Is it the end of contract employment? Controversial NLRB Ruling makes companies responsible for violations made by contractors

The National Labor Relations Board (NLRB) came to a decision Thursday that companies are liable for labor violations done by their contractors. This may end contract employment.

NLRB's ruling determined that waste management firm Browning-Ferris Industries is a "joint employer" that should negotiate with Teamsters union for the workers from a certain contract staffing firm working in one of the company's recycling plants.

This decision will change how franchisers do their business. They can now be held liable for hiring and firing any of their franchisees. Routine business decisions will also be checked to determine how they will affect the efforts of a union to organize employees.

This means corporations may be held liable for their workers if subcontractors and franchisees violate any labor law. Three of the five members of the board who voted for the decision said the old standard is not enough to keep up with the current workforce, where diversity or workplace arrangement has grown drastically.

To understand just how diverse it has become, there were 2.87 million workers in 2014 employed through a temporary agency, which is a significant growth from 1990's 1.1 million.

Those who opposed the ruling claim that it could have adverse effects on businesses such as restaurants, manufacturers, retailers, hotels, cleaning services, and even constructing firms.

U.S. Chamber of Commerce senior vice president Randy Johnson said, "This decision has broad implications, as it appears to upend decades of settled law defining who the employer is under the National Labor Relations Act."

Food chains like Burger King and McDonalds will be hit the hardest and business advocates believe these companies will even cut ties with its local franchise owners.

Before the ruling, the standard was very different. A company can be considered a joint-employer if it has control over the working conditions. But for the new standard, a company is a joint-employer if its control over the working conditions is indirect, or if its authority over the working conditions is reserved.