A recent ruling by the National Labor Relations Board (NLRB) states that companies using workers employed by a third party (such as outsourcing service providers) may share liability for labor violations committed by the third party.
CIO magazine states that the ruling will primarily impact companies that outsource to a provider with unionized employees. However, it also opens up the possibility for appeals and claims of violations in environments where no unions are involved.
Initially, the ruling won’t impact offshore or nearshore operations of providers delivering services to U.S. firms. However, U.S.-based operations of India heritage firms, for example, will be affected. One specific risk for service providers relates to rebadged employees. Providers will need to be vigilant not only local unions but with regard to benefits and dismissal policies.
In this climate, clients and providers should collaborate to review their relationship, assess the implications of the ruling and closely monitor potential problems.
