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The Daily

NLRB Ruling: Entities Legally Liable for Contractors' Labor Practices

By:
Chris Gaetano
Published Date:
Aug 28, 2015
'Categorisation-hierarchy-top2down' by Andreas Plank - Own work. Licensed under CC BY-SA 3.0 via Wikimedia CommonsCompanies that use contractors will need to be more careful about who they hire and how they supervise them, as a new decision from the National Labor Relations Board declared that entities are now legally liable if one of them violates labor law, according to the Hill. The decision, reached yesterday, concerned a company called Browning-Ferris, a waste management firm that contracted with Leadpoint Business Services to staff a California recycling facility. The matter before the board involved the local teamster's union wanting to deal not just with Leadpoint, their direct employer, in their collective bargaining negotiations but Browning-Ferris as well, according to the Wall Street Journal. The union said they needed both companies present at the bargaining table to reach an adequate deal, as the money that goes towards their wages comes not from their direct employer but from the company that hired it. 

While companies traditionally have only been considered legally liable for their contractors if they controlled its ability to set hours, wages or job responsibilities, the board felt that this standard is out of step with today's economic circumstances, and so ruled that Browning-Ferris is a joint employer with Leadpoint, meaning that they can be considered part of collective bargaining negotiations along side them, and be held liable for labor law violations committed by them, said the Hill. 

The Hill said the decision will have wide-ranging impacts, as it would affect the very business model of major companies, including restaurant franchises and staffing agencies, as they become reluctant to be responsible for both their own workers and those of their subcontractors as well. The Hill said it will, instead, be much more attractive to simply do more things in-house.