A new federal rule set to take effect next month has sparked controversy as it could potentially make it easier for workers to form unions at major corporations such as McDonald's. The rule, announced by the National Labor Relations Board (NLRB), aims to establish new standards for determining when two companies should be considered "joint employers" under the National Labor Relations Act.

The concept may sound technical, but essentially, this rule could expand the number of companies that are required to participate in labor negotiations alongside their franchisees or independent contractors. For instance, it could mandate Burger King to negotiate with workers, even though the majority of its U.S. restaurants are owned by franchisees. Similarly, Amazon might have to bargain with delivery drivers who are employed by independent contractors.

Cathy Creighton, the director of the Buffalo Co-Lab at Cornell University's School of Industrial and Labor Relations, explained that the rule acknowledges the current workforce landscape, where many employers subcontract work and claim they are not the direct employer. However, she emphasized that it is the true employer who calls the shots and holds the financial resources.

The NLRB argues that this new rule is a necessary change from a 2020 rule that made it too easy for joint employers to evade their responsibility to negotiate with workers. The National Labor Relations Act, which has been in place for 88 years, guarantees the right of U.S. workers to form or join unions. Yet, critics contend that this rule is an overreach by the pro-union Biden administration and undermines independent business owners. For instance, the American Hotel and Lodging Association has already filed a lawsuit to block the rule.

McDonald's President and CEO, Chris Kempczinski, defended the franchise business model, saying it has been a successful American innovation that has created wealth for thousands, particularly underrepresented minorities and women. He argued that this model needs support instead of being attacked.

Senators Joe Manchin, a West Virginia Democrat, and Bill Cassidy, a Louisiana Republican, have introduced a Congressional Review Act resolution to overturn the rule. However, for the resolution to pass, it must be approved by both houses of Congress and signed by President Joe Biden. Although Biden has not stated his stance on the joint employer rule, he has positioned himself as the most pro-union president in history. The rule is scheduled to go into effect on December 26.

The personal experiences of workers like Richard Eiker, who has worked in fast food for 25 years, shed light on the potential benefits of unionization. Eiker, who currently works at a McDonald's in Kansas City, Missouri, believes that joining a union could improve his pay, benefits, and working conditions. He shared that his job does not offer affordable healthcare or paid time off, which makes it difficult for him to manage his foot pain and high blood pressure. Eiker argues that McDonald's, with its substantial profits, can afford to treat workers better and that a union could hold the company accountable.

The roots of this joint employer rule can be traced back to the Obama administration. In 2015, the NLRB ruled that Browning-Ferris Industries, a waste management company, should be considered the joint employer of contract workers who were sorting its recycling due to its authority over their working conditions. The decision was upheld by a federal court in 2018. However, during the Trump administration, the Republican-controlled labor board narrowed the definition of a joint employer, stating that companies could only be considered joint employers if they had "substantial direct and immediate control" over employment conditions. The latest rule, passed by the current Democrat-controlled board, aligns more closely with the 2015 Browning-Ferris ruling. It states that companies can be considered joint employers if they have authority, whether direct or indirect, over at least one condition of employment, including wages, benefits, hours, scheduling, duties, work rules, and hiring. It is important to note that this rule only applies to labor relations, while the Department of Labor determines its own joint employment standards for issues like meeting minimum wage requirements.

Despite the limitations, the new rule could have a significant impact. According to the International Franchise Association, local franchise owners employ over 8 million people in the U.S., and millions more work for subcontractors or temporary agencies.

John Motta, who owns 32 Dunkin' locations in New Hampshire and Virginia, expressed concerns that the rule could lead companies like Dunkin' to stop working with franchisees and instead operate stores directly to avoid responsibility for any labor violations committed by franchisees. As the leader of the Coalition of Franchisee Associations, which represents around 46,000 franchisees, Motta worries about losing the independent decision-making power that attracted him to the franchise business.

Attorney Michael Kaufman, who represents companies in labor disputes, highlighted potential complications arising from the rule. For instance, if a business hires temporary workers through a contractor and later asks the contractor to terminate a worker for harassment, the new rule might allow the temporary worker to file unfair labor charges against the business. Kaufman argued that the NLRB is holding the wrong people accountable while believing it is increasing accountability.

Labor unions, on the other hand, argue that the new rule is necessary to ensure that all workers can negotiate fair wages and working conditions. In a joint letter to members of Congress, the AFL-CIO, the Teamsters, and the Service Employees International Union emphasized that workers' collective bargaining rights cannot be realized if the entity with the power to change employment terms and conditions is absent from the bargaining table. They believe the NLRB will consider specific circumstances on a case-by-case basis.

As the December 26 effective date approaches, the outcome of the rule remains uncertain. The clash between proponents arguing for increased workers' rights and critics highlighting potential negative consequences for independent business owners sets the stage for a heated debate in Congress and potentially in the courts as well.