For too many people, work means low pay, unpredictable hours, and nonexistent opportunities for advancement. A major reason for this dire situation is what David Weil has termed “workplace fissuring.” Fissuring occurs when large companies devolve responsibility for parts of their operations onto smaller, less-accountable companies, or even onto workers themselves (through contract work and the gig economy). When workplaces fissure, workers can lose rights, such as legal protections for effective collective action aimed at improving their wages and working conditions. But a bill pending in Congress—the Protecting the Right to Organize (PRO) Act, which was recently advanced through the House Education and Labor committee—would blunt some of fissuring’s worst consequences.

Workplace fissuring may at first sound like an organic process, but it’s the result of strategic decisions made by employers. Consider the troubled company WeWork, and its reported plan to fire its entire cleaning staff. WeWork doesn’t plan to hire new cleaners, or even to save money by having its remaining employees start cleaning their own offices. Instead, current cleaners have been told they will have the option of being hired by another company that will contract with WeWork to provide cleaning services. In other words, WeWork plans to use a contracting arrangement to shed its responsibility as an employer. If these employees have a problem, they’ll now have to take it up with the subcontractor who will be responsible for not just their payroll and taxes but for complying with labor and employment laws.

WeWork is far from unusual in its decision to stop directly employing its cleaners; many companies subcontract things such as their janitorial, security, and meal preparation operations. Which company actually issues workers’ paychecks may seem like an unimportant detail—but it can have significant consequences, especially if something goes wrong. For example, if a janitorial employee believes they have been paid less than the minimum wage, they would likely sue their employer, not the company whose building they clean. But the subcontractor—unlike their larger client—might not be able to pay a judgment, and it might also be less concerned about the kind of bad publicity that could harm a global brand.

Fissuring Limits Workers’ Right to Protest at Their Place of Work

Subcontracting also has consequences for employees’ rights to protest how they are treated at work. The National Labor Relations Act (NLRA) protects workers’ rights to engage in workplace collective action. But the NLRA also prohibits certain “secondary activities,” which are union protests directed at an entity other than the company with which the union has a labor dispute. The NLRA’s prohibition on secondary activity was added to the statute in 1947 and amended in 1959, because Congress wanted to end practices such as “blackmail” pickets and strikes that were capable of shutting down neutral businesses entirely, such as by blocking all deliveries to a business. However, the statute was drafted broadly enough to encompass even activity that simply seeks to persuade onlookers, such as sidewalk picketing that makes a moral case against patronizing a secondary business. Further, courts can block union activity that violates these rules, and affected companies can sue for damages.

In the age of workplace fissuring, the NLRA’s secondary boycott provision presents a special challenge. The “primary” employer for a group of janitorial workers might have an office where the workers have never set foot—or it might not have an office at all, instead existing mainly in cyberspace. In this scenario, the logical recourse for workers would be to protest at the location where they go to work each day. Protesting at this “secondary” location can make sense, too, because in many cases the (larger) client is the one with the power to dictate the terms of any contract with the (small) primary employer, and that contract effectively dictates how much workers can be paid.
When unions and workers try to protest at workers’ job sites, the NLRA’s secondary activity provision can interfere. A complicated set of rules governs workers’ picketing where multiple employers operate at one place, and it can be easy for unions to slip up. For example, in one recent National Labor Relations Board (NLRB) case, the agency found that cleaners picketing sexual harassment by their supervisor outside the office building they cleaned ran afoul of these rules when they passed out fliers to building tenants referring to the workers as “their” janitors. The problem, according to the NLRB, was that this pronoun would make people think that the building or its tenants employed the janitors directly, which was not the case. (This case is now pending on appeal; I co-authored an amicus brief in support of the union in the case.)

Based in part on the union’s choice of pronoun—the very definition of a legal technicality—the NLRB decided that the janitorial company did not violate the NLRA when it fired the protestors, a group of low-wage workers who were seeking to make their working conditions safer. That outcome was not only deeply unfair to the workers involved, but it also sends a chilling message to unions: get one word wrong, and workers could lose their jobs, and unions themselves could also be forced to pay damages to the “neutral” employer.

