The myriad complexities of today's business relationships show the impracticality of the N.L.R.B.'s new rule. Under their recent decision, the status of "employer" is not limited to companies that exert direct control over their workers. "Indirect" control, and the potential to exercise control, now suffice.
So what does that mean for the many businesses that work with multiple subcontractors?
For example, manufacturers contract with shipping companies for distribution, and with suppliers of raw materials and component parts. Corporations often utilize vendors for catering, janitorial and maintenance work. And general contractors routinely work with a dozen or more subcontractors, each of whom provide different construction specialties.
It is virtually impossible to tell which employers in this line-up are "indirect" employers now.
It is virtually impossible to tell which employers in this line-up are "indirect" employers now, as that status is not clearly defined in the new rule. Contracting companies typically limit their management to setting hours of operation, minimal standards of competence or skill, and to the right to remove any contractor employee whose conduct is disruptive or performance is incompetent.
Such broad oversight should be distinguished from the subcontractor's domain, which includes direct control of wages, hours and benefits, and day-to-day employee supervision. But under the N.L.R.B.'s new "indirect employer" rule, these lines of management and responsibility blur confusingly, resulting in significantly increased costs to the contracting companies or franchisors. Automakers, for example, strictly control prices for their suppliers — a business model that would suffer greatly under the new rule because of the potential for additional uncapped costs.
Essentially, the N.L.R.B. has opened the door for multiple, unworkable workplace obligations for contracting parties, even when they have no direct or immediate relationship with the terms and conditions of the subcontractor's employees. This decision is unbounded and plainly inconsistent with the purposes of the N.L.R.B., set by Congress in 1935 to remove the burdens and obstructions that were "impairing the efficiency, safety or operation of the instrumentalities of commerce."
Eventually, the courts and Supreme Court will reject this new rule that subjects an ever-widening circle of businesses to liabilities not of their making.
Originally published on September 14 in the New York Times
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