Franchisor-Franchisee Relationship Focus of NLRB General Council

01.08.2015
HR & Safety

Implications also for contractor-subcontractor relationship

In a brief note in its Labor & Collective Bargaining blog the law firm of Jackson Lewis reports on a National Labor Relations Board Office of the General Counsel announcement of more than a dozen unfair labor practice complaints against McDonald’s franchisees and McDonald’s USA, LLC, as joint employers. The complaints allege that McDonald’s USA, LLC and certain franchisees violated the rights of employees working at McDonald’s restaurants at various locations around the country.
The General Counsel’s action heightens anticipation for the Board’s decision in another case, Browning-Ferris, in which the NLRB is expected to change the existing standard for a finding of joint employer. This may affect not only franchisees and franchisors, but also the rights and obligations arising under contractor-subcontractor relationships regarding collective bargaining and setting terms and conditions of employment.
In an amicus brief in the Browning Ferris case, NLRB General Counsel Richard Griffin argued that the 30-year-old standard defining the relationship between franchisor and franchisee, or contractor and subcontractor, be scrapped in favor of a broader definition as joint employer. Franchisors and contractors can exert significant indirect or potential control over day-to-day operations: even if they don’t set wages: and should be involved in collective bargaining, he argued.
Although a decision in Browning-Ferris is expected shortly, the McDonald’s unfair labor practice complaints are just starting down what may be a lengthy procedural path, but which has the potential to significantly change how contractors and subcontractors, and franchisors and franchisees frame their business relationships.

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