(New throughout, adds comments from experts and groups, details on NLRB decision, background on McDonald's case)
By Daniel Wiessner
Dec 14 (Reuters) - A U.S. labor board on Thursday overturned an Obama-era ruling that had made it easier for unions and workers to hold companies accountable for practices of contractors and franchisees, a decision welcomed by business groups that could affect a major case against McDonald's Corp .
The 3-2 decision by the National Labor Relations Board reversed the standard it had set in a 2015 case involving Browning-Ferris Industries Inc. It reinstated a previous test that says companies are "joint employers" only when they exercise direct control over workers.
President Donald Trump appointed two Republicans to the five-member NLRB earlier this year, giving his party a 3-2 majority for the first time in a decade. Trump's appointees, who joined the board in August and September, are widely expected to revisit a series of recent NLRB decisions that business groups say unfairly favored unions. Thursday's decision marked the third time this week the board overruled an Obama era decision.
Use of franchising or contract labor allows many companies to avoid the costs and responsibilities of directly employing workers. But a company found to be a joint employer can be required to bargain with unions and may be held liable for labor law violations by contractors, staffing agencies or franchisees.
Prior to the 2015 ruling in Browning-Ferris, companies were found to be joint employers of workers hired by another business if they had “direct and immediate” control over working conditions.
In the Browning-Ferris decision, the NLRB said joint employment could also exist when companies have only "indirect or unexercised control" over workers.
On Thursday, the board said the Democratic majority in Browning-Ferris overstepped its authority by altering the legal definitions of employment.
The two Democrats on the board dissented, saying the Browning-Ferris decision was legally sound and the majority failed to provide any "real-world examples or even remotely plausible hypotheticals" that show how the standard harmed businesses.
In a separate case, the NLRB has filed complaints against McDonald's claiming it was the joint employer of franchise workers across the country. A trial began over 2-1/2 years ago, but Thursday's decision could derail the bulk of the case.
The McDonald's case had been seen as an important test of how Browning-Ferris, which did not mention franchisors, would apply to those companies.