NLRB Decision in Browning-Ferris Restores Employer Accountability for Wages and Working Conditions

Last week’s decision by the National Labor Relations Board regarding Browning-Ferris Industries of California (BFI) is a big victory for working people and labor advocates. By holding that BFI is a joint employer with the staffing agency that provides all but a few of the workers at one of BFI’s recycling centers, the decision closes one of the many loopholes corporations use to avoid paying decent wages, Social Security and Medicare taxes, worker’s compensation premiums and unemployment insurance taxes, and to avoid even providing a safe workplace.

Millions of people work for employers that want their time, their sweat, and their creativity —but don’t want to treat them as employees. The companies have put middle-men between themselves and their workers and—– thanks to Reagan-era legal changes—have avoided their responsibilities, including the duty to recognize and bargain with employee unions. Now, after 30 years of watching corporations evade these obligations with the government’s blessing, the key labor agencies of the federal government are saying, “enough is enough.” The NLRB is following the lead of David Weil, the Department of Labor’s Wage and Hour Division administrator, who has begun cracking down on phony independent contractor arrangements.

This victory, like most labor victories these days, is bittersweet. On the one hand, whenever a government agency protects or expands the rights of workers to organize and bargain collectively, or holds a corporation accountable for its treatment of workers, it is a cause for celebration. On the other hand, all the BFI decision does is restore the law regarding joint employers to where it was until 1984. Things weren’t going all that well for the labor movement even before the Reagan era, and the BFI joint employer doctrine won’t level the playing field between workers and corporations. It just turns back the clock to a fairer set of rules.

The last 30 years have seen an explosion of contingent work, where the real employer hides behind a façade, claiming that its employees are working for some other, usually lightly capitalized employer such as a temp agency or a farm labor contractor. The companies that supply employees can change corporate identities or go out of business if a union organizes their employees or if workers sue for back wages or other compensation owed. Or the corporation avoids any middle-man and simply pretends its workers are self-employed and working as independent contractors. These legal schemes don’t reflect an inevitable evolution of employment relations or the effects of technology and globalization; they reflect clever lawyering and an intense desire to cut labor costs and keep as much corporate revenue as possible for shareholders and executives. The Reagan-era NLRB and the courts gave corporate America a loophole to evade labor standards, and they ran through it.

As the NLRB writes in BFI:

As the Board’s view of what constitutes joint employment under the Act has narrowed, the diversity of workplace arrangements in today’s economy has significantly expanded. The procurement of employees through staffing and subcontracting arrangements, or contingent employment, has increased steadily since TLI was decided. The most recent Bureau of Labor Statistics survey from 2005 indicated that contingent workers accounted for as much as 4.1 percent of all employment, or 5.7 million workers. Employment in the temporary help services industry, a subset of contingent work, grew from 1.1 million to 2.3 million workers from 1990 to 2008. As of August 2014, the number of workers employed through temporary agencies had climbed to a new high of 2.87 million, a 2 percent share of the nation’s work force.

On the merits, the NLRB has made the right decision, one that is essential if employers are to be held accountable for the wages they pay and the working conditions they provide. BFI’s claim that it owned and operated a recycling center but wasn’t responsible for hundreds of the employees working there was based only on a game of corporate hide-and-seek. BFI couldn’t do the work or carry out its contracts without those employees, and it retained the right to influence or control who was hired and fired, how they did their jobs, and how much they could be paid.

This case doesn’t decide whether franchise arrangements like those of McDonalds are joint employment: every case has to be decided on its own facts. But the NLRB is sending a signal that the long period of joint-employer abuse—where the government looks the other way as corporations evade their responsibilities by denying that they are their workers’ real employer—is coming to an end.