OAKLAND, Calif.--(BUSINESS WIRE)--In December 2015, the National Labor Relations Board (“NLRB”) issued a complaint based on charges filed by of California Nurses Association/ National Nurses Organizing Committee, (“CNA/NNOC”) alleging that Community Health Systems, Inc. (NYSE: CYH) (“CHS”) is a single or joint employer with several individual hospitals. The complaint against CHS alleges multiple labor law violations committed at individual hospitals, and seeks to put CHS on the hook for those violations. CHS has effectively invited federal government scrutiny of corporate structures common in the hospital industry by refusing to follow basic labor law.
If the NLRB and the union succeed, the case will establish precedent for holding large multi-state hospital chains accountable for the actions at individual hospitals. Hospital chains could be required to adopt wholesale, nation-wide changes to employment practices, based on a finding of a violation at an individual hospital. CHS could settle the case against it by agreeing to comply with the law, without setting this potentially expensive precedent for the whole industry. Currently, it is unclear what impact the hearings will have on the recent spinoff Quorum Health Corporation (QHC).
This complaint against CHS follows a similar complaint by the NLRB which sent shockwaves throughout the chain restaurant industry. In 2014, the NLRB issued federal complaints that seek to hold McDonald’s USA, LLC accountable for alleged labor law violations committed at individual McDonald’s restaurants. This action by the NLRB’s General Counsel has the potential to close legal loopholes and strengthen protections for workers who work at local branches of large corporations. This means that increasingly, parent corporations, franchisors, and other businesses can be held liable as the employers of workers at individual facilities.
There is good reason to think that the NLRB and the union will succeed with their claims that CHS violated federal labor law at the local hospitals. CHS hospitals have already faced three federal court injunctions based on charges filed by the CNA/NNOC, and a fourth is pending in federal court in Ohio.