NLRB Ruling Redefines Who’s The Boss

In a long-awaited ruling reverberating throughout the franchising world, the National Labor Relations Board last week upheld the idea of joint employer status, marking a controversial shift in the standard for determining who is liable for hiring practices and employment policies.

The ruling came in a case before the board about the former Browning-Ferris Industries of California, a large waste-management company. The ruling, stating the company was a “joint employer” of workers hired by a contractor to run its recycling center, enables unions to assert that the designation also applies to corporate parents of QSR franchises, meaning that companies such as McDonald’s and Yum Brands would have to take responsibility for workers at franchises.

The ruling likely will be a boon to labor unions attempting to organize and fight for higher wages and changes in working conditions, particularly in the QSR industry.

Foodservice industry opposition remains heated, and the NLRB’s ruling is likely to be challenged in court. Stating, “it appears that once again the board is stacking the deck against small business,” Angelo Amador, Senior V.P.-Labor and Workforce Policy and Regulatory Counsel for the National Restaurant Association, said that upending the joint employer standard will have “dire consequences” on franchisees’ decisions to grow and expand their businesses.

The National Council of Chain Restaurants and the Int’l. Franchise Association both oppose the ruling. The IFA has argued that franchisees operate independently, controlling their own hiring practices, working conditions, wages and hours of operations and filing their own taxes.

Since the 1980s, regulatory and court decisions have increasingly allowed corporate parents to shift responsibility for workers to franchisees, resulting in a growing workforce that has no voice with corporate management on issues such as wages, hours and health and safety.