The growing practice of hiring contract workers from third-party staffing agencies instead of full-time employees took a hit yesterday when the National Labor Relations Board (NLRB) ruled 3-to-2 that such firms are nonetheless responsible for labor violations involving those workers.

The ruling came in the case of Browning-Ferris Industries, a Houston-based waste management company that used a staffing agency to provide workers for its recycling center in Milipitas, Calif. The NLRB ruled that Browning-Ferris was a joint employer even though it didn’t directly hire or have immediate control over the workers in Milipitas.

The ruling also means that companies hiring contract workers will have to directly bargain with unions representing those workers. And that in turn means these workers can vote to unionize company by company.

In addition, the ruling extends to franchise operators like McDonald’s, which can now be held responsible for labor law violations at individual franchises.

If you own or operate a small to medium-sized business, managing all your employees plus meeting federal labor laws and regulations can be daunting, especially with new rules being issued all the time. To help you understand your rights and responsibilities in every facet of running a business, please order a copy of Personnel Concepts’ All-On-One HR Compliance Program for Small Businesses.