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OpenMarket: Labor and Employment

  • NLRB's Joint Employer Ruling Challenged in Court

    January 25, 2016 1:22 PM

    CEI applauds Browning-Ferris’ stand against the National Labor Relations Board's upending of employment liability and flexibility, otherwise known as the new joint employment standard. 

    The NLRB regulators last year unilaterally changed the definition of who is a joint employer in a way that could expose tens of thousands of businesses nationwide to increased costs and liability by making one employer responsible for another’s actions. The NLRB’s action will block a path toward entrepreneurship, reduce job creation, expand employer liability, increase employment insurance costs, lead to a surge in lawsuits, and disrupt thriving business models. It's a move that aids labor union organizing at the expense of jobs and economic opportunity.

    Regulators also set a bad precedent. The Board overturned decades-old employment law that held a joint employer relationship existed when one company exercised “direct and immediate” control over another company’s workforce. But now, under the NLRB’s new definition, companies may be held legally liable for labor violations committed by other employers with whom they contract, even if they only exercise indirect control, unexercised potential control, and a vague notion of “economic and industrial realities.”

  • Labor Policy Developments to Watch in the New Year

    January 22, 2016 12:39 PM

    Labor policy reform was a fast-moving issue during in the past year. At the federal level, labor policy became more tilted in favor of union organizing, while state reform was a mixed bag.

    The National Labor Relations Board changed how union elections are conducted, made determining who your employer is a tough question, and made company email systems a union organizing tool.

    Outside the Beltway, Wisconsin became the 25th right-to-work state, giving workers the right to forgo paying union dues to a union they disagree with. Major cities around the country approved $15 minimum wages, including Seattle and Los Angeles.

    The coming year looks to continue rapid pace of labor policy changes. While 2015 was the NLRB’s year, it looks like the DOL is going to take the reins in 2016.

  • How Do We Give Workers a Fair Shot? Remove Regulatory Roadblocks

    January 13, 2016 12:16 PM

    In President Obama’s State of the Union address, he echoed a theme that has been constant throughout his tenure, saying, “how do we give everyone a fair shot at opportunity and security in this new economy?”

    One way President Obama could have a productive final year in office and work toward expanding opportunity is by directing the National Labor Relations Board to stop making it more difficult for employers to hire and entrepreneurs to get started. During Obama’s time in office, the NLRB has imposed costly regulations that threaten to disrupt workplaces around the nation and the greater economy.

    One example is the NLRB’s recent change to the joint employer standard.

    For decades, a franchisor and franchisee were considered two distinct entities. This is commonsense. A franchisee is an independent small business owner that hires and fires employees, creates their schedules, and is responsible for any labor violations against its employees. This business relationship benefited all involved—employers, consumers, and workers. It allowed entrepreneurs an easy way to strike out on their own. They are able to use the franchisor’s brand name, and benefit from the parent company’s marketing efforts and tested business methods. In return, the franchisee is liable for its day-to-day business practices and is their own boss.

    The franchise business model thrived under the decades old joint employer standard. Franchises employ millions of workers and account for 10 percent of new jobs in 2013 and 2014. Projections from the International Franchise Association show that the “gross domestic product (GDP) of the franchise sector will increase by $521 billion or 5.2 percent in 2015, an increase over the $496 billion generated in 2014.”

  • Union Subsidy Eliminates So-Called "Free Rider" Problem

    January 6, 2016 1:29 PM

    On January 11, the U.S. Supreme Court will hear oral arguments in Friedrichs v. California Teachers Association, a case that could provide right to work protections to state and municipal employees across the nation—meaning public employees cannot be required to pay dues to a union or risk being fired.

    At issue is whether government employee unions should be to compel non-members to pay “agency fees,” which cover the costs of collective bargaining, as a condition of employment, in lieu of dues. The current forced dues precedent was established under the 1977 Supreme Court case, Abood v. Detroit Board of Education.    

    This case is all about worker freedom. No worker should have to pay money to any organization in order to keep his or her job—especially inherently political organizations like government unions.

