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Union wins closely watched labor case over who’s the boss

More companies may be held responsible for labor-law violations committed by the contractors they hire under a decision by a politically split U.S. labor board in a closely watched case.

The National Labor Relations Board on Thursday unveiled a new standard that also could require more businesses to negotiate pay and benefits for workers employed by another company. Previously, employers had to have direct control over working conditions to be deemed so-called joint employers.

That standard no longer fits in “the current economic landscape,” the board’s three Democrats wrote. They noted that almost 2.9 million Americans had jobs through temporary agencies a year ago, or 2 percent of the workforce, up from 1.1 million in 1990.

Under the ruling by the five-member board, companies that exert indirect control over workers through employment contracts or franchise agreements may be deemed joint employers.

The case, involving Browning-Ferris Industries Inc. and a union at one of its contractors, drew attention from labor, businesses and Republicans in Congress, who vow to try to block the panel’s decision.

‘Unprecedented’ obligations

The board’s two Republicans, in a 29-page dissent, said the decision will “subject countless entities to unprecedented new joint-bargaining obligations.”

The International Franchise Association, a Washington-based business group, said the decision is a “seismic shift” in labor law that threatened the franchise business model.

“If allowed to go into effect, the impact of this new joint-employer rule would be sweeping and widespread, create havoc for the franchise industry and, ultimately, would inflict serious damage to our nation’s economy,” Steve Caldeira, the group’s chief executive, said in a statement.

The standard will be applied in separate cases pending against McDonald’s Corp. in which the labor boards’ general counsel has accused the restaurant chain of labor violations at its franchisees.

The NLRB decided to move away from criteria used for three decades in a case involving waste management company Browning-Ferris and the Teamsters union trying to draw the company to the negotiating table along with a staffing company, Phoenix-based Leadpoint Business Services.

The board found Browning-Ferris was a joint employer of the workers.

Wilma Liebman, a former head of the labor board who advocated for the new standard, said shifts in the workforce shouldn’t make basic protections provided by labor laws “illusory.” Often the company that hires a subcontractor sets conditions of employment through a contract, she said.

“The nature of employment and the nature of the economy has changed a lot,” Liebman said in an interview.