Wednesday, July 30, 2014

NLRB seeks to supersize its joint-employer standard

The NLRB is waging war on employers, and it’s drawing its latest battle line at the McDonald’s drive-in. Yesterday, the NLRB Office of General Counsel announced that it has authorized complaints against 43 different McDonald’s franchises; it also announced that in each case it will issue a complaint against the franchisor, McDonald’s, USA, LLC. The problem, however, that in no case does McDonald’s own the restaurant or employ the workers. Instead, McDonald’s merely licenses its trademarks and operating procedures to the local franchisees. The franchisees, in turn, hire, fire, discipline, pay, and take all other responsibilities for the employees. As a “joint employer,” however, McDonald’s will share liability with the direct employer as if it stood in their shoes.

This announcement by the NLRB is its latest salvo in a war it is waging against employers. In May, the NLRB asked for interested parties to file briefs on the issue of whether the NLRB should revisit its joint-employer standard.

Under the current joint-employer standard, to which the NLRB has adhered for at least 30 years, the Board looks to whether the employer exerts direct and meaningful control over matters related to the employment relationship, such as hiring, firing, discipline, supervision, and direction. The current iteration of the NLRB, however, seeks to loosen the rules to find joint employment whenever one wields sufficient influence over the working conditions of the other entity’s employees. The operational requirements of a franchise relationship will likely trigger this significant-influence test.

According to the New York Times, McDonald’s plans to contest these decisions. Frankly, it has no choice. If a franchisor is a joint employer with its franchisee, the franchisor would not only share liability for the franchisee's unfair labor practices, but also its wage-and-hour violations, acts of discrimination, and other employment sins, not to mention claims related to employees’ negligence, such as slip-and-falls and food-related claims. This liability will be a tough nut for franchisors to swallow, since they exercise no control and bear no responsibility for the employees.

These cases are far from over. In fact, they are just at their beginning. All that has happened so far is that the NLRB has authorized complaints to issue. Hearings will be held, ALJ decisions will be written, appeals will be taken to the NLRB in Washington, and, ultimately, appeals to federal circuits courts and the Supreme Court. This issue is years from a resolution, but nevertheless warrants notice, as it serves as further evidence of the aggressive pro-union position the current iteration of the NLRB is putting forth.