    It is also about the rights of voters and taxpayers. Many outcomes of collective bargaining should up to elected officials. Negotiations between unions and state and local government officials should not determine whether public funds go toward contributing to public employee pensions, other municipal needs, or necessitate the raising of additional funds. Those decisions should be left exclusively to elected officials, not private organizations like government unions.

    Further, a large number of public employees who are forced to pay dues never had a chance to vote on whether they desired union representation in the first place. Research finds that most public employees never voted for the union that represents them and collects dues from them. As Heritage Foundation labor policy analyst James Sherk notes, “Fully 99 percent of the teachers in Florida’s largest school districts had no choice about being represented by their union.”

    Labor unions contend that they need to collect agency fees because non-members still benefit from collective bargaining, contract administration, and grievance procedures. Therefore, union officials claim that if they were not allowed to compel non-members to pay agency fees, those workers would be “free riders” who benefit from union representation.

    This is a bogus argument for two reasons.

  • Will SCOTUS Friedrichs Case Lead to Member-Only Unions?

    January 5, 2016 8:25 AM

    Government employee unions have a lot at stake in Supreme Court case, Friedrichs v. California Teachers Association—especially access to millions of dollars in compulsory “agency fees” from non-members. Worried about the Court ruling for the plaintiff, some union leaders and left-leaning pundits are considering their options.

    One possibility is member-only unions, explored in a November 2015 Century Foundation paper, which notes the advantages for individual union members when unions try to attract them, rather than corral them through compulsory agency dues.

    “One benefit to the members-only approach is in order to survive, these unions must be built upon activism, involvement, and democratic governance,” note authors Moshe Z. Marvit and Leigh Anne Schriever. “Further, in order to remain in existence, a members-only union must keep the membership engaged, educated, and active.” (p. 9)

  • In Friedrichs v. CTA, Supreme Court Can Strike a Blow for Free Speech

    January 4, 2016 4:47 PM

    Oral arguments in one of the most important Supreme Court labor cases in years are set for January 11, with potential major implications in the one area where unions remain strong—government work.

    The case, Friedrichs v. California Teachers Association, was brought by a California school teacher who objects to paying for representation she doesn’t want to an organization that pushes a political agenda she doesn’t support. The plaintiff, Rebecca Friedrichs, seeks a remedy to unions’ ability to compel non-members at a unionized workplace to pay for union representation.

    Unions collect those non-member payments, known as “agency fees,” in lieu of full-fledged union dues, supposedly to address what they call the “free rider” problem of the union having to represent non-members.

    In the realm of government employment, the Supreme Court tried to address this by requiring non-members to pay the union only for the expense of representing them, not for politics or other purposes, in its 1977 decision in Abood v. Detroit Board of Education.

    However, collective bargaining between a government entity and a union is inherently political because it involves making public policy decisions through the allocation of government funds. As the Friedrichs cert petition notes, “Such spending necessarily requires either spending less on other public programs or raising additional public revenues—either of which is an important public issue.” (p. 17)

  • Promoting Economic Freedom in 2016

    January 4, 2016 1:00 PM

    It was Marxists who wanted permanent revolution, but it is capitalists who have delivered it. The last 50 years have seen a sustained revolution in the way people’s needs for goods and services are supplied.

    Businesses have revolutionized their structures to provide continuous improvement in the consumer’s experience.

    Innovation and creative destruction have swept away once mighty market powerhouses in a way that antitrust laws could never dream of—search in vain for a Borders or Blockbuster at your local mall.

    Payments systems have made purchasing services as well as goods much easier; you no longer have to pay a cleaner or handyman with cash, for instance, thanks to apps like Handy and Taskrabbit.

    And the old verification system of a businessman’s reputation has been bolstered by a variety of feedback mechanisms, like Lyft’s or Tripadviser’s ratings system.

  • Protecting American Workers and Job Creators with the Omnibus

    December 9, 2015 5:06 PM

    This week, Congress is working against the clock to avert a government shutdown and pass new spending legislation before the current continuing resolution expires on Friday, December 11. As lawmakers continue to discuss a variety of policy riders during omnibus negotiations, here’s why the joint-employer rider should be a bipartisan no-brainer and be included in any spending legislation that funds the National Labor Relations Board (NLRB).

