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OpenMarket: Private Unions

  • Will the NLRB’s McDonald’s Decision Destroy Franchise System or Make Companies More Accountable?

    September 15, 2014 10:56 AM

    That was the question at the center of a September 9 House Health, Employment, Labor, and Pensions Subcommittee hearing, which was held in response to the National Labor Relations Board’s (NLRB) July 29 decision declaring McDonald’s to be a “joint employer” with all of its local franchisees across the country.

    Subcommittee Chairman Rep. Phil Roe (R-Md.) warned that the decision would diminish business opportunities for Americans by destroying the franchisee model that allows entrepreneurial people to use an established brand name to start a business instead of starting on their own from scratch.

    The first witness, Catherine Monson, CEO of a franchise who has been in the business for 30 years, warned that the NLRB decision would impact many lines of business in addition to hotels and restaurants, including accounting and home improvement services. Monson said that, “I have seen franchising allow people to achieve the American dream of business ownership.” She expressed strong disagreement with the ruling, because franchisees pay their own taxes and hire, fire, manage, schedule, and train their own employees. The franchisor sets overarching standards to protect the brand name but has no input on franchisees’ labor relations.

    But if franchisors were required to have direct input over labor relations, they would be liable for any charges of unfair labor practices. The potential for significant legal costs would force franchisors to enhance their oversight of the franchisee. Monson said this enhanced oversight would reduce franchisees’ autonomy, thus effectively ending the franchisee system. When asked about the costs to franchisees from this decision, Monson said there would have to be “cuts.”

    Jagruti Panwala, a first generation immigrant from India and a franchisee, said that she would not have started her own business without the franchise system. Panwala said that franchising helped her business grow by attracting new customers and that, “Ultimately, franchising appealed to us because we still controlled our own business and simply paid fees for the use of a brand name.” Panwala, who employs roughly 200 people at a hotel, said that the impact of a decision forcing her franchisor to be involved in labor relations would hurt morale of her employees, some of whom have worked for her for over a decade. She described the potential restructuring of the franchise system as “devastating” to her business and said that it would make her an employee of the parent company instead of a business owner.

  • Judge: NLRB Acting as "Litigation Arm" of SEIU

    August 28, 2014 11:00 AM

    A federal judge in Pittsburgh has reprimanded the National Labor Relations Board for its heavy-handed and questionable treatment of University of Pittsburgh Medical Center (UPMC) in a labor dispute between the healthcare giant and the SEIU.

    A UPMC hospital is undergoing a two-part trial over SEIU’s allegations that the company committed unfair labor practices. The first case involves the charge that UPMC management conducted interrogations and surveillance of organizing activity and made implied threats of discipline and arrest. NLRB judges have not yet issued a ruling for that case. The second case involves SEIU’s claim that UPMC is one entity, and therefore vulnerable to unionization, which the UPMC denies because it claims that each hospital is its own entity.

    U.S. District Judge Arthur J. Schwab weighed in and said,

    The Court does not see how these requests have any legitimate relationship or relevance to the underlying alleged unfair labor practices; instead, the requests seek highly confidential and proprietary information (except for a few public documents); the requests have no proportionality to the underlying charges; and, the requests seek information that a union would not be entitled to receive as part of a normal organization effort.

    Judge Schwab also said,

    Indeed, the scope and nature of the requests, coupled with the NLRB’s efforts to obtain said documents for, and on behalf of the SEIU, arguably moves the NLRB from its investigatory function and enforcer of federal labor law, to serving as the litigation arm of the union, and a co-participant in the ongoing organization effort of the union…

    In the end Judge Schwab unfortunately decided to let the NLRB get away with the excessive barrage of subpoenas.

    If the NLRB is indeed stepping out of its investigatory function and acting as air support for the SEIU’s organizing effort of UPMC, it would not be the first time the federal bureaucracy has played favorites under President Obama’s watch.

  • Obama Claim Spurious; Labor Unions Furious; New Ranking Curious

    July 28, 2014 9:55 AM

    Coauthored with Alex Bolt.

    President Barack Obama spuriously claimed, "These so-called right-to-work [RTW] laws, they don't have anything to do with economics," when he futilely attempted to thwart Michigan’s enactment of a right-to-work law.

    A new study by the Competitive Enterprise Institute demolishes Obama’s spurious claim by showing how RTW laws, which free workers from a mandate to join a union in order to be employed, benefit states.  RTW laws produce better income, population, and job growth than in forced-unionism states.

  • Did Former Labor Secretary Hilda Solis Violate the Hatch Act?

