Court to rule: Will parent corporations remain liable for violating labor laws?
DC District Court will decide if Leadpoint and BFI industries must negotiate with employees such as these. | AP

WASHINGTON – Last week, the D.C. Federal District Court of Appeals heard a case brought by a corporation that wants to be allowed to shrug off obeying U.S. labor laws.

The decision to be made by the three judge panel could affect millions of workers employed by companies that are franchises or contractors of other companies. The ruling will be especially important to workers trying to organize into unions.

When such workers charge that their supervisors are violating their rights, the parent corporation and the franchisee often claim that the other is responsible, and more often than not, the complaints go unanswered.

The problem is growing because of the spreading of the o-called “gig” economy, in which more and more employers are creating “joint relationships” with each other. They do this so that they can classify as many workers as possible as “independent contractors” not covered by federal labor protection laws. For example, there are now more than 2.87 temp workers hired by firms that then send them out to work for other firms.

In 2014, in a case involving the MacDonald’s fast food chain, the National Labor Relations Board (NLRB) ruled that yes, a parent company can be held liable along with its franchise owners for violating the rights of workers.

The NLRB said its investigation found that McDonald’s, through its franchise relationship and its use of tools, resources and technology, “engages in sufficient control over its franchisees’ operations, beyond protection of the brand, to make it a putative joint employer with its franchisees, sharing liability for violations” of labor law.

And in 2015, the NLRB issued the same ruling when Teamster Local 350 charged Browning-Ferris Industries (BFI) with refusing to bargain after the workers at one of its franchises, the Leadpoint recycle center in Milpitas, Calif., voted to unionize.

On-site supervisors working for BFI tell Leadpoint workers minute by minute what to do and how to handle the plastics, trash and other materials that come in. And BFI supervisors determine if the center’s production line should speed up, slow down, or stop.

Based on these facts, the NLRB ordered BFI to take part in the negotiations with the Teamsters

At that time, the NLRB said in a statement that it was “refining” its standard for determining joint-employer status to bring it up to date “in the current economic landscape.”

Nevertheless, BFI appealed the NLRB ruling and that appeal is what the DC District Court now has before it.

At last week’s District Court hearing, Craig Becker, representing Local 350, told the judges that in making its 2015 decision, “The NLRB looked at all the facts” to decide who actually controls the workers. Becker is a former NLRB member.

At the hearing, Joshua Ditelberg, BFI’s attorney, admitted that the corporation was using the “parent company/franchise” scheme to avoid liability.

“Are you talking about deep pockets and employers trying to evade responsibility for unsafe working conditions?” Judge Raymond Randolph asked Ditelberg.

“I would agree,” Ditelberg replied.

He probably felt safe being so brazen because we now are now under the Trump regime.

No rule, regulation or law protecting workers’ rights are safe. Chances are good that the Circuit Court will reverse the NLRB’s previous ruling and decide in favor of BFI.

In fact, last week a California judge reversed the NLRB’s 2014 decision and let McDonald’s off the hook.

Workers’ rights advocates are worried that the DC Federal District Court will use the California decision as a precedent and simply cave in to corporations who are taking advantage of working people.


Mark Gruenberg
Mark Gruenberg

Mark Gruenberg is head of the Washington, D.C., bureau of People's World. He is also the editor of Press Associates Inc. (PAI), a union news service in Washington, D.C. that he has headed since 1999. Previously, he worked as Washington correspondent for the Ottaway News Service, as Port Jervis bureau chief for the Middletown, NY Times Herald Record, and as a researcher and writer for Congressional Quarterly. Mark obtained his BA in public policy from the University of Chicago and worked as the University of Chicago correspondent for the Chicago Daily News.