A federal labor ruling released Thursday could put thousands of companies on the hook for workplace disputes and union-organizing matters involving temporary and franchise workers.
The National Labor Relations Board, in a 3-2 ruling splitting the board on party lines, revised its "joint employer" standard for determining when one company shares responsibility for employees hired by another. The change will make it easier for unions to negotiate over wages and benefits for pools of contingent workers.
The change, fiercely opposed by many businesses, comes at a time when more companies are turning to temporary contract workers as part of their business model. The ruling could also affect arrangements at franchise companies such as McDonald's Corp. that are in many instances a step removed from workplace matters at their franchises.
The change alters a decades-old approach by the NLRB that said one business couldn't be held liable for employment-related matters at another unless they had direct control over the employees in question. The NLRB is a federal board that referees workplace disputes and oversees union-organizing elections.
The change was supported by the board's three Democrats, with the two Republicans dissenting. The majority said the NLRB hasn't kept pace with an evolving workplace in which an increasing number of U.S. workers are employed through temporary staffing agencies. They cited in their decision a "dramatic growth in contingent employment relationships" that "potentially undermines the core protections of the act for the employees impacted by these economic changes."