San Francisco Chronicle

Unions, workers lose some leverage

- By Noam Scheiber Noam Scheiber is a New York Times writer.

The National Labor Relations Board on Thursday overturned a key Obama-era precedent that had given workers significan­t leverage in challengin­g companies like fast-food and hotel chains over labor practices.

The ruling changes the standard for holding a company responsibl­e for labor law violations that occur at another company, like a contractor or franchisee, with which it has a relationsh­ip.

The doctrine also governs whether such a corporatio­n would have to bargain with workers at a franchise if they unionized, or whether only the owners of the franchise would have to do so.

While most labor law experts expected the labor board, which gained a Republican majority only in late September, to overturn the board’s jointemplo­yer decision from 2015, the speed came as a surprise to many.

“Frankly, it’s shocking,” said Wilma Liebman, a former Democratic appointee on the board who once served as its chairwoman.

The board’s 3-2 vote, along party lines, restores the pre-2015 standard, which deemed a fast-food corporatio­n a joint employer only if it exercised direct and immediate control over workers at the franchise, and in a way that was not limited.

Employer groups had been agitating to undo the standard that was set under President Barack Obama almost from the moment it was decided, and they applauded the decision.

“Today’s decision restores years of establishe­d law and brings back clarity for restaurant­s and small businesses across the country,” Cicely Simpson, executive vice president of the National Restaurant Associatio­n, said in a statement.

The key question in determinin­g whether a company, like a fast-food corporatio­n, is a joint employer of workers with another company, like a franchise, is the degree of control exercised by the corporatio­n. The ruling declared that such control must be direct.

Under the Obama-era doctrine, the fast-food corporatio­n could be held liable for labor violations that occurred at the franchise even if the control it exerted was indirect — for example, if it required the franchisee to use software dictating certain scheduling practices — or if it had the right to exercise control over workers that it nonetheles­s didn’t exercise.

The reversal could have important implicatio­ns for the ability of workers to win concession­s from employers through collective bargaining. In many cases, a contractor or franchisee has such low profit margins that it could not afford to raise wages or improve benefits even if it wanted to.

But when a wealthier company employing a contractor or conferring a franchise is considered a joint employer, it must join the bargaining and could in principle compensate workers more generously.

The reversal also could affect the ability to unionize. A company is free to fire a contractor or end a franchise arrangemen­t if it suspects that workers are on the verge of unionizing. But there could be legal liability for doing so if the company is a joint employer of workers with the contractor or franchisee.

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