NLRB’s General Counsel Opines Franchisor Can Be Liable For Unfair Labor Practices Under “Joint Employer” Standard
The California Supreme Court recently ruled franchisor Domino’s Pizza could not be held liable for sexual harassment claims brought by a former employee of a franchisee because the franchisor was not a “joint employer” of the former employee (Patterson v. Domino’s). Taking a contradictory approach, the General Counsel’s office for the National Labor Relations Board (NLRB) has authorized charges against McDonald’s in its capacity as a franchisor.
According to the NLRB, it has evaluated 181 cases filed against McDonald’s since November 2012. Of those cases, 68 were found to have no merit. 64 of the cases are currently pending with 43 of the cases found to have merit. The General Counsel stated that it will issue charges against the corporate entity McDonald’s if the parties are unable to reach settlement.
Specifically, the NLRB Office of the General Counsel reported it was investigating charges that McDonald’s franchises and their Franchisor violated the rights of employees in the context of employee protest. There have been a number of employee protests at numerous McDonald’s locations concerning wages, many resulting in arrests. The General Counsel indicated that it could pursue charges against the corporate entity under the joint employer standard, and corporate entity McDonald’s has vowed to fight any charges. It is unclear how many of the 68 cases that are pending against McDonald’s Corporation involve franchised locations.
The General Counsel’s opinion means that McDonald’s, along with the franchise owners, will be named in future unfair labor practice actions, assuming there is no settlement.
In an unrelated matter, (Browning-Ferris Industries, Case no. 32-RC-109684), but one which should clarify the NLRB’s interpretation of “joint employer,” the NLRB is re-evaluating its decades-old standard for deciding when contractual business arrangements render one business a “joint employer” of workers employed by another.
The NLRB’s General Counsel filed a brief calling for the NLRB to adopt a standard that “would make no distinction between direct, indirect, and potential control over working conditions.” The General Counsel argued the current standard “ignores” Congress’s intent to treat the term “employer” more broadly and inhibits meaningful collective bargaining involving nontraditional employment agreements.
If the General Counsel’s less restrictive standard of joint employer is adopted by the NLRB, it could impact thousands of franchise businesses located across the United States.
Even if the NLRB rejects the General Counsel’s proposed “joint employer” standard, General Counsel’s decision to pursue McDonalds’ Corporation is further evidence of the NLRB’s recent efforts to alter long time precedents and hold employers to significantly more stringent standards.
We will continue to monitor NLRB developments, and update this article once the NLRB issues its decision on this critical “joint employer” issue.
ABOUT THE AUTHOR: Ms. Silva is a graduate of University of the Pacific. She is the head of the firm’s Employment Practices Group. She is a former prosecutor and has considerable trial experience. Contact her at email@example.com