Editorial: Labor ruling another example of overreach

The National Labor Relations Board’s Democratic majority voted last week to radically rewrite labor law and expand joint employer liability — a move that affects thousands of small businesses, franchisees, temp agencies and subcontractors across the country.

For decades, the board has relied on a test, established in a 1982 federal court decision, to determine if a company qualified as a joint employer.

Under the test two or more companies are considered joint employers if they “share[d] or codetermine[d] those matters governing the essential terms and conditions of employment.” In redefining the policy in 1984 and again in 1994, the Board required companies to actually exercise control over an employee, not simply possess that authority. Additionally, that control had to be direct and immediate, not limited and routine, according to the National Law Review.

Thursday’s ruling throws previous policies out the window. Now, a company need only exercise indirect control to be considered a joint employer. That means parent companies of franchises — like McDonald’s — can be named a joint employer and held liable in any disputes even if they weren’t directly involved. But its effect reaches even farther.

“Potentially, this NLRB ruling could extend to any business that uses a subcontractor or temp agency,” according to an editorial in the Wall Street Journal. “Parent companies could be on the hook for subsidiaries and affiliates. The rule could cover any American who employs a worker through a landscaping, catering, plumbing or housekeeping service.”

Labor leaders praise the change, saying it will enhance workers’ collective bargaining rights by ensuring all who control conditions of employment are at the negotiating table. But while employees might see their opportunities expanded, the policy change — and other changes under the Obama administration — makes it more difficult for employers to operate by creating burdensome administrative challenges and embroiling them in labor disputes.

This ruling is yet another example of regulatory overreach under the Obama administration. President Obama fails to understand that sweeping changes in law and policy are best left to elected members of Congress rather than an appointed board with a political agenda.

Contrary to what Obama seems to think, the majority of American businesses don’t have infinite amounts of money to pay heavy fines and comply with unnecessary regulation. Nor do they have the time, resources and manpower to spend when employees they only tangentially manage file grievances against their employer.