On July 29, 2014, the National Labor Relations Board (NLRB) Office of General Counsel issued a press release suggesting that it would seek to pursue unfair labor practice charges against McDonald’s franchisees – as well as against the franchisor, McDonald’s USA, LLC, as an alleged joint employer. The announcement appears to be part of an ongoing effort to broaden the joint employer standard under the National Labor Relations Act (NLRA). Here’s what employers need to know about this issue:
The Current Joint Employer Standard: The current joint employer for the NLRA recognizes that two or more business entities that are separate may be joint employers when they “share or codetermine those matters governing the essential terms and conditions of employment.” This is typically established by showing that the employer “meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision, and direction.” Laerco Transp., 269 NLRB 324, 325 (1984).
The New Proposed Joint Employer Standard: In a recent amicus brief, the Office of General Counsel urged the NLRB to abandon the current joint employer standard and adopt a new, broader standard. The new standard proposed would find a joint employer relationship if “under the totality of the circumstances, including the way the separate entities have structured their commercial relationship, the putative joint employer wields sufficient influence over the working conditions of the other entity’s employees such that meaningful bargaining could not occur in its absence.” As the Office of General Counsel described it, this would result in a joint employer finding whenever “industrial realities” make an entity essential for meaningful bargaining.
The McDonald’s Press Release: By publicly announcing an effort to target McDonald’s, the Office of General Counsel is signaling that it believes McDonald’s, as a franchisor, will qualify as a joint employer under the new proposed standard. This has significant implications not only for McDonald’s, but for all franchisors, as well as other companies. For more information about how this issue could impact franchisors, click here.
Takeaway: The Office of General Counsel is seeking to broaden the joint employer standard under the NLRA so that more companies, including franchisors, will be found to be joint employers. But the NLRB has not yet adopted this new standard. As of today, the current joint employer standard remains the law, but that may not be the case for long.