Twenty-First Century Employers

Abstract

The most fundamental question in labor and employment law is whether an employment relationship exists. Often, this questions centers on whether a worker is classified as an employee covered by a relevant statute. But even when there is no issue about a statute’s jurisdiction over workers and firms involved in a dispute, determining whether an employment relationship exists can still pose challenges. This is especially true when multiple firms are involved in the supply or use of labor, such as through contracting, franchising, leasing, and other similar business models. Although these business forms can have legitimate and beneficial corporate justifications, they can also lead to a “fissured” employment relationship that is fraught with problems, including the inability of workers to hold their primary or official employers liable for workplace violations; exclusion of workers from the often superior working conditions and benefits enjoyed under traditional work relationships; a decrease in cooperation between workers and firms; an increase in workplace accidents; and frustration of workers’ attempts to engage in collective bargaining. The practice of firms using indirect or fissured labor is not a new one. Courts have long struggled to determine firms’ liability under various workplace laws pursuant to the joint-employer concept. Technology, however, has greatly exacerbated this issue, as it has made it easier for firms to use contingent workers and to enter into shared operational relationships like franchising. The salience of this issue was brought home by the NLRB General Counsel’s recent case against McDonald’s, arguing that the corporation was a joint employer along with many of its franchisees. This chapter explores these issues and proposes an alternative analysis that renews the focus on the primary purpose of labor law’s joint-employer doctrine — ensuring meaningful collective bargaining. The central inquiry under this test would be whether the official employer, by itself, is able to effectively bargain over the work conditions at issue or whether a third-party firm’s absence thwarts employees’ right to engage in good-faith bargaining over their work conditions. If a third party is needed for an employer to alter or make a concession over a term of employment, then that third party should be considered a joint employer and have to bargain over that term. This proposed test compares favorably to current common-law tests by maintaining more focus on the issues in dispute, by typically involving a more streamlined application, and by providing third-party firms more control over their potential status as a joint employer.