An Obama-Era Rule Has Held McDonald’s Liable for Labor Abuses. The GOP Is Close to Undoing It.

Thor Benson October 13, 2017

Republicans want to make it harder for workers to take action against McDonald's for violations of labor laws. (Mohd Samsul Mohd Said/Getty Images)

In what was hailed as a major vic­to­ry for labor unions, the Nation­al Labor Rela­tions Board (NLRB) in 2015 rede­fined what con­sti­tutes a joint employ­er,” rul­ing that any com­pa­ny that has indi­rect” con­trol over a busi­ness can be held respon­si­ble if that busi­ness vio­lates labor law. In prac­tice this has meant that a cor­po­ra­tion such as McDonald’s can be held liable if its fran­chis­es are ille­gal­ly with­hold­ing pay to employ­ees or oth­er­wise break­ing the law. Now, a new bill could reverse that deci­sion and make it much hard­er to hold large cor­po­ra­tions accountable.

On Octo­ber 4, the Save Local Busi­ness Act (H.R. 3441), was advanced out of com­mit­tee by the House Edu­ca­tion and the Work­force Com­mit­tee, and is set to go before the full House for a vote. 

Rep. Bradley Byrne (R‑Ala.), who intro­duced the bill, explained after the leg­is­la­tion advanced that it would return legal stan­dards to what they were pri­or to the NLRB’s 2015 joint employ­er rul­ing. H.R. 3441 sim­ply restores the com­mon­sense joint employ­er stan­dard that work­ers and employ­ers relied on for decades.” Byrne said.

What the bill would actu­al­ly do, how­ev­er, is much more far-reach­ing. In order to be con­sid­ered a joint employ­er, work­er advo­cates would have to prove that a com­pa­ny direct­ly, actu­al­ly and imme­di­ate­ly exer­cis­es sig­nif­i­cant con­trol over essen­tial terms and con­di­tions of employ­ment,” includ­ing every­thing from hir­ing and fir­ing to sched­ul­ing and day-to-day super­vi­sion of employ­ees.” The cur­rent stan­dard does not require com­pa­nies to have this kind of direct, dai­ly super­vi­sion and con­trol to qual­i­fy as a joint employer.

It’s real­ly disin­gen­u­ous and not truth­ful to say that what this bill does is undo [the NLRB’s] deci­sion,” Sharon Block, exec­u­tive direc­tor of the Labor and Work­life Pro­gram at Har­vard Law School, tells In These Times. What it does is change the law in such a rad­i­cal way. It doesn’t go back to sort of what the sta­tus quo was before. It cre­ates a stan­dard for joint-employ­ment that’s almost impos­si­ble to meet.”

Such a stan­dard would allow many of the nation’s largest cor­po­ra­tions to avoid respon­si­bil­i­ty for the actions of their fran­chis­es and con­trac­tors. If Burg­er King loca­tions aren’t giv­ing employ­ees lunch breaks or pay­ing them over­time? Not Burg­er King’s prob­lem. The bill could have a sweep­ing effect, leav­ing work­ers across the coun­try with lit­tle recourse when fac­ing ille­gal work conditions.

It could have a dev­as­tat­ing effect on employ­ees being able to, pos­si­bly, hold any employ­er account­able for wage, hour and [Nation­al Labor Rela­tions Act] vio­la­tions,” Block says, not­ing that such a change would be unprece­dent­ed in labor law.

While work­ers could still hold their indi­vid­ual fran­chise account­able, these small busi­ness own­ers have few resources and often vio­late laws due to pres­sure from their par­ent com­pa­nies. Fur­ther­more, many times these labor vio­la­tions are sys­temic with­in a cor­po­ra­tion, which means they’re big­ger than indi­vid­ual businesses.

For his part, Rep. Byrne has already received $5,500 in cam­paign con­tri­bu­tions this elec­tion cycle from the Inter­na­tion­al Fran­chise Asso­ci­a­tion — an orga­ni­za­tion that rep­re­sents fran­chis­ers — which would ben­e­fit from the new law by being able to evade cul­pa­bil­i­ty for the actions of their franchisees.

A giant step backward

In 2016, fol­low­ing the NLRB’s joint employ­er rul­ing, McDonald’s set­tled a law­suit with fran­chise work­ers for the first time in the company’s his­to­ry. The com­pa­ny was forced to pay $3.75 mil­lion in dam­ages to cov­er back pay and legal fees to Cal­i­for­nia fran­chise employ­ees who claimed labor laws had been vio­lat­ed at one of its loca­tions. Such law­suits would have no chance in court if this bill becomes law.

While Repub­li­cans in Con­gress often talk about how much they care about work­ing peo­ple, Block says this type of action demon­strates they’re far more inter­est­ed in pro­tect­ing the most-wealthy Amer­i­cans. Trump and Repub­li­cans in Con­gress are tak­ing work­ers’ pro­tec­tions back at a time when they need them more than ever,” she says.

Judy Con­ti, fed­er­al advo­ca­cy coor­di­na­tor at the Nation­al Employ­ment Law Project (NELP) tells In These Times that this bill would be ter­ri­ble for small busi­ness own­ers, because it will leave small­er busi­ness­es respon­si­ble for all lia­bil­i­ty even when their con­trac­tors force con­di­tions upon them that lead to vio­la­tions in the first place.”

If suc­cess­ful, the bill would mark a his­toric shift in labor law. Mil­lions of low-wage work­ers across the coun­try would be direct­ly impact­ed, los­ing a key mech­a­nism to pro­tect their rights on the job, while cor­po­ra­tions which reg­u­lar­ly escape lia­bil­i­ty would gain protections.

The Con­gres­sion­al attempt to gut the decades-long pro­tec­tions of the joint employ­er doc­trine is a trans­par­ent attempt to pro­tect large com­pa­nies that out­source their work in uneth­i­cal ways from lia­bil­i­ty for those actions,” Con­ti says. It’s a lose-lose for small busi­ness and work­ers. Only those employ­ers with cof­fers large enough to employ cor­po­rate lob­by­ists will ben­e­fit if this bill is signed into law.”

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