(Adds comments by restaurant association and by dissenting board members)
Dec 14 (Reuters) - A U.S. labor board's newly minted Republican majority on Thursday overturned an Obama-era ruling that had irked business groups by making it easier for unions and workers to hold companies accountable for the practices of staffing agencies, contractors and franchisees with which they partner.
In a 3-2 decision, the National Labor Relations Board reversed the standard it set out in a 2015 case involving Browning-Ferris Industries Inc and reinstated a previous test that says companies are "joint employers" only when they exercise direct control over workers.
Many companies use franchising or contract labor in part 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.
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.
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 decision came in a case involving two construction companies based in Iowa and Illinois. The board said the companies were the joint employers of several workers who were unlawfully fired for going on strike.
The International Franchise Association and National Restaurant Association, which represents McDonald's Corp and other fast-food restaurant operators, have been especially vocal critics of the Browning-Ferris standard, arguing that it could doom the franchising industry.
The restaurant association said in a statement that Thursday's decision "restores years of established law and brings back clarity for restaurants and small businesses across the country."
The two Democrats on the board dissented on Thursday, saying the Browning-Ferris decision was legally sound. They said the majority failed to provide any "real-world examples or even remotely plausible hypotheticals" that show how the Browning-Ferris standard negatively affected businesses. (Reporting by Daniel Wiessner in Albany, New York; Editing by Alexia Garamfalvi and Leslie Adler)