Unions set sights on e-commerce and manufacturing firms after NLRB ruling

U.S. union leaders said on Friday that a landmark U.S. labor board ruling on companies' obligations toward contract and franchise workers would help them organize manufacturers and e-commerce companies as well as fast food chains.

On Thursday the National Labor Relations Board (NLRB) ruled the owner of a California recycling plant was a "joint employer" with the contractor that hired workers at the plant, essentially forcing both to bargain with the union together or risk violating U.S. labor law.

Business groups, arguing that the ruling could lead to higher costs and hurt the economy, are pushing the Republican-led Congress to overturn it, in part it because the company named in the decision - Browning-Ferris - cannot challenge it in a federal court without overcoming a number of procedural hurdles.

Unions see the decision as a breakthrough not just in efforts to help employees organizes at franchisees of McDonald's Corp (MCD.N) and other chains but also as a tool to counter the proliferation of subcontracting in other industries in which workers are one or two steps removed from the companies indirectly controlling them.

Manufacturers including auto workers, food processors, steelmakers and aerospace companies are potential targets for union campaigns, said Elizabeth Bunn, director of the AFL-CIO's organizing department, noting that plant workers are often not directly employed by the parent firm.

"You literally can walk into almost any non-union manufacturing plant in the United States and you’ll see workers working on a line and not be able to distinguish who is temp from an agency and who is a direct employee of the company,” she said.

Big labor has focused much of its resources over the past few years on pushing for higher wages in the fast-food industry, and the Browning-Ferris ruling could have implications for an ongoing NLRB case seeking to hold McDonald accountable as a "joint employer" for alleged violations at franchisees.

'GAME-CHANGER'

But union organizers see Thursday's ruling as paving the way for gains across a range of industries given the widespread use of subcontracting by the manufacturing and service sectors to lower costs.

“It’s certainly a game changer,” said Teague Paterson, a partner at Beeson Tayer & Bodine, a law firm representing the union in the NLRB case. “Unions and workers have been frustrated by these triangulated relations that the board condoned in the past. It certainly opens the door to more organizing.”

Rand Wilson, a veteran organizer and a communications and policy director at a Massachusetts chapter of the Services Employees International Union, said he saw potential in warehousing, cleaning services and health care.

Another segment widely cited by organizers and labor experts is the warehouses of companies like Amazon.com Inc, Wal-Mart Stores Inc and Google Inc, which are often filled with workers from staffing agencies or contract firms.

The Teamsters union recently won an election to represent warehouse and shipping workers at Google Express, the technology giant's shopping delivery service. The workers are employed through staffing firm Adecco.

Rome Aloise, president of the Teamsters in Northern California, said the Browning-Ferris ruling means Google will now have to be part of the discussions about working conditions with the union and the contractor.

"This is a classic case. We won and are going into negotiations and now Google will have to come to the table."

It was a local branch of the Teamsters that originally brought the complaint about a union election at the Browning-Ferris recycling plant to the labor relations board, and the union has been active in organizing truck drivers and warehouse workers at delivery companies and tech firms.

Amazon, Google and Adecco were not immediately available for comment. Wal-Mart spokesman Brian Nick said the company was still reviewing the decision but has concerns.

TOUGH CHALLENGE

Challenging the ruling in court will not be easy, opponents say, because a court could only take up the case if closely-held Browning-Ferris refuses to negotiate with the workers' union. "This will not be resolved quickly,” said Browning-Ferris's attorney Stuart Newman. He declined to specifically comment on the company’s next legal steps.

Trade groups have little to no legal recourse, since they were not the subject of the NLRB's ruling.

“The litigation strategy is somewhere between challenging and nonexistent, and of course the NLRB knows that,” said Michael Layman, a vice-president at the International Franchise Association on Friday.

Instead, the IFA and other groups said they would focus their efforts on Congress, which could write its own definition of employer responsibility for contract workers into law or pass a resolution blocking use of the new NLRB standard.

The Republican chairmen of congressional committees with oversight of labor issues, Senator Lamar Alexander of Tennessee and Rep. John Kline of Minnesota, both pledged to introduce legislation that would roll back the decision.

But any bill targeting Browning-Ferris would join other Republican measures aimed at reversing NLRB decisions that have yet to become law, and would likely face a veto as long as a Democrat is in the Oval Office, said Walter Olson, a senior fellow who tracks labor law at the libertarian Cato Institute.

“The politics are such that, even though Republicans have strong majorities in both houses of Congress, the NLRB is considered enough of a party-line issue that a bill would get a presidential veto,” Olson said.