Updates on the Joint Employer Status

Mid-December saw an overturned Obama-era ruling that had increased a union’s and employer’s ability and right to hold franchisors and companies responsible for franchisees’, contractor’s and even staffing agency’s labor law violations. In the earlier ruling, if a company or franchisor provided training or policy, they could be declared a joint employer.  

This 3-2 majority vote came in after President Trump appointed two Republicans to the National Labor Relations Board (NLRB), and is expected to be the start of a string of overturned rulings that some businesses considered unfair with a strong leaning toward unions. This reversal made the definition of a joint employer clear: One that exercises “direct control” over workers.

 

The Browning-Ferris Case

It was the Browning-Ferris case that prompted the ruling and change in status. In this case, the NLRB ruled that Browning-Ferris Industries (BFI), a waste management company, was a joint employer with Leadpoint, a staffing service company that supplied several workers to BFI. When some employees were fired after going on strike–a bad judgment call on someone’s part–both companies were held responsible.

The possible ramifications were discussed throughout the restaurant and business realm. Many believed it was an attempt by unions to obtain access to a franchisor’s “deep pockets” when a franchisee violated a labor law. Others felt the whole franchising model could be at stake. The International Franchise Association and the National Restaurant Association were particularly vocal in their protests.

 

The McDonald’s Case

More recently, franchisors claimed another success when cases regarding McDonalds and the joint employer status were suspended. The delay was due to a legal action taken against McDonald’s and a franchisee.

According to the Times, the lawsuit was filed in 2015 by former McDonald’s workers alleging that one of McDonald’s franchisees acted in a “racially motivated way” when they fired several employees. They sued both McDonald’s Corporation and the franchise. At the time, NLRB sided with the employees and held the corporation responsible as a joint employer.

Because of the new NLRB rulings, McDonalds and franchisees were granted a 60-day delay, giving them time to settle out of court as well as determine if complaints are still valid following the recent decisions.

 

Why Restaurants are Celebrating

Some believe that big fast-food corporations should be held responsible for how their employees are treated across the globe. Labor groups argue that this decision will hamper the ability to unionize.

But the ruling that centered on the Browning-Ferris case didn’t just affect large mega-restaurants and businesses, it affected everyone. So, should the small restaurant with a few franchises be held responsible for how a franchisee handles a labor issue when they are halfway across the country? While I certainly want to protect both brand and employees, I don’t think legal ramifications will help the cause when lack of communication may be the source.

The whole idea or business model behind a franchise is that it is an opportunity to extend the brand while shifting responsibility to an independent contractor. Though many of you may not agree, I say let the government take a step down and let each business owner be responsible for the training and care of their own employees. If they don’t understand how to manage a restaurant staff and keep their employees happy and motivated, they should bear the brunt of the repercussions, not the franchise model.     

 

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