    The joint-employer policy rider prevents enforcement of the NLRB’s new joint-employer standard in the 2016 Labor, Health and Human Services Funding bill. The policy rider restores the traditional joint-employer standard, which fostered the creation of thousands of beneficial business relationships, including franchise businesses, contractors, and temporary staffing agencies.

    In August, the NLRB unilaterally changed the definition of joint employment in a way that could expose tens of thousands of businesses across the United States to increased costs and liability. For decades, the NLRB held that a joint-employer relationship existed when one company exercised “direct and immediate” control over another company’s workforce. Under the NLRB’s new definition, companies may be held legally liable for labor violations committed by other employers with whom they contract, even if they do not exercise direct control over that company or its employees.

    By making employers liable for the practices of contractors, franchises, and temporary staffing agencies, companies will likely bring many functions in-house, take greater control of operations, or eliminate jobs. Defining companies that merely contract with each other as joint employers, the NLRB threatens entrepreneurship and the ability of American businesses to grow and create jobs. Moreover, the NLRB’s redefinition of joint employment threatens franchising, which has provided countless small entrepreneurs with the opportunity to start their own businesses.

  • Official Time and Criminal Misconduct by Federal Employees

    December 2, 2015 11:51 AM

    With under two weeks until Congress must pass an omnibus spending bill to avoid a government shutdown, one policy that should be on the chopping block is union official time, a practice that allows federal employees to conduct union business, instead of their public duties, on the taxpayers’ dime. Not only is official time an obvious waste, it also may breed corruption.

    Recent analysis at found that the American Federation of Government Employees (AFGE), a federal government union, led all American federal unions in criminal misconduct from January 2014 to June 2015, with 13 union officials found guilty and three indicted at the time the article was published.

    While it is unknown why AFGE leads the pack in criminal misconduct, the little known government union special privilege—official time—may explain some of the union’s proclivity for malfeasance.

    Five AFGE union officials found guilty or indicted of criminal activity ranging from embezzling to mail fraud to theft were granted 100 percent union official time, which means they never did any government work while paid by the taxpayer.

    As of November 17, 2015, the number of AFGE union officials found guilty is 14 with the conviction of former AFGE president Stephanie Hicks at the Birmingham’s Veterans Affairs Hospital. As The Gasden Times reports:

    A federal judge on Tuesday sentenced the former president of the federal employees union at the Birmingham’s Veterans Affairs Hospital to six months in prison, plus six months home detention, for embezzling more than $92,000 from the local chapter.

  • NLRB Attack on McDonald's

    November 18, 2015 3:14 PM

    No one accuses the government of being responsive to the public. Whether you are a veteran seeking care or need to renew your license at your local DMV, you can expect to wait. Another area where the public can expect to wait on the government: responses to public records requests. 

    Here, at the Competitive Enterprise Institute, we are all too familiar with waiting on FOIA requests. For example, “EPA has stonewalled CEI repeatedly and continues to slow-walk CEI’s ‘Windsor’ request, insisting it need only process 120,000 records at the glacial pace of 100 records processed per month; that is, it says it will conclude this production in 100 years.”

    On the other hand, the federal government doesn’t like to wait and will use its power to extract information it wants from the public. 

    In Investor’s Business Daily, I summarize the National Labor Relations Board’s attempt to use its vast powers to force McDonalds to handover proprietary data:

    Last year, NLRB General Counsel Richard Griffin consolidated dozens of unfair labor practice charges against McDonald's franchisees and named McDonald's USA LLC as a joint employer responsible for alleged labor-law violations of privately owned franchises all across the country. The case had stalled because the NLRB has asked for multiple continuances.

    The NLRB claimed the case has been held up because of a purported lack of transparency from McDonald's. It complains that McDonald's has heavily redacted information that it needs to make its case.

    In defense, McDonald's contends the blacked-out information is not relevant to the case or concerns business practices that are proprietary information. In September, the NLRB opposed McDonald's request to commence the case, but a trial is tentatively set to start Jan. 11. It's about time.

    McDonald's has produced over 100,000 pages of documents and calls the NLRB's discovery requests excessive. McDonald's has gone out of its way to supply the NLRB with the information it will need to question witnesses, build its case and begin the hearing.


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