On August 27th, the National Labor Relations Board (NLRB) issued a ruling that greatly expands the definition and scope of joint employers. Now, the Society for Human Resources Management (SHRM) and other experts believe this pivotal redefinition will pave the way for franchisee employees and contract workers to more easily unionize and may cause rifts in the relationships between larger corporations and franchisees, staffing agencies and contractors.

The case before the NLRB involved a California recycling center and a staffing agency used by the center to provide workers. The NLRB ruled that the recycling center and the staffing agency are the “joint employers,” rather than solely the staffing agency, of the affected outsourced workers at the center and both companies are responsible for any alleged labor violations. According to the NLRB, the recycling center “exercised sufficient control over hiring, firing, discipline, supervision, and work hours to qualify as a joint employer.”

All companies that provide “temporary” workers and franchisees of larger companies, such as casual and fast food restaurants, and the “parent” companies that control employees “indirectly through an intermediary, or whether it has reserved the authority to do so,” are now joint employers, per the NLRB ruling. The original case before the NLRB was brought by the Teamsters Union in an effort to bring the recycling center in question to the negotiating table as a joint employer. In addition to labor violations, parent companies are now also required to deal with trade unions representing the outsourced workers and can both be held liable for anti-union activities, including preventing or attempting to interfere with worker unionization efforts.