The predictable effect of this combination of workplace fissuring and the legal prohibition against secondary activities will be to chill organic worker protest, in favor of making sure that labor lawyers carefully vet each word of every picket sign or flier.

The law gives the NLRB flexibility to interpret this provision broadly, and under President Trump, the NLRB has repeatedly taken positions that disempower worker protest. These decisions also tend to interact with each other to produce bad outcomes for the most vulnerable workers.

For example, consider how the NLRB’s approach to secondary activity interacts with another recent decision about whether contractors’ employees may protest at their work site. The general rule in labor law is that employees can pass out literature on some areas of their employers’ property during times when they are not required to be working. But the Trump NLRB recently reversed this rule for off-duty contractors, holding that the owner of a performing arts center was free to expel workers who were handing out fliers because they worked for a ballet company that performed at the center, and not for the center itself. True, the ballet company workers could take their protest to adjacent public land. But the farther they get from their intended audience, the more they need to rely on less polite methods of communication, such as picket signs and loudspeakers, rather than fliers and quiet conversations. And picket signs are riskier for workers, because they are more likely to violate labor law’s secondary activity rules than are other methods of communication.

Fissuring Undermines Collective Bargaining

Fissuring also has a negative impact on workers’ ability to seek better working conditions through unionization and collective bargaining. If a group of contracted workers—such as the janitors described above—vote to unionize, they may be entitled to sit across the bargaining table from only their direct employer, not the company that contracts for their services. That could make for a futile bargaining experience: if workers demand pay increases or greater scheduling predictability, the employer’s response might be that it can’t deliver either because it is too severely constrained by the terms of the contract with its clients.

Workers might be able to break through such a logjam if they had a right to bargain with both their direct employer and the contracting company, but that depends on if the contracting company qualifies as a “joint employer.” If it does, then the contracting company will have the same obligations under labor law as any other employer.

Who counts as a joint employer is another area where the Trump NLRB has sought to narrow companies’ obligations. During the Obama administration, the NLRB decided that it would consider companies to be joint employers if they had the power to exercise control over core working conditions, such as hiring, pay, and scheduling. But the Trump NLRB has proposed a rule that would treat companies as joint employers only if they actually exercise “substantial direct and immediate control”—a standard that could easily be manipulated by sophisticated companies.

The Independent Contractor Trap

Contracting arrangements can place workers at significant disadvantages as compared to working directly for the companies to which they provide services—but at least a contracted employee still has an employer, who is responsible for meeting legal minimums. Some workers do not even have that, because their employer has decided to treat them as independent contractors. By misclassifying employees as independent contractors, employers shift legal risk directly onto the workers themselves while lowering their own costs, as most statutory employment laws do not apply to independent contractors. In addition, independent contractor status can absolve companies of paying millions of dollars in employment taxes.

Seeking to unravel whether a group of employees has been misclassified under various employment laws can be expensive and time-consuming. For example, the NLRB distinguishes employees from independent contractors by considering ten separate factors that often point in different directions. This makes the law very unpredictable—and coupled with that, the NLRA’s weak remedies do little to deter employers from erring on the side of treating workers as independent contractors and not employees. Further, while most workers who are not covered by the NLRA may still engage in concerted activity—though they may not have legal recourse if their employers retaliate—some forms of collective action by independent contractors could violate antitrust law. Thus, workers who believe they have been misclassified by their employers face legal risk if they decide to come together to seek better treatment.

The PRO Act Would Ensure Fair Treatment to All Workers

The rise of workplace fissuring means that, as both a legal and a practical matter, an increasing number of employees cannot come together to better their own working conditions through collective action. The PRO Act would respond to these problems.

Significantly, it would eliminate restrictions on union secondary activity altogether. It would also revert to the Obama-era test for joint employment, bringing greater certainty and straightforwardness to an area of law that has proven unpredictable over the past forty years. And it would adopt a clear, three-prong test to distinguish employees from independent contractors. That test, known as the ABC test, has recently been included in a bill in the state of California and would, for example, give Uber drivers the same rights as other workers. Just as importantly, the PRO Act would allow workers to file lawsuits to enforce their rights under labor law, and impose real penalties on employers who break the law. All these measures would help reset the balance of power between workers and employers, making the PRO Act a landmark legislative proposal for the 116th Congress.