March 10th, 2016PDF Download
How labor agencies are targeting worker bargaining power in an increasingly outsourced world.
Richard Griffin swears he had no agenda when he came to serve as the general counsel of the National Labor Relations Board two and a half years ago.
“I didn’t come in with the idea that this needs to be addressed or that needs to be addressed, at all,” says Griffin, blue eyes gazing out from under bushy eyebrows, his Yale rower’s frame slumped in a chair. “Some people may find that hard to believe, but it’s true.”
As the agency’s chief prosecutor, Griffin can only work with the complaints that cross his desk. It was either luck or fate, then, that a series of new cases would give him the opportunity to help fundamentally reshape the rules that govern companies that increasingly rely on subcontractors, temporary workers, franchise employees and the like.
Many of those complaints arose from McDonalds workers who say franchisees retaliated against them for protesting over wages. Griffin, in bringing their case, asserts that McDonalds headquarters has enough control over its franchisees’ operations to be equally responsible for their missteps.
A key test of that theory begins Thursday, when McDonald’s lawyers will face off against Griffin’s in a New York City courtroom. From the workers’ perspective, their complaint targets a problem that’s gotten much worse in recent years: The company that calls the shots is not actually the one who signs their paycheck.
That case, and another decided last year called Browning Ferris Industries, has alarmed a host of industries that have come to rely on franchising and other arms-length relationships to shed responsibility for the people who do their work. Trade associations say they saw such attacks coming, and that is why they resisted Griffin’s appointment from the get-go; they said he would tilt the agency in favor of labor.
“Have I fulfilled their expectations?” Griffin chuckles, wryly, upon being told of such predictions.
From the angry language of industry leaders and conservative groups, the attempts to get the NLRB’s actions rolled back legislatively, and pronouncements by politicians — including Jeb Bush, who had a whole anti-NLRB plank in his now-defunct presidential campaign platform — of the need to rein in the “unaccountable” agency, it seems the answer is yes.
“If you’re a management person, you’re going to say Mr. Griffin’s term is one of the most dramatic activist terms of any general counsel in history,” said Michael Lotito, co-chair of the Workplace Policy Institute at the management-side law firm Littler Mendelson.
Department of Labor Wage and Hour administrator David Weil, in front of a portrait of his mentor, former Labor Secretary John Dunlop. (Department of Labor) Department of Labor Wage and Hour administrator David Weil, in front of a portrait of his mentor, former Labor Secretary John Dunlop. (Department of Labor)
A dynamic duo
Griffin is actually one of two Obama appointees who, in their separate legal domains, have taken on the project of ensuring that bargaining rights and wage protections are upheld by the companies that ultimately govern the terms and conditions of their employment.
The other is David Weil, a rumpled professor who had spent a career studying the enforcement of labor laws in an outsourced world when Obama plucked him from Boston University three years ago to serve as wage and hour administrator at the Department of Labor.
Weil’s confirmation hearing was nearly as rough as Griffin’s. The position had been empty for nearly a decade, with two nominations already having been withdrawn in the face of GOP objections. And Weil had just published the most powerful book of his career: “The Fissured Workplace,” a tour through the ways in which he argues industries remade themselves for maximum efficiency and minimum responsibility for workers.
Ultimately, in early 2014, he was voted through. With no time to waste, Weil set about remaking the Labor Department’s enforcement strategy to reflect his understanding of how businesses had changed.
All too often, Weil says, they have misclassified employees as independent contractors to avoid paying benefits like minimum wage, overtime, unemployment insurance and workers compensation, or brought in temporary staffing agencies that can be swapped out as soon as they get too expensive. So with a beefed up inspection staff, the department has done extensive market research to target investigations in industries like construction and light manufacturing, where abuses are most common.
“We’re trying to understand the way the world is structured in order to maximize our impact,” explained Weil, in a January interview.
Weil’s diagnosis of the problem has had far-reaching influence within the administration — including upon Griffin. The general counsel cited Weil’s research in a brief in the Browning-Ferris case that laid out how the labor relations board should expand its definition of an employer to include not just a company that exerted direct control over workers, but also those who simply reserve the right to do so — reflecting the “economic reality” of their business practices. In its decision, the board adopted Griffin’s recommendation nearly in full.
