Court Now Likely for Joint Employer, Franchise Company Liability Case

A sanitation company at the center of a major U.S. labor board ruling that could force companies like McDonald’s Corp. to negotiate directly with franchise and contract workers has refused to bargain with workers hired by a staffing agency.

The widely expected move by Browning-Ferris Industries raises the prospect of a court challenge to the National Labor Relations Board’s decision in August.

Browning-Ferris sent a letter this week to Teamsters Local 350 saying it had no employment relationship with workers at its California recycling plant despite the NLRB ruling that the company was a “joint employer” because it had indirect control over working conditions.

A lawyer for the union, Susan Garea, on Friday said she would file a complaint later in the day with the NLRB. The five-member board will likely rule in the case by next year. That decision could then be appealed in federal courts.

Business groups, including the U.S. Chamber of Commerce, have already said they plan to be involved in any court challenge to the decision.

Republicans in Congress have introduced legislation that would roll back the ruling but are not expected to muster the votes to override an expected veto by Democratic President Barack Obama.

Since the board has already found that Browning-Ferris is a joint employer, the case will likely move up to the courts quickly, said the company’s lawyer, Stuart Newman.

“It’s a very, very bad decision unsupported by precedent, so the sooner an appeals court throws it out, the better,” Newman said.

In its 3-2 ruling, the NLRB found that a standard that said companies only qualify as joint employers of workers hired by another business if they had “direct and immediate” control over employment matters was outdated and did not reflect the realities of the 21st-century workforce.

The board said companies can be held liable for labor violations committed by franchisees and contractors even when they have only indirect control. It is expected to affect a broad range of U.S. industries built on franchising and contract labor, from fast food and hospitality to security and construction.

Business groups and employment lawyers strongly criticized the ruling, saying it would force companies to the bargaining table even when they have little say over working conditions.

(Reporting by Daniel Wiessner in New York; Editing by Chizu Nomiyama, Alexia Garamfalvi and Jonathan Oatis)