Newspaper article The Christian Science Monitor

Labor Ruling Could Shake Up Franchise, Temporary Staffing Industries

Newspaper article The Christian Science Monitor

Labor Ruling Could Shake Up Franchise, Temporary Staffing Industries

Article excerpt

A landmark ruling from the US National Labor Relations Board on Thursday could make it easier for labor groups to negotiate directly with major fast food corporations on behalf of their employees.

The ruling could shake the foundation of multiple major industries built on franchising and contract labor by redefining the board's standard for when parties can be identified as employers. According to the 3-2 decision, parent companies can be held liable for labor violations committed by franchisees and contractors even when they only have indirect control.

The ruling is expected to impact major US industries, including fast food, hospitality, security, and construction.

Fast food companies in particular could see an immediate impact. Unions have struggled to organize workers in the restaurants because they are often run by franchisees who are considered small business owners, despite paying fees and adhering to standards set by a parent company like Wendy's or McDonald's Corp.

The decision ruled that the existing standard, which says parent companies only qualify as "joint employers" of workers hired by another business if they had "direct and immediate control" over employment matters, was outdated. The board noted that there were over 2.8 million workers in the US employed through temporary agencies last summer, and that its former joint employer standard has "failed to keep pace with changes in the workplace and economic circumstances."

The case involved a waste management company in California, Browning-Ferris Industries, which used the staffing agency Leadpoint Business Services to supply it with workers. The board ruled that Browning-Ferris is a joint employer of the workers.

Unions could now be able to negotiate directly with parent companies to win higher wages and better working conditions. In the past they've struggled to achieve industry-wide reforms because they have had to deal with a patchwork of hundreds of thousands of franchises. …

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