What you should know about the national labor ruling on subcontractors

This week, the National Labor Relations Board made a ruling that could play an important role in holding companies legally responsible for employees hired through subcontractors or by independently-owned franchises. Melanie Trottman of the Wall Street Journal joins Hari Sreenivasan from Washington with more.

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  • HARI SREENIVASAN, PBS NEWSHOUR WEEKEND ANCHOR:

    Once again, we take a look at the changing nature of work in the new economy. This week, the National Labor Relations Board made a ruling that could play an important role, stating that an employer is legally responsible for employees even when they are hired through subcontractors or by their independently-owned franchises. Many of those workers are low-wage, part-time or temporary.

    Joining me now is reporter Melanie Trottman of The Wall Street Journal.

    So, what's at the core of this case here?

  • MELANIE TROTTMAN, THE WALL STREET JOURNAL:

    How much control does a company have over the workers in question? So, McDonald's, for example, do they control the wages and working conditions at an independently owned store in Iowa?

    It used to be that you had to have direct control to be considered a joint employer. That meant you would co-determine things like wages and working conditions. Well, now, the board says even indirect control, you reserve the right to have control over those workers. So, that can make you a joint employer.

  • HARI SREENIVASAN:

    So, what are the ripple effects here? Does that mean McDonald's Corp. is responsible for the wages or whether or not these employees can unionize?

  • MELANIE TROTTMAN:

    Well, what it means is a McDonald's Corp. or a company that subcontracts workers could be drawn into collective bargaining talks with workers at a restaurant or, you know, workers at a temporary staffing company who want to unionize. And the rationale is that, you know, unions say, look, these companies affect the wages and working conditions of these workers, and so, the companies need to be at the table for us to bargain effectively for the worker.

  • HARI SREENIVASAN:

    This has got to be getting some pushback from the business community, saying, "It's going to be harder for me to employ people. It's going to be harder for me to negotiate every time."

  • MELANIE TROTTMAN:

    What they're saying is that, "Look, this is going to undermine the efficiencies of contracting and franchising. You know, we set up our businesses up this way to have flexibility and, you know, this could result in less flexibility. It could raise our costs. It could cause major problems."

  • HARI SREENIVASAN:

    All right. Melanie Trottman from "The Wall Street Journal," joining us from Washington, thanks so much.

  • MELANIE TROTTMAN:

    Thanks for having me.

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