US labour board takes action on sharing economy jobs
A US labour board voted on Thursday to redefine the employee-employer relationship, granting new bargaining powers to workers in an economy increasingly reliant on subcontractors, franchisees and temporary staffing agencies.
The decision by the National Labour Relations Board could upend the traditional arm's-length relationship that has prevailed between corporate titans such as McDonald's and its neighbourhood franchises. And it comes as concerns are growing about a generation of new internet-driven business such as Uber and Lyft that depend heavily on independent contractors that often do not have the benefits and protections of full-time employees.
In a case that drew intense lobbying by both business and union groups, Democratic appointees on the panel split 3-2 with Republicans to adopt a more expansive definition of what it means to be a "joint employer". The decision makes it more difficult for companies to avoid responsibility for the treatment of employees by outsourcing work to others.
In doing so, the panel sided with labour advocates and academics who have described an increasingly fissured economy, in which whole industries have been built on business models that offer workers few of the protections of a traditional employer relationship. "With more than 2.87 million of the nation's workers employed through temporary agencies in August 2014, the board held that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances," the board said.
The board's action is just the latest to tackle the trend. The Department of Labour has cracked down on employers who misclassify workers as independent contractors, and the Occupational Safety and Health Administration has directed inspectors to consider whether principal employers might be at fault for the safety violations of their subcontractors. Courts, meanwhile, have been scrutinising companies like FedEx and Uber for their use of contractors. Employers are pushing back. Businesses that might be subject to the new joint employer definition have warned that it could undermine established business practices that have kept the US economy competitive by holding down labour costs.
As a result of the decision, some businesses may try to legally distance themselves from their partners to avoid joint employer status, but others may find they need to exert more control. Corporations are "trying to have it both ways - have the benefits of the control, and not the disadvantages", said Timothy Glynn, a professor at Seton Hall University School of Law.