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The brewing liberal labor revolution

Success in efforts to raise the minimum wage has sparked new efforts to take on a bigger challenge: recasting labor laws nearly a century old. 

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Brendan McDermid/Reuters
A customer places an order at a Domino's Pizza in New York City.

Jos茅 Juarez never expected to be involved in one of the biggest clashes between American labor and business owners in decades. He was just trying to take care of his family.

Mr. Juarez bikes 16 miles a day from Yonkers, N.Y., to his $10.50-an-hour job at a Domino鈥檚 Pizza franchise in Manhattan.

He could take the subway, but riding his bike saves him at least $5 in fares each day, he says 鈥 which adds up to over $100 a month. After his shift making pizzas and on his days off, he works a second job, delivering food for another uptown restaurant 鈥 allowing him to provide for his family and send some money back to parents in Guerrero, Mexico.

鈥淭here鈥檚 no benefits, no sick days, no medical 鈥 it鈥檚 sometimes depressing,鈥 Juarez says, through an interpreter. 鈥淢y son wants to see me, but I need to rest when I鈥檓 home since I have to work so much with my two jobs.鈥 聽聽

Three years ago, when his son was a baby, Juarez joined the FightFor15 protests. The movement, which has racked up significant wins in Democratic-led states like New York and California, has helped turn the minimum wage fight into one of the most visible fronts in the income inequality battle and reinvigorated elements of the American labor movement.

That momentum has encouraged liberal politicians and policymakers from the White House to city halls to go further, chipping away at labor laws that are nearly a century old and, they say, wildly out of sync with today鈥檚 economic realities.

鈥淭here is a new effort to take old laws shaped under old economic structures and figure out how they can be used to get at the way the economy and work structures exist today,鈥 says Jennifer Gordon, a professor at Fordham Law School and an expert in labor law and immigration.

The nation鈥檚 labor laws, and the basic social contract they established, were mostly formed when the country's corporate behemoths and large-scale employers made American manufacturing a global force. The laws regulated an economy characterized by jobs that provided a steady and sufficient income for middle-class Americans.

Since 1970, however, one-third of those manufacturing jobs have disappeared, signifying a broader shift in the American economy toward jobs that lack benefits, steady hours, or good pay. The trend has in part fueled the most significant populist backlash in a generation, upending American politics. But the laws governing employee rights and corporate practices haven鈥檛 changed.

鈥淪o US labor law has not kept up with changing times in terms of protecting workers,鈥 says Jonathan Westin, executive director of New York Communities for Change, a grassroots coalition of working class families and one of the founding organizations of the FightFor15 movement, that began in New York City in 2012. 鈥淲hether it's the franchise loophole, the independent contractor model, it鈥檚 creating a very different workforce in the modern era.鈥

The liberal labor experiment聽

With Washington in partisan deadlock, liberal lawmakers have made several efforts to close the loopholes they see in the general American labor contract 鈥 some that conservatives and business owners say have overreached what the market can bear.

  • Liberal cities such as Seattle, San Francisco, and Los Angeles, as well as the blue state bastions California and New York have signed flexible versions of a $15 minimum into law in the past year.
  • In May, the Obama administration changed administrative rules to to include an estimated 4.2 million more workers. Before, only salaried workers making less than about $24,000 a year qualified for overtime. As of December, any worker making less than $47,466 a year must be paid time and a half. The Obama administration estimates it will boost wages for workers by $12 billion over the next 10 years.
  • In August last year, the National Labor Relations Board (NLRB) its definitions of a joint employer, making it easier to hold corporate parents responsible for the labor violations of their individual franchisees. Previous joint employer standards, the Board said, 鈥渇ailed to keep pace with changes in the workplace and economic circumstances.鈥
  • In May, New York鈥檚 Attorney General Eric Schneiderman , using the expanded definition of joint employment to hold it responsible for the franchisees accused of underpaying its workers.

鈥淟awsuits like Schneiderman鈥檚 are likewise arguing, we have to go back to 鈥榝irst principles,鈥 鈥澛爏ays Professor Gordon. 鈥淟et鈥檚 look at what we meant by an 鈥榚mployer,鈥 and who should be liable for the laws that we passed in the 1930s.聽

The restaurant industry employs about 14.4 million people 鈥 or 10 percent of the overall US workforce 鈥 generating nearly $800 billion in sales every year, in Washington, D.C.

These are mostly small businesses, with jobs that used to be considered entry-level employment for teens and others. But the average age of workers in the fast-food industry is now 29, and more than a quarter of them, like Juarez, are parents raising children, in Washington.

鈥淥ver the last few years 鈥 there鈥檚 been a definite diminishment of the social contract at work,鈥 says Gary Chaison, professor of industrial relations at Clark University鈥檚 Graduate School of Management in Worcester, Mass.

Two views of the changes

Juarez is happy with the results of his first experience with grassroots organizing: New York City will be among the first places in the country to reach at the end of 2019, giving workers like Juarez significant raises over the next few years.

But small business owners say that $15 an hour will cause them to have cut back 鈥 either on workers or their hours. And the new definition of joint employer, business advocates argue, will damage what they see as the backbone of the American economy.

鈥淔ranchisees, these are small business owners,鈥 says Jess Dance, a partner at the Denver office of Gardere Wynne Sewell, and a former assistant attorney general in Colorado now representing franchisor parents in labor litigations.

鈥淔or decades, it has always been the franchisee's responsibility to comply with employment laws, wage and hour laws,鈥 says Mr. Dance. 鈥淎nd because of that, it鈥檚 been well established, for decades, that franchisors are not joint employers, they are not jointly liable for franchisees violations of wage and hour laws.鈥

For Catherine Monson, CEO of the franchisor Fastsigns International in Carrollton, Texas, the NLRB鈥檚 new definitions imperil a business model that actually helps workers enter the middle class.

鈥淭he real answer to income inequality is the franchise model,鈥 says Ms. Monson, 鈥渂ecause I know many folks who were either immigrants or minorities and decided that they want to change the circumstances of their lives, and bought a franchise.鈥

鈥淎nd through buying that franchise,鈥 she continues, 鈥渢hey not only created jobs and economic output, but pulled themselves up by their bootstraps to get into the middle class.鈥

The dispute over the definition of employer may ultimately have to be adjudicated by federal courts, experts say.

But Juarez, for his part, sees the recent victories of FightFor15 as the path to a better life for himself and his family.

鈥淚n the future, when we start making $15, hopefully we鈥檒l also have a union and benefits,鈥 he says. 鈥淭his will be a lot better for me and my family.鈥

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