Yesterday, the National Labor Relations Board (NLRB) in the U.S. handed down a ruling that will present significant implications for supply chain logistics, warehousing and customer fulfillment services providers.
In a narrow, 3-2 decision, the NLRB revised the “joint employer” standard for determining when one company shares responsibility for employees hired by another. This ruling applies to the use of contract workers and temporary employees where a hiring agency assumes responsibility for recruiting temporary employees, and those same employees are managed by another firm.
Business media headlines have been quick to cite the impact to fast-food, construction, and service industries but the ruling, if upheld, will have similar dramatic effect across industry supply chains.
The nature of supply chain activity is its constant operational ebbs and flows timed to either end-of-month, end-of-quarter or seasonal fulfillment activities. Large customer fulfillment centers managed by the likes of Amazon, Wal-Mart and others, include significant numbers of temporary workers brought in to support volume surges, especially in the October thru December holiday fulfillment period. Similarly, warehousing, transportation and third-party logistics (3PL) firms utilize temporary workers. It has been a means to leverage a flex workforce to manage overall costs. Companies generally share decision-making on employment, hiring and dismissal. But, in some cases, policies for the use of temporary workers have broached into other dimensions.
As one example, during the U.S. West Coast port disruption that severely impacted so many industry supply chains last year, independent truckers servicing these ports, who were compensated by number of loads completed, were especially vocal in expressing grievances for not being adequately compensated for the enormous amount idle time spent in long queues entering West Coast ports. Similarly, while West Coast Longshoremen were able to negotiate a new five-year contract, independent truckers remain with the same grievances and have conducted wildcat work stoppages.
The NLRB is now more concerned on the meaningful impacts to workers concerning working conditions, and worker rights to bargain with all responsible parties that determine working conditions and benefits. According to business media reports, the NLRB, with its latest ruling, will now consider whether a business exercises control through an intermediary or has the right to do so.
The ruling has triggered new concerns and emotions by businesses that the NLRB is making it easier for temporary workers to organize and join labor unions.
Industry groups are already urging the U.S. Congress to overrule the labor board ruling, and with the U.S. Presidential nomination season underway, what transpires is anyone’s guess.
Whether you agree or disagree with this ruling, the implication, if upheld, is especially significant and will change the labor cost and work policy scenarios related to temporary and flex workforce needs, an essential for many industry supply chains.