The National Labor Relations Board made a big announcement last week that could have a big impact on businesses and workers. The NLRB said they want to enact a new way to determine who is a “joint employer” of a worker. Before this decision, for example, an employee at McDonald’s was the employee of the franchise owner, but now the NLRB says that both the franchise owner and McDonald’s corporation should be considered “joint employers” of that worker. This decision is not yet in effect but if it does go into law it could be a major shift to businesses who are not used to setting policies for franchise workers or temporary workers that have traditionally been viewed as separate from corporate.

What are the criteria?

Employers are responsible for their workers if they have direct control over the conditions they work in (tell them what to do, how to do it, etc.). Big franchise companies claimed that they stayed out of those decisions, and that their franchise owners were the decision makers and should be responsible for workers. Staffing agencies are viewed as the ones in charge of their workers, even though the companies they are sent to staff might have a particular way of doing things they want that worker to follow. The NLRB says that there are two principles to determine joint employer status. If both parties are employers within the meaning of the common law, and if they both determine or share anything that governs the terms and conditions of employment, they are considered joint employers.

That means that big corporations with lots of franchised storefronts will have to work together with franchises and employees on things like hourly wages and workers’ compensation benefits, among other things. This could be a good thing for workers who can collectively bargain and might see better wages and working conditions because they’re talking to a huge business with more money than their local store owner. It could hurt businesses which might have to start paying for higher wages, overtime and better benefits. Businesses that already provide these things for employees could enjoy a brief leg up on the competition as their competitors work to meet the new standards of their employees.

Another argument against this decision is that, there are so many workers that are working “under” a company but it would be impossible for a big company to individually bargain with each worker. They say they’ve stayed out of it and let the franchise owner or the temp agency talk to workers about wages and benefits. Some argue, for example, that businesses that use a staffing agency to hire janitors to clean their office at night could potentially be considered joint employers, and a decision like this could be inefficient and harmful.

The board talked about the rise of temporary employment in their decision, which is heavily contested by business owners. Temporary workers who are sent out to a company via a staffing agency often get directions from both companies, so those kinds of relationships could fall under this joint employer label too. Workers argue that the current model allows companies to undercut them on wages and benefits.

The decision was big enough news already; now let’s see if it takes effect what the outcomes will be.