The National Labor Relations Board (NLRB) — the federal agency governing U.S. labor law — is one step closer to Republican control for the first time in a decade.
President Trump’s two NLRB nominees, William Emanuel and Marvin Kaplan, were recently approved by the Senate Committee on Health, Education, Labor and Pensions (HELP) and now await a floor vote. With a confirmation expected soon, Emanuel and Kaplan will be able to help the NLRB pare back recent board decisions that ran roughshod over decades of precedent and left job creators scrambling. In the last eight years, the NLRB issued countless rulings without regard to the rule of law and the effect it would have on job creators and their employees.
Take the “joint employer” ruling. Historically, a business needed to have direct and immediate control over employees on employment matters — from hiring and firing to disciplinary actions — in order for it to be considered an employer. The NLRB’s 2015 “joint employer” ruling, however, dismantled that long-standing practice. It declared that “employer” status kicks in even if a business can be shown to exercise a certain level of control “indirectly through an intermediary.” For example, McDonald’s International is considered a “joint employer” with a local franchise under that standard, leaving corporate headquarters vulnerable to labor disputes in which it played no direct part.
As you might imagine, the new standard severely undermines the small business model of franchising, in which a local investor or business — the franchisee — opens an independently-owned store that uses the name and products of a franchisor but operates independently. The franchisee alone directly controls employment decisions and working conditions. McDonald’s and other companies turned into global behemoths through franchising.
As Charlie Owens, the Michigan state director of the National Federation of Independent Business explained after the ruling came down, the NLRB essentially decided to “make a franchisor responsible for a franchisee’s employees even in areas where they do not exercise direct control over employees of the franchisee.” Why? The intention was to make it “easier for big labor unions to strike and organize franchise business employees and small independent businesses.”
This comes with real-world consequences. The franchise model has created 770,000 small businesses in America, supporting 18 million direct and indirect U.S. jobs. It has also added more than $2 trillion to the U.S. economy.
The NLRB was busy in other ways. With its 2011 “Specialty Healthcare” decision, the agency enabled labor unions to unionize a workplace in segments, transforming a portion of an employer’s workforce into so-called “micro-unions.” Imagine a restaurant where the cooks were unionized, but the waiters and hostesses were not.
The NLRB has also ruled that teaching assistants at Columbia University are employees and therefore have the right to unionize, laying the foundation for unionized colleges and universities around the country. When you hear about a union organizing campaign at Harvard University, for example, you can thank the NLRB for opening the floodgates.
Fortunately, President Trump’s nominees are expected to reverse the overreaches of their predecessors. Neither William Emanuel nor Marvin Kaplan have a track record of mixing politics with labor legalese. Both believe in historical precedent and the importance of impartial arbitration.
When it comes to labor, Americans can be grateful for NLRB board members that are faithful to the rule of law.
F. Vincent Vernuccio is former special assistant to the assistant secretary for administration and management at the Department of Labor under President George W. Bush.