Recent Employment Law Developments May Signal a Union Comeback

The last 30 years has seen a significant decline in union membership by workers in the United States, with a resulting decrease in the political power of unions. But a recent legal shift toward empowering collective bargaining may point towards a recovery.

The National Labor Relations Board (“NLRB”) recently issued a ruling dramatically altering the standard for when an employer using subcontractors could be treated as a joint employer of them. Under previous law a company wasn’t a joint employer — with the accompanying liabilities and responsibilities — unless it both possessed and exercised the authority to control employees’ terms and conditions of employment. Existing NLRB authority held that merely having the power to control a worker’s working conditions was not sufficient. However, in its August 27, 2015 ruling in the Browning-Ferris Industries case, the NRLB held that having the authority to control working conditions was sufficient to create a joint employment relationship, and that this control could be exercised through an intermediary rather than directly. This is a landmark ruling that could have significant effects on many industries who hire contract workers, franchisees, and temporary workers through staffing agencies. The ruling means that those companies can now be liable for the labor violations of their subcontractors or franchisees, and could be required to engage in collective bargaining with workers, even if they do not directly employ those workers.

The fast food industry may be hit hardest. Until now, it was very difficult for fast food workers to unionize and bargain with the parent company because they generally work for individual franchises. Now, large parent companies like McDonald’s may be required to bargain with their workers in their franchises if the employees can show that McDonald’s has the authority to control the working conditions in those franchises. The ruling could give workers significantly more power to demand increased pay and better working conditions from large parents companies who previously were insulated by their franchise agreements. But smaller companies also need to be aware of the potential liability implications of the ruling. If a company uses workers through a subcontractor or temporary workers hired from a staffing agency, it should be wary of potential liability for the direct employer’s labor law violations suffered by the workers. The workers would only need to show that the company had the authority to control the terms and conditions of their employment. Therefore companies must be careful when choosing a subcontractor or staffing agency and make sure that those companies are reputable businesses that abide by all applicable labor laws.

The NLRB has also recently enacted substantial changes to its union representation voting procedures, changes that also benefit and encourage unionization. The NLRB streamlined and modernized procedures, allowing electronic submission of election documents and shortening the time for union elections. Previously law automatically delayed elections for 25-30 days to allow time for the NLRB to conduct any requested reviews of the Regional Director’s hearing decisions. The NLRB abolished this automatic stay, as it determined that such reviews were rarely requested. Accordingly, employees can now conduct elections much more quickly, which gives employers less time to meet with employees after being given notice of union elections. These procedures took effect on April 14, 2015 and their full effects are not yet clear, but they will likely encourage increased union membership as union procedures become easier for workers to satisfy.

These NLRB rulings suggest a more receptive attitude toward unions, which may be reflected in national politics. Wisconsin Governor Scott Walker, who has a very strong anti-union track record and campaign platform, recently dropped out of the race for the Republican presidential nomination. Walker’s anti-union rhetoric did not seem to resonate with Republican voters. Conversely, Bernie Sanders, a strong union proponent with significant union endorsements, has seen a surprising surge of support since entering the presidential race.

The legal and cultural pendulum appears to be swinging back toward support for unions. As it does, employers should consider the potential effects of increased unionization of their workforce and keep abreast of new regulations to ensure ongoing compliance.

Laura Payne

Laura Payne

Laura Gladwin Payne is an associate attorney with Brown White & Osborn LLP.She is a former clerk for a federal judge, and she handles a wide variety of civil litigation.She has a special interest in employment and entertainment law.
Laura Payne