For the second time in a month I am writing a supplemental post. The previous one, which you can find here was about the US Supreme Court decision that employers do not have to pay employees for the time they spend in post-shift security checks. This time we are circling back to an NLRB matter from my November 20 post, which you can find here. In that post, we saw that the NLRB might seek to join McDonald’s USA, LLC a franchisor as a respondent in complaints by employees against some of its franchisees. Yesterday the NLRB in fact issued consolidated complaints, naming the franchisor as a respondent and a joint employer. Join The EmpLAWyerologist after the jump for more information….
So what happened? In its press release, which you can find here the NLRB says that it received 291 charges from employees of different McDonald’s franchisees, primarily alleging actions taken in retaliation for activities aimed at improving their wages and working conditions. The NLRB General Counsel’s Office found 86 of those charges to be meritorious and stated that if they were not resolved, it would file formal complaints and name the franchisor, McDonald’s USA, LLC as a joint respondent. As of yesterday, the NLRB filed 13 complaints involving 78 charges against the franchisor and the franchisees. 11 other cases have been settled and another 71 are still under investigation.
The theory behind including the franchisor as a respondent is that McDonald’s USA, LLC exercises enough direct control over the franchisees’ employees to justify treating the franchisor as a joint employer. I have previously written about joint employment, here, among other places. While there are factual disputes as to how much actual direct control the franchisor exercises over the franchisees’ employees, (the franchisor does not actually employee anyone who works for the franchisees) the other issue is that the NLRB’s position strikes at the very heart of the franchise model. One of the attractions the model offers is that it has long been held to insulate the franchisor from any liability for its franchisees’ misconduct. There is tremendous concern that such a ruling being allowed to stand –and to gain momentum–could severely undermine this model, which in turn could have serious ripple effects. I am not going to venture a guess on that one, but I do think that the NLRB will face some challenges on its position on joint employment on appeal.
These cases and any others that are not settled and result in more filings by the NLRB will probably leave these issues in flux for quite a while. Why is that? The losing parties will likely appeal, and it may take oral argument before the US Supreme Court to settle the issue–assuming the Supreme Court agrees to hear an appeal. If so, that day is likely years away.
What should you do in the meantime if you are a franchisor? First, visit The EmpLAWyerologist’s archives and read the previous posts on co-employment/joint employment. Next, consult with competent employment counsel who is versed in this issue and who understands or can get up to speed on the law as applied to franchises to create your game plan while the parties, and possibly the courts expend tremendous amounts of time, energy, and resources attempting to straighten out all the issues.
Stay tuned for The EmpLAWyerologist’s regular post coming to you next week before the holiday.
If you or your company would like to learn more about co-employment and minimizing joint liability, click here to download my webinar on Joint Employment, which aired at 1 p.m EST Tuesday November 25, 2014.
Disclaimer: This post’s contents are for informational purposes only, are not legal advice and do not create an attorney-client relationship. Always consult with competent employment counsel on any issues discussed here.
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