Their harmonious approaches have raised suspicions on Capitol Hill that Griffin and Weil are mounting a coordinated assault on businesses that depend on all forms of subcontracting, a push that has now surfaced at the Occupational Safety and Health Administration and Equal Employment Opportunity Commission. Republicans on the House Education and Workforce Committee demanded to see any correspondence between the two, which they said would be “inappropriate.” And indeed, some evidence of communication between the two agencies was produced, although the Department of Labor says that’s entirely above board.
“Federal agencies can foster a more efficient and effective government by working together to learn best practices and to broaden understanding of topical developments in relevant legal issues,” said a spokesman for the department.
Nevertheless, Griffin and Weil say they didn’t know each other well before going into public service, and have since only seen each other at the occasional event. And Griffin has been around in the labor movement long enough to understand the changing economic realities facing workers himself.
Mike Fanning, who served as general counsel of the union before Griffin took over and calls him “one of the brightest, hardest working, and sweetest guys you’ll ever meet,” recalls a case before the NLRB that had been appealed all the way to the Supreme Court. In order to write a brief, they needed evidence from their members in large hospitals. Griffin, who grew up in Buffalo as the child of Catholic civil rights activists, was assigned to collect it.
“He was the kind of guy who would walk into any boiler room in America and sit down with the guys and say ‘I’m sorry I’m interrupting, I know it’s your lunchtime, but this is what I’ve got to do.’”
— Former IUOE General Counsel Mike Fanning
“He basically got on an airplane for six weeks, and was in the basements of hospitals, interviewing engineers, putting together the history,” Fanning recalls. “He was the kind of guy who would walk into any boiler room in America and sit down with the guys and say ‘I’m sorry I’m interrupting, I know it’s your lunchtime, but this is what I’ve got to do.’ He found guys to testify, but they wouldn’t trust me, they would only trust Dick.”
Although never working directly for a union, Weil hasn’t lived his life in an ivory tower either. According to a 2014 Boston Globe profile, he dropped out of high school and spent a year doing manual labor in California before going to college. That kind of experience — along with extensive academic research — helped him understand something that’s been evident to the labor movement for a long time.
“The reason it’s important and edifying for advocates who work with low-wage workers is that these people in the administration are starting to call attention to the problem,” says Cathy Ruckelshaus, general counsel for the liberal National Employment Law Project. “That makes a huge difference, because they know it in their bones.”
Weil and Griffin’s actions have prompted yelps of protest from a broad range of industries that rely on “fissuring,” as a broad range of contracted work has come to be known. But none has resisted as loudly as the franchise industry, through its trade group the International Franchise Association, which sees the action around joint employment as simply an indication that the administration is following organized labor’s agenda.
“When you have an administration that is pro-union, and appoints people who are pro-union, and you have unions spending a tremendous amount of money, it provides a fertile environment for unions and employment-related causes to take on high visibility,” says Stuart Hershman, a longtime franchise lawyer who advises the IFA.
The problem, Hershman says, is that franchisors don’t know what kinds of assistance they can provide to franchisees without becoming a joint employer. Franchisors are already spending more on lawyers to try to adapt to the new rules, he says, but they fear it won’t be enough. According to Ruckelshaus, of NELP, the number of cases being filed against companies as joint employers is rising as well.
In response, the association has built a grassroots lobbying network to try to push Congress to stop the Department of Labor and NLRB from pursuing franchisors as joint employers of their franchisees’ workers.The trade group has also recently advocated for laws adopted in a handful of states that formally state a franchisor can’t be held responsible for the actions of its employees — that doesn’t protect them from federal law enforcement, but it’s something.
As a result of the uproar, Griffin and Weil have engaged in an unusual amount of dialogue with trade groups, appearing at conferences and taking private meetings to explain their approach. Just a few weeks ago, Griffin flew down to San Antonio on a Saturday to answer questions at the IFA’s board meeting, in hopes of providing more clarity. People in attendance say they appreciated the gesture, but they were not put at ease.
“He said, ‘I don’t understand why you guys are so upset about this,’” recalls IFA President Robert Cresanti, of Griffin’s presentation. “I think when I walked away from this thing, in my head the phrase that kept ringing was, ‘this guy is really well intentioned, but we can’t afford to live in a world where intentions matter more than results.’ And the result here is the destruction of the franchise industry. And it is slow, and it is not seismic, it’s just piece by piece by piece.”
Weil and Griffin have both said that upstanding employers shouldn’t have any issue with the new enforcement regimes — it’s just those who try to exert control without taking responsibility who’ll run into problems.