NLRB decision: What’s the definition of employer?

  • By Joel Mathis and Ben Boychuk Tribune News Service
  • Friday, September 4, 2015 1:24pm
  • OpinionCommentary

What makes an employer an employer?

That’s the question a new ruling by the National Labor Relations Board attempts to settle. The NLRB last week decided that contract workers and franchise employees — think of your local McDonald’s — may more easily unionize thanks to a new, broader definition of the term “joint employer.”

A majority of five-member board said, in effect, that just because a corporate franchise is independently owned and operated doesn’t mean a corporation may exclude itself from the bargaining table. The ruling is being called one of the biggest developments in labor law in 35 years.

Is the NLRB ruling correct or an impingement on business freedom? Joel Mathis and Ben Boychuk debate.

Gift to unions will result in price increases

What the National Labor Relations Board did last week was no obscure exercise in bureaucratic decision making. The board’s 3-2 decision will likely affect how much you pay for a Big Mac and a car ride, and quite possibly, where you work and how much you earn.

The ruling concerned Browning-Ferris Industries, a waste management company, and its relationship with Leadpoint Business Services, a staffing company Browning-Ferris used to hire and manage temporary workers. One company needed workers. The other provided them. No fuss, no muss.

But the NLRB is all about fuss and an unlimited supply of muss. And so the board, which consists of three Democrats and two Republicans, is building a new regulatory scheme.

Last year, in another 3-2 decision, the board decided that McDonald’s has “sufficient control over its franchisees’ operations” to make it a “joint employer” for collective bargaining purposes. Under the old standard, the franchiser needed to have a direct say in hiring, firing and wages. Not anymore.

So what is this really all about?

It’s difficult for a union to organize one store at a time. One franchise owner may be amenable. Others may balk. But if the government forces the big bad corporation to the table, the dynamic changes. Suddenly, the union is poised to unionize tens of thousands of stores in one fell swoop. And what a coup that would be!

But if you think this is just about squeezing a popular peddler of third-rate hamburgers, think again. Federal regulators would like very much to put the screws to Uber, Lyft and other companies that rely heavily on temporary and contract workers.

The main reason those models succeed — the reason your car ride to the airport is so much cheaper than a standard taxicab fare — is that those companies aren’t paying conventional salaries or benefits.

On the other hand, an Uber driver has greater flexibility than someone who works a standard 40-hour week. Regulators would take that flexibility away and dictate rules that would make the so-called sharing economy far less attractive and competitive.

The reality is, private-sector unions are on the wane and have been for decades. The NLRB is giving big labor a nice boost, but at the expense of economic growth, opportunity and the freedom of contract.

—Ben Boychuk

Union negotiation is key part of capitalism

Let’s be honest about what the world of franchising amounts to these days: It’s often an elaborate scheme to let big businesses make big money without doing anything so tawdry as take care of their workers.

Take McDonald’s, for example. The company maintains strict control over many items at franchisee restaurants — including how employees do their work during the day. An employee can be fired if they don’t follow McDonald’s corporate-imposed rules in a franchise restaurant. Common sense tells you that anybody who dictates the rules of your employment — and thus decides if you’ll keep that employment — is your boss. This isn’t complicated.

Same for Uber. There’s a lot to love about the ride-sharing company. But the company succeeds, in part, but shifting costs to drivers — the purchasing of cars, gasoline and more. When all the expenses are taken out, the rate of pay is such that it amounts to little more than pocket change.

Let’s be clear what the NLRB ruling does and doesn’t do: It doesn’t force McDonald’s to pay $15 an hour. It doesn’t force Uber to compensate drivers for expenses. It merely says that workers for those businesses can organize into unions — and that businesses have to talk to those unions. It orders no concessions or change to the business model. It just means that companies have to listen when their employees say they need more.

Shocking, isn’t it? The conservative vision of capitalism is that bosses offer a job and a wage, take it or leave it. The liberal version suggests a third way: It involves negotiation. There’s nothing uncapitalistic about it, unless you decide workers have little or no freedom of action to decide their own fates.

As my colleague stated earlier, “It’s difficult for a union to organize one store at a time. One franchise owner may be amenable. Others may balk. But if the government forces the big bad corporation to the table, the dynamic changes. Suddenly, the union is poised to unionize tens of thousands of stores in one fell swoop. And what a coup that would be!”

What a coup that would be.

—Joel Mathis

Ben Boychuk is associate editor of the Manhattan Institute’s City Journal. Joel Mathis is associate editor for Philadelphia Magazine. Visit them on Facebook: www.facebook.com/benandjoel.

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