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Joint Employer Ruling

Position: OPPOSE JOINT EMPLOYER STANDARD
Status: LEGISLATION TO REPEAL STANDARD PENDING

History
On July 29, 2014, the National Labor Relations Board (NLRB) General Counsel Richard Griffin released a memo recommending regional NLRB offices to consider McDonald’s USA, LLC as a “joint employer.” This memo allows administrative law judges to hold McDonald's Corp. and McDonald’s franchisees jointly liable in regards to labor cases pending against individual franchisees. On December 19, 2014, the NLRB made good on its memo by issuing 13 complaints  (totaling 78 charges) naming McDonalds corp as joint employer with the franchisee.

 
SUMMARY
The current standard on determining joint-employer status—which has been in place for 30 years—recognizes separate business entities as joint employers if they “share or codetermine matters governing the essential terms and conditions of employment...[meaning] matters relating to the employment relationship such as hiring, firing, discipline, supervision and direction.” The NLRB, however, suggests a new, broader standard which would result in a joint employer finding whenever “industrial realities” make an entity essential for meaningful bargaining.

Although the directive applies only to pending NLRB cases, the decision is seen as an attempt to overhaul the joint-employer standard and apply penalties to both franchisors and franchisees in regards to labor violations. In addition to threatening the franchise model, the directive would make it easier for unions to organize franchised businesses.

If settlements aren’t reached regarding the complaints addressed in Griffin’s memo, the cases will be argued before an administrative law judge. Those rulings can then be appealed to the NLRB itself, and ultimately to federal courts. McDonald’s has stated that it plans to appeal the decision.

In the meantime, the business community is awaiting the NLRB’s decision in the “Browning-Ferris” case, which also raises the issue of joint-employer status—this time in relation to subcontractors. In Browning-Ferris, Griffin filed an amicus brief urging the NLRB to scrap its 30-year-old joint-employer standard, citing franchise relationships as a reason for change.

Position
NFA believes the NLRB memo erodes the proven franchisor/franchisee relationship and jeopardizes the success of the BURGER KING brand.