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‘Fight for $15’ Union Sues to Undo Trump-Era Franchise Rule (1)

Sept. 17, 2021, 7:57 PM

The union behind the “Fight for $15” movement is suing to overturn a Trump-era rule that makes it harder to hold companies like McDonald’s Corp. and Amazon.com Inc. accountable for violations of franchised or sub-contracted workers’ rights.

In a lawsuit filed Friday in Washington D.C. federal court, the Service Employees International Union challenged the legality of a 2020 National Labor Relations Board regulation that narrowed the definition of a “joint employer.” The designation refers to a company with enough control over workers to be liable if they’re mistreated and obligated to negotiate with them if they unionize, even though the individuals get their paychecks from a different company.

Joint employer liability has been one of the most controversial and closely watched issues facing the labor agency in recent years, as major companies have increasingly been relying on workers officially hired by someone else, like the “temps, vendors and contractors” who in 2018 became the majority of Alphabet Inc.’s global workforce.

Read more: Inside Google’s Shadow Workforce of Contract Laborers

The standard had become more worker-friendly under the Obama administration, when Democratic labor board appointees established a broader definition of joint employer.

Under President Donald Trump, Republicans worked to reverse the precedent, initially with a ruling that was invalidated over an ethics violation and later via regulatory rule-making authority. The labor board’s Republican majority said last year that having control over workers doesn’t make a company a joint employer unless it meets narrower criteria, such as setting their specific pay rates.

In its federal court complaint, the SEIU said that regulation is “arbitrary and capricious,” disregards the significance of corporations’ control over safety conditions, and is inconsistent with the National Labor Relations Act, which the labor board exists to enforce.

“The final rule betrays the act’s fundamental promise by empowering large, highly organized employers to hold control over workers and extract the maximum amount of profit from their labor while unilaterally opting out of the legal duty to negotiate” over working conditions, the union said in the filing.

In an emailed statement, the union, which has tried to win higher pay and unionization for fast food workers through the “Fight for $15” campaign, cited the need for “essential workers” who labored through the Covid-19 pandemic to be able to negotiate over safety issues.

‘Speaking Out’

“When I put on a McDonald’s uniform, it means I’m working for McDonald’s, period,” Delia Vargas, an employee at a franchised McDonald’s restaurant in Oakland, California, said in the statement. “We know McDonald’s is our boss, and we’ll keep speaking out and fighting for a voice on the job until they take responsibility for keeping us safe.”

In an emailed statement, McDonald’s Corp. said it’s not a joint employer of its franchises’ workers and called the lawsuit “yet another attempt by the union to advance claims on an issue that has been fully considered and resolved.”

“While the union is focused on deploying tactics to grow its membership base, McDonald’s and our franchisees are focused on actual efforts to support and protect restaurant crew during an incredibly challenging time,” the company said.

A spokesperson for the labor relations board declined to comment on the lawsuit. The agency last month became controlled by Democrats again, following confirmation of President Joe Biden’s nominees.

(Updates to include comment from McDonald’s and show that NLRB declined to comment)

To contact the reporter on this story:
Josh Eidelson in Palo Alto at jeidelson@bloomberg.net

To contact the editors responsible for this story:
Weston Kosova at wkosova@bloomberg.net

Richard Clough, Jonathan Roeder

© 2021 Bloomberg L.P. All rights reserved. Used with permission.

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