Trump-Era Labor Abuse: The Newest Addition to the Dollar Menu®

-- By PatrickMarris - 28 Feb 2018

On November 7, 2017, in an anti-labor move surprising to no one, House Republicans—along with eight Democrats—passed a bill that could wrest from low-wage workers a mechanism through which such workers can protect their already minuscule bundle of rights. If enacted, the bill, laughably named the "Save Local Business Act," would limit the application of the term "joint employer" to only employers who "directly . . . and not in a limited and routine manner, exercise[] significant control over the essential terms and conditions of employment." Without a strong, inclusive joint employer standard, businesses are far more easily able to create corporate structures that allow avoidance of worker-friendly labor laws. The bill would codify a standard that drastically weakens the joint employer standard.

Franchising

Under traditional federal labor law, franchisees, not franchisors, are considered the employers of people who work in franchised businesses. In most legal contexts, the franchisee runs a business independent from, but maintains a contractual relationship with, the franchisor. The term "joint employer" describes a context in which both the franchisee and the franchisor are considered employers. Under the traditional federal franchising law, this is rare. As such, employees of franchises have difficulty holding wealthy corporate franchisers responsible for labor law violations committed by franchisees. But with Browning-Ferris, it became possible.

The NLRB's Standard

Between 1984 and 2015, the National Labor Relations Board used a joint employer standard similar to the standard that would be created by Save Local Business Act. In the 2015 Browning-Ferris decision, however, the NLRB created a standard which required only that a company exert "indirect control" over terms and conditions of employment to qualify as a joint employer. This shift was much maligned by interest groups closely allied with such local business darlings as McDonald's, Hyatt Hotels, and every white nationalist's favorite pizza brand, Papa John's.

Bolstered by the Browning-Ferris standard, more than 800 McDonald's workers employed at five separate franchises sued McDonald's for labor abuses. The lawsuit resulted in an unprecedented $3.75 million settlement, $1.75 million of which was earmarked for backpay and damages. Furthermore, the settlement seemingly signaled the beginning of a new era for low-wage workers—an era in which formerly powerless workers could fight labor abuses committed by mega-corporations, including—potentially, at least—the bane of the unionist's existence, Walmart.

But in December 2017, the NLRB in Hy-Brand Industrial expressly overruled Browning-Ferris and opted to reinstitute the pre-2015 standard, quashing the hope of bringing even slight improvement to the powers of workers. This was, of course, only one of the many anti-labor moves made by the federal government in Trump's first year.

Though the NLRB very recently reinstated the Browning-Ferris standard due to a potential conflict of interest in its 2017 decision, the Save Local Business Act—and the direction of Trump's NLRB—would ensure momentum lies with McDonald's et al.

The McJoint Employer

The Save Local Business Act was introduced by Representative Bradley Byrne of Alabama. In the current election cycle alone, Byrne has received $8,000 from the International Franchise Association, $5,000 from the American Hotel and Lodging Association, $5,000 from the Association of KFC Franchisees, and $5,000 from the National Restaurant Association, all groups lobbying for large corporations that would benefit from a strict joint employer standard. It's difficult to imagine House Republicans didn't titter to themselves—change from McDonald's securely in pocket—as they named this bill.

This is not to say, of course, that Democrats are more in touch with the working class. They may well not be. But Republicans are drenched in hypocrisy, generating a creed of working-class and small business support while accepting 89 percent of the 2016 congressional donations made by the International Franchise Association, 92 percent of the 2016 congressional donations made by the Association of KFC Franchisees, and 84 percent of the 2016 congressional donations made by the National Restaurant Association. Contrast these data with data on labor union contributions. More than 99 percent of federal campaign contributions made by the Service Employees International Union, more than 98 percent of federal campaign contributions made by the Laborers Union, and more than 99 percent of federal campaign contributions made by the AFL-CIO went to Democrats. For all of their faults—of which there are many—House Democrats have tended to vote in support of workers.

The Future of Joint Employers

The Save Local Business Act will likely never be law. But the Federal government is nevertheless working to curtail labor protections and shape policy relating to joint employers. Peter Robb, Trump's appointee as general counsel for the NLRB, has already begun settling an NLRB case against McDonald's for abuses of workers—a case distinct from the judicial action already discussed—in which the NLRB has invested 150 days of trial. Though the prior settlement was viewed as a positive step for workers's rights, a settlement in the administrative case would be viewed—at least by Sharon Block and Benjamin Sachs of Harvard Law School—as "abandoning . . . a groundbreaking inquiry into whether a major employer like McDonald's should be held accountable for violating the rights of its low-paid workers." Such a question, according to labor activists, deserves the attention of a judge. And though with the recent overruling of Hy-Brand Industrial the NLRB has reverted to the Browning-Ferris standard, Trump's Republican appointee for the fifth member of the Board is awaiting Senate confirmation. With this majority, Trump's NLRB can "engage[] in a full-fledged legal assault on unions that's poised to wreak havoc on collective bargaining" by dismantling the worker-friendly joint employer standard.

With the Republican NLRB and the Republican Party at large working diligently for the interests of McDonald's, Walmart, and other mega-corporations and with a wildly anti-worker president, it's time for low-wage workers to organize behind Democratic candidates to retake Congress from anti-union, anti-worker Republicans. Otherwise, the future for workers at low-wage franchises is bleak.

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