    July 21, 2014 12:17 PM

    Sadly, but unsurprisingly, it appears that former Secretary of Labor Hilda Solis may have violated the Hatch Act—which prohibits federal employees from engaging in political activity while on duty—by soliciting funds for President Obama’s reelection campaign during work hours.  

    The House Oversight Committee, chaired by Rep. Darell Issa (R-Calif.), broke the story when it released a voicemail of Solis calling a Department of Labor subordinate “off the record” to get help for Obama’s 2012 campaign. The release of the voicemail came as a result of a larger investigation into the Obama administration’s political activity during the 2012 election cycle.

  • Harris v. Quinn Gives Home Care Workers Renewed Opportunity to Get Back Compulsory Dues

    July 1, 2014 3:53 PM

    When you can’t win, change the players. That was essentially the strategy pursued by government employee unions in recent years. This week, it came to a halt.

    Yesterday’s Supreme Court ruling in Harris v. Quinn put a brake on government unions’ efforts to expand the definition of “public employee” to any service provide who receives state assistance, such as home care workers who are paid by Medicaid. The Court ruled that “partial public employees” like home care providers cannot be required to pay for the costs of representation by a union—representation many didn’t ask for.

    Today, the Court gave some home care workers who have been forced to pay dues a renewed opportunity to get those dues back. The Court applied Harris v. Quinn to Schlaud v. Snyder, a suit brought by a group of Michigan home care workers seeking class action certification in order to get back union dues taken from them unwillingly.

  • Is Harris v. Quinn Decision Preview of Abood Challenge?

    June 30, 2014 3:42 PM

    The U.S. Supreme Court’s decision in Harris v. Quinn puts a brake on an ongoing effort by organize labor to expand the definition of “public employee” to just about anyone who receives any form of government assistance, such as home care workers paid by Medicaid (a phenomenon I pointed out in a 2009 Cato Institute study on public sector unions; see page 9).

    However, the Court did not address the issue of whether government employees may be required to pay union dues in the first place. Workers who aren’t union members but work under a collective bargaining agreement can be required to pay “agency fees,” which are essentially dues in all but name.

    That would have required revisiting the Court’s 1977 decision, Abood v. Detroit Board of Education, which upheld a Michigan law, “whereby every employee represented by a union even though not a union member must pay to the union, as a condition of employment, a service fee equal in amount to union dues.” Yet, Justice Samuel Alito, writing for the Court’s majority in Harris, offers some strong criticisms of Abood that could well open the possibility of future challenges to it. 

  • Harris v. Quinn: A Human Interest Angle

    June 30, 2014 3:20 PM

    The Harris v. Quinn decision today by the U.S. Supreme Court is a major human interest story.

    Congratulations to Pam Harris and her son, Josh, and family whose First Amendment freedom of association rights were vindicated.

    In total, eight women petitioned for their rights before the Supreme Court against a state governor and two massive unions. What’s more, all eight of these women were participants in a Medicaid program that afforded benefits for their loved ones who have been ill.

    Caring for chronically ill loved ones is a costly endeavor, financially, temporally, and emotionally.

    In the Harris v. Quinn victory, thwarting Big Labor’s attack on these eight family women and the other women who predominantly provide America’s home health care and daycare (in the sister case of Parrish v. Dayton) is great news.

  • What’s at Stake in Monday’s SCOTUS Decision on Harris v. Quinn

    June 27, 2014 12:46 PM

    This Monday, the U.S. Supreme Court is scheduled to decide Harris v. Quinn, as one of the court’s last two decisions to be handed down in 2014.

    The case, which originated in Illinois, concerns whether home health care workers who receive government assistance are public employees and can be unionized. These workers include individuals who offer home health care services, an industry that is largely run by women. A sister case in Minnesota, Parrish v. Dayton, addresses many of the same issues but focuses on daycare service providers. In both cases, all of the plaintiffs are women.

    There are two big issues to keep in mind for Monday’s decision:

    1. Forcing private employers, employees, and independent contractors to be government employees

    Many daycare and home health care service providers end up being paid with government benefits because an individual they are caring for is a recipient of government benefits, such as Medicaid. At issue in this case is whether these providers may be considered state employees, because some of their earned pay comes from government dollars.

    The argument is ridiculous that anyone directly or indirectly receiving government benefits as payment for service could therefore be considered a government employee. That is like arguing 7-Eleven workers are government employees because 7-Eleven accepts food stamps. In this case’s oral argument, the attorney representing the women suing the government, used the example of medical care, saying that by this logic, every doctor could then be considered a government employee for accepting Medicaid or Medicare.

    2. Violating the First Amendment right to Freedom of Association

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