New Labor Rule Boosts Union Ability To Organize Contractors and … – Investopedia

Key Takeaways

  • The National Labor Relations Board issued a new rule expanding when companies count as employers of the people who work for them through contracting and franchise agreements.
  • The rule could give workers more ability to unionize at companies like Amazon and McDonald’s.
  • Business groups opposed the rule, with a major trade group threatening legal action.

Unionization might be coming to a franchise or independent contractor near you.

The National Labor Relations Board issued a rule Thursday that expands the definition of “joint employer,” making it more likely that a company will be legally considered the employer of people who work for them through contractors, staffing agencies, franchises, or other arrangements. 

Under the new rules, more companies could be required to bargain with unions representing those workers, and could potentially be exposed to liabilities when labor laws are broken, employment law experts said. The rule could be especially significant for companies like Amazon (AMZN), which uses independent contractors to deliver their packages, or McDonald’s (MCD), which runs its business through franchise agreements.

The definition of joint employer has been contentious and has shifted along with the composition of the NLRB depending on whether Democrats and Republicans were in charge. The new rule overturns a 2020 standard established during the administration of Donald Trump, which had in turn replaced an Obama-era rule. 

Under the Trump standards, a company was only considered a joint employer of someone if they exercised “direct control” over their workers. Under President Joe Biden, the standard is looser and could encompass more companies: They only have to have the ability to exercise control, even if they’re not actually doing it, and even if the control is “indirect.”

“The broad definition of joint employment contained in the final rule is in line with the aggressive pro-labor stance the Board has taken throughout the Biden administration,” employment lawyers at the Littler law firm wrote in a commentary. 

A slew of business groups came out against the ruling, with some urging Congress to overturn it. The Chamber of Commerce, a lobbying group representing businesses, said it was considering litigation.

“This rule will create chaos and more legal confusion that will harm both employers and workers,” the chamber said in a statement.

Amazon and McDonald’s did not immediately return e-mailed requests for comment, nor did the Teamster’s Union, which earlier this year signed a contract with a company that provided delivery services for Amazon. 

The new rule gives a boost to a labor movement that has flexed its muscles lately under a pro-union Biden administration. Strikes have hit multi-decade highs in recent months, according to Department of Labor data, and strikes by Hollywood actors and screenwriters and auto workers have grabbed headlines.

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