17
Spring 2015 Issue
DO BUSINESS BETTER
Through a number of cases heard by the National Labor Relations
Board this spring, the federal government is poised to attack the
very existence of the franchisor/franchisee business relationship.
In response to wage-related “strikes” that occurred across the
country at various fast food establishments, and resulting unfair
labor practice charges filed by those participating in the “strikes”
against not only the franchisee but the franchisor, including of
particular note McDonald’s USA, LLC, the legal concept of “joint
employer” has reared its head. According to the General Counsel
of the National Labor Relations Board (NLRB), McDonald’s USA,
LLC “through its franchise relationship and its use of tools,
resources and technology, engages in sufficient control over its
franchisees’ operations, beyond protection of the brand, to make
it a putative joint employer with its franchisees, sharing liability”
for violations of federal laws.
In essence, the National Labor Relations Board hopes to establish
and prove that McDonald’s USA, LLC is a “joint employer” with
its individual franchisees such that it bears legal responsibility
for the actions and misconduct of those franchisees. McDonald’s
USA, LLC is not the only restaurant franchisor being subjected
to the NLRB’s new-found “joint employer” test, as Burger King,
Wendy’s, Taco Bell, Jack in the Box, Subway and Panera Bread
also have hearings pending before them that they too are a “joint
employer” with their individual franchisees.
The National Restaurant Association, the Ohio Restaurant
Association and the International Franchise Association have
been lobbying Congress to put an end to the NLRB’s scheduled
hearings, or to amend the National Labor Relations Act to
expressly recognize the lack of bona fide control that a franchisor
has over its franchisees where violations of certain laws may
occur. Since the Occupational Safety and Health Administration
(OSHA) tends to follow the precedents set by the National Labor
Relations Board with respect to such legal issues as “joint
employer,” it is conceivable that if the NLRB prevails in its cases
against various franchisors, OSHA will also adopt the same legal
test which will invariably result in substantially greater penalties
against both a franchisor and franchisee where “serious,”
“repeat,” or “willful” safety violations are alleged to have
occurred. The NLRB’s efforts to change the definition of “joint
employer” may also substantially impact individual franchisees
who have separately incorporated individual locations or groups
of locations since the government is seeking to treat all of those
units as one “joint employer.”
The final outcome of the NLRB’s scheduled hearings remains
uncertain as does lobbying efforts to curb what many view as
an assault on the franchisor/franchisee business relationship. At
this juncture, it appears that taking a “wait and see” approach
is sound, coupled with efforts to contact your federal Senator
and Congressmen and voicing objection to what the federal
government is attempting to accomplish.
By Keith L. Pryatel, Esq.
Kastner Westman & Wilkins, LLC
FEDERAL GOVERNMENT
ATTACKS FRANCH I SOR / FRANCH I SEE STRUCTURE
