The NLRB: Government agency gone rogue

The Obama National Labor Relations Board continues its unrelenting effort to expand union power over the workplace.   Already, the board has stripped workers of their right to challenge by a secret ballot election their employer’s recognition of a union based on a questionable card check; mandated rushed elections—the so-called “Ambush Election” rule—that eliminates the time necessary for employees to hear the other side of the union story and authorized the creation of unprecedented small bargaining units—the groups of employees represented by a union—which will give unions quick easy access into an employer but threatens to balkanize the workplace.

Now, last August, it did what the former Clinton board refused to do: it roped in for union organizing millions of U.S. companies, large and small, in all segments of the economy that increasingly go outside the traditional employment model and contract with specialized service companies to perform a function such as providing temporary help, a building security or janitorial service, or making a part.    

{mosads}Contracting out has become an important tool for small and large businesses.  It allows producers to focus on their core competencies, increase productivity and improve efficiency.  It has spawned the creation of tens of thousands of service companies creating millions of jobs. 

Frustrated by the loss of an economy dominated by manufacturing and large companies, unions view contracting out as inhibiting their ability to organize.  For a union, a larger battle in one locale is easier and less expensive to fight than multiple smaller ones.  Big Labor has been clamoring for a change. 

In perhaps its most reckless and irresponsible decision to date, the Obama board delivered one.

It made the producer an employer of its service company’s employees—liable for the service company’s unfair labor practices and obligated to bargain with a union representing the service company’s employees over the terms of the service contract.

The majority eliminated long-standing common sense requirements that an employer had to exercise “meaningful,” “direct” control over an essential term and condition of employment.  Now, indirect control, however tangential, over terms previously considered non-essential will be sufficient. These are contract provisions routinely used to protect the workplace, and make sure the producer gets what it is paying for, such as: a cost-plus contract price, a description of the general nature of the work to be performed, the number of workers to perform it, minimum job qualifications and the removal from the workplace of a worker for misconduct such as taking illicit drugs.    

The decision will cause significant harm to U.S. business and cost countless jobs.

A key ingredient to economic growth, flexible labor, will be less available as unions add temporary workers to a producer’s regular workforce.  The benefits of using specialized service companies as an aid in production will be greatly outweighed by a collective bargaining obligation that could result in the producer having to bargain away its ability to contract with a different service company or to cut down on workers it no longer needs.   And the unions, of course, will use the bargaining table to gain access to the producer’s other employees and for leverage in the effort to organize the balance of the producer’s employees.  

Unions and their allies defend this expanded standard because of the alleged economic disparity between temporary and regular workers: temporary workers are generally paid less and receive fewer benefits than regular workers.  But lower pay and fewer benefits are typical of temporary work. Temporaries at the Obama Department of Labor receive fewer benefits than its regular workers.  The differential in pay and benefits makes temporary work affordable for the employer and is made up for by opportunities regular work does not provide, such as, an immediate job without a job search, training, experience in different industries, and control over career.

This is not to gloss over the serious social problem that exists when a large percentage of temporary workers (70 percent find permanent work within a year) are locked into lower-paid temporary work or when an employer’s immoral desire for excessive gain causes it to take advantage of its temporary workforce.  But the unavailability of permanent work for some and the shameful avarice of others is insufficient reason for a government agency to ignore the common sense limits built into the law it is charged with administering and issuing a decision that goes far beyond the problem showcased to justify it.

The reach of the board’s joint employer ruling makes its consequences even more alarming.  The new “employer” standard is about to be applied to the relationship between franchisors and their franchisees, threatening to destabilize whole industries that rely on entrepreneurs to open independent businesses to sell their products.

The board acquiesces only to decisions of the Supreme Court.  As a result, it will take years for this issue to be resolved using the judicial process.  In the meantime, an untold number of businesses and their employees will be harmed.  Congressional riders have been added to the 2016 omnibus spending bill that will block implementation of this recent decision as well as the Ambush Election rule.  These are important riders that should not be eliminated.

Schaumber is a former chairman of the NLRB under President George W. Bush.