Bruun’s Views: NLRB Ruling Bad for Oregon Business

Wednesday, December 16, 2015

It’s a safe bet that Oregon’s small businesses, homebuilders, construction contractors and franchisees don’t spend a bunch of time thinking about the National Labor Relations Board (NLRB). There are plenty of more important things to think about and worry about, right? Like finding the next customer, hiring the right employees, and managing Oregon’s complex web of regulation and taxation.

These Oregon small businesses may now need to add the NLRB to the list of worries. A recent ruling by that board, if implemented, would turn longstanding employee and employer relations on its head.

The challenge arises from a NLRB ruling in the case of “Browning-Ferris.” In the case (decided in late August) the NLRB redefines what it means to be a “joint employer.” According to the NLRB, rather than exercising direct control over employment, businesses must have only the mere “right” to exercise control now to be considered a joint employer. This change casts a shadow of uncertainty over just about any business-to-business relationship.

Any business that engages in user-supplier, lessor-lessee, parent-subsidiary, contractor-subcontractor, franchisor-franchisee, predecessor-successor, creditor-debtor, and contractor-consumer relationships could be pulled in. In other words, every Oregon small business that engages in contractual relationships.

It’s worth noting that the actual board of the NLRB consists of 5 members appointed by the President. As such, the composition of the board largely reflects President Obama’s philosophies and political agenda. This means that the current NLRB board marches in lockstep with the whims and desires of Big Labor.

The NLRB’s Browning-Ferris decision unwinds decades of precedence. No doubt, it was done to help expand collective bargaining powers and opportunities for Big Labor. Namely, to pull small mom & pop franchisees businesses into larger labor and workplace negotiations.

This will be incredibly bad for those small businesses, whether restaurants, hotels, hardware stores, gyms or any other franchised small business. It will be equally bad for any other small business that relies on contractual relations to perform. Like Oregon’s construction contractors.

Construction in Oregon, from small homebuilders and remodelers to commercial contractors and subcontractors, will be thrown into an environment of legal limbo, uncertainty, employee-employer tension, and increased operating costs under the NLRB’s broadened definition.

Success in construction contracting, as for other industries, includes building and developing strong relationships across a variety of specialty trades and synergistic vendors. Builders establish and manage contractual relationships with a broad array of design and trade professionals. Think of, for example, the contractor who manages the independent plumber, painter and electrician who all work to accomplish a kitchen remodel. The NLRB decision will now force all of these independent small businesses to reexamine every existing relationship.

Doing my day job, I have had the opportunity to talk to several contractors about the issue. Needless to say, they are upset that federal regulators have created one more roadblock to success.

Oregon’s contractors employ thousands of Oregonians. Construction was the hardest hit industry during the Great Recession. While improved, the industry has not fully recovered. The last thing Oregon’s beleaguered construction workers need now is an ill-considered and disruptive mandate out of Washington D.C.

But that’s now what they’ve got.

Without a fix, Oregon’s contractors will have to take on a new level of risk since they may soon be liable for the employment practices of other firms they do business with. To avoid this, those same contractors may choose to limit contractual risks by expanding their own operations. Yet expanding beyond core expertise or financial wherewithal creates other risks. Trying to self-perform heretofore contracted services would be a dangerous venture for many Oregon contractors.

Thankfully, there is a much better solution: Repeal the NLRB’s decision.

Legislation in congress, the Protecting Local Business Opportunity Act, would do just that. The bipartisan bill, chief-sponsored by Tennessee senator Lamar Alexander of red plaid-shirt fame, would restore the original and long-standing joint employer standard.

Nationally, one of the most influential senators on this issue is Oregon’s own Ron Wyden. Wyden’s past support of common-sense business policies -- like international trade agreements and working timber initiatives -- means that his voice on the joint employer issue will go a long way.

Ron Wyden, along with the rest of Oregon’s congressional delegation, needs to understand how important this issue will become for Oregon’s small businesses and construction industry. Our working families -- those construction families -- have suffered much over the last eight years. While conditions have improved somewhat, wages remain stagnant and consistent job growth opportunities are still too rare.

Oregon’s leaders can do much to help the situation. Fostering the right public education policies, the right tax policies and the right trade policies will help. So will getting federal regulatory policies right. In fact it’s critical.

A positive step on that regulatory front starts by saying ‘no’ to the NLRB’s needlessly disruptive joint employer ruling.

Scott Bruun is a fifth-generation Oregonian and recovering politician. He lives with his family in the 'burbs', yet dutifully commutes to Portland every day where he earns his living in public affairs with Hubbell Communications.

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