The National Labor Relations Board has overruled its 2015 Browning-Ferris Industries decision and turned the clock back on the board's test for determining whether multiple employers are joint employers under the National Labor Relations Act.
"W$3 e return today to a standard that has served labor law and collective bargaining well, a standard that is understandable and rooted in the real world", Chairman Philip A. Miscimarra (R) and Members Marvin E. Kaplan (R) and William J. Emanuel (R) said in a 3-2 ruling.
The National Restaurant Association, which feared the 2015 ruling threatened the franchisee model, hailed the board for its decision.
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A US labor board's newly minted Republican majority on Thursday overturned an Obama-era ruling that had irked business groups by making it easier for unions and workers to hold companies accountable for the practices of staffing agencies, contractors and franchisees with which they partner.
The International Franchise Association and National Restaurant Association, which represent McDonald's and other fast-food restaurant operators, have been especially vocal critics of the Browning-Ferris standard, arguing it could doom the franchising industry.
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Essentially, prior to the 2015 ruling in Browning-Ferris, companies were recognized as joint employers of workers hired by another business if they had "direct and immediate" control over working conditions. Under the "direct or indirect" standard, a franchisor (such as the McDonald's corporate business) became much more likely to be held as a joint employer with its independent franchisees (such as the local McDonald's in your neighborhood).
Many companies use franchising or contract labor in part to avoid the costs and responsibilities of directly employing workers.
In a statement, NLRB said in all future and pending cases two or more entities will be deemed joint employers under the National Labor Relations Act (NLRA) if there is proof that one entity has exercised direct and immediate control over essential employment terms of another entity's employees.
This was convoluted and confusing in regards to franchising.
The case challenged a previous ruling that found a contractor to be a joint-employer with a construction company.
On Thursday, the board said the Democratic majority in Browning-Ferris overstepped its authority by altering the legal definitions of employment.
"This case is not a proper vehicle for reconsidering the joint-employer standard to begin with, and the majority's failure to permit public participation only worsens matters", according to the dissent.