A new federal rule that takes effect next month could make it easier for millions of workers to form unions at major companies like McDonald’s. But it is already facing significant opposition from businesses and some members of Congress.

The rule, announced late last month by the National Labor Relations Board, sets new standards for determining when two companies should be considered “joint employers” under the National Labor Relations Act.

It sounds strange. But essentially, the rule could increase the number of companies required to participate in collective bargaining alongside their franchisees or independent contractors. Burger King, for example, could be forced to negotiate with workers even though most of its U.S. restaurants are owned by franchisees. Or it could require Amazon to negotiate with delivery drivers who are technically employed as independent contractors.

“It’s about considering the reality of today’s workforce when many employers are subcontracting work and saying, ‘Oh, we’re not the employer,’” said Cathy Creighton, director of the Buffalo Co-Lab at the School of Industrial Engineering Cornell University and Labor Relations. “It’s the employer who really calls the shots and has the money.”

The NLRB says the new rule changes a 2020 rule that made it too easy for joint employers to avoid their responsibilities for negotiating with employees. The 88-year-old National Labor Relations Act guarantees U.S. workers the right to form or join unions.

But critics say the new rule represents an overreach by the pro-labor Biden administration that undermines independent contractors. Some — including the American Hotel and Lodging Association — have already filed suit to block it.

U.S. Sens. Joe Manchin, a West Virginia Democrat, and Bill Cassidy, a Louisiana Republican, have introduced a Congressional Review Act resolution that would repeal the rule. The resolution must be passed by both houses of Congress and signed by President Joe Biden.

Biden hasn’t said whether he supports the new joint employer rule, but he has described himself as the most pro-union president in history. The new regulation is due to come into force on December 26th.

“The franchise business model is a truly great American innovation. It has created wealth for thousands, especially underrepresented minorities and women,” McDonald’s President and CEO Chris Kempczinski said during a recent conference call with investors. “This is something that we believe needs to be supported, not attacked.”

“You can definitely afford to treat us better”

Richard Eiker, 54, has worked in fast food for 25 years and now works at McDonald’s in Kansas City, Missouri. He said McDonald’s clearly controls its franchise stores and shirks its responsibilities to workers.

Eiker, a leader of the pro-union group Stand Up KC, said unionization could improve his pay, benefits and working conditions. Eiker has foot pain and high blood pressure, but said his job doesn’t offer affordable health care or paid time off to see a doctor. He often cuts his prescription medications in half because he can’t afford to refill them.

“McDonald’s has made a profit of almost $15 billion over the past two years. They can definitely afford to treat us better, and with a union we could make sure they do the same,” he said.

The new joint employer rule originated in the Obama administration. In 2015, the NLRB ruled that Browning-Ferris Industries, a waste management company, should be considered a joint employer of contract workers who sorted the waste recycling because it had control over their working conditions. A federal court upheld the NLRB’s decision in 2018.

But during the Trump administration, the Republican-controlled Labor Committee narrowed the definition of a joint employer. Under the 2020 rule, companies could only be considered joint employers if they had “substantial direct and immediate control” over the terms and conditions of employment.

The latest rule, passed by a panel now controlled by Democrats, is more similar to the Browning-Ferris decision from 2015. It states that companies can be considered co-employers if they have the authority – directly or indirectly – at least to control a condition of employment. Conditions include wages and benefits, work hours and scheduling, assignment of tasks, work rules and attitudes.

The regulation only applies to employment relationships. The Department of Labor sets its own common employment standards for issues such as compliance with minimum wage requirements.

Nevertheless, the new regulation could have a major impact. According to the International Franchise Association, local franchise owners employ more than 8 million people in the United States. Millions more work for subcontractors or temporary employment agencies. “Nevertheless, the new regulation could have a major impact.” According to the International Franchise Association, local franchise owners employ more than 8 million people in the United States. Millions more work for subcontractors or temporary employment agencies.

“Hold the wrong people accountable”

John Motta, who owns 32 Dunkin’ locations in New Hampshire and Virginia, said franchisees must meet certain brand standards and use Dunkin’ uniforms and signage. But more than that, they want to run their businesses independently.

“We don’t want our corporate partners to tell us, ‘This is how much you have to pay per hour,’” he said. “That’s not why I got into this business. I wanted to make all these decisions myself.”

Motta leads the Coalition of Franchisee Associations, which represents approximately 46,000 franchisees. He fears the rule will cause Dunkin’ and other companies to stop working with franchisees and operate stores themselves so they can’t be held accountable if a franchisee commits labor violations.

Michael Kaufman, an attorney who represents companies in labor disputes, said the rule presents other potential complications. If a company hires temporary workers through a contractor but then asks the contractor to fire a temporary worker because he or she is harassing someone, the new rule may allow the temporary worker to bring wrongful performance claims against the company, Kaufman said.

“The NLRB believes it is holding more people accountable, but it is holding the wrong people accountable,” he said.

Unions say the NLRB will consider such circumstances on a case-by-case basis, but the rule is still necessary to ensure that all workers can negotiate wages and working conditions.

“Workers’ right to collective bargaining cannot be realized if the company that has the authority to change the terms and conditions of employment is absent from the bargaining table,” the AFL-CIO, the Teamsters and the Service Employees International Union wrote in a letter this month to members of Congress.

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Source : fortune.com

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