For many years, the National Labor Relations Board (“NLRB” or the “Board”) and the Courts have considered that two entities constitute a joint employer under the National Labor Relations Act (“NLRA”) only if they demonstrate the ability to directly and immediately control essential terms and conditions of employment such as hiring, firing, discipline, supervision and direction. Recently, however, the Board has broadened that definition by filing three hundred and ten (310) unfair labor practice charges against franchisor, McDonald’s, and some McDonald’s franchisees as joint employers responsible for alleged unfair labor practices. The NLRB alleged that joint employment relationships were established because McDonald’s allegedly possesses and/or exercises control over the labor relations policies of its franchisees. According to the Board, McDonald’s through its franchise relationships and its use of tools, technology and resources engages in sufficient control over its franchisees’ operations beyond protection of its brand, to make it a joint employer with its franchisees, sharing liability for violation of the labor laws that the NLRB enforces. McDonald’s has denied these allegations and will resist the application of a new joint employee standard to its franchises.

This change in direction by the NLRB is opposed by the U.S. Chamber of Commerce as undermining the efficiency of contracting, making companies liable for the actions of their franchisees and making franchisors and their franchisees more vulnerable to union organization of their employees. Not surprisingly, unions are enthusiastic about this change of direction and filed the unfair labor practice charges against McDonald’s as part of a nationwide campaign of workers protests against fast food chains. In addition, the new Administrator of the Wage-Hour Division of the Department of Labor (“DOL”), David Weil, has also embraced this broadened definition of joint employer for the purpose of enforcing the wage hour-laws.

How broadly the NLRB, DOL and other government agencies charged with enforcing the country’s labor and employment laws apply the broadened definition of joint employer used by the NLRB in the McDonald’s cases remains to be determined, but all employers who rely on the use of a separate entity to provide labor whether it is a franchisee or an independent contractor need to be aware of this development and prepare to defend against being determined to be a joint employer by the NLRB, DOL or other agency seeking relief for violations of any labor/employment law.