On July 29, the general counsel for the National Labor Relations Board (NLRB) issued a directive announcing that McDonald’s USA could be considered a “joint employer,” along with various franchisees, with respect to a series of pending unfair labor practice complaints brought by employees of its franchisees. Although the joint-employer doctrine is not new, the NLRB seeks to drastically expand the doctrine to the franchise relationship by relying on the manner of overall control that a franchisor exercises over its franchisees (i.e., regulating use of the trademark, services and goods to promote brand uniformity and maintain the goodwill of the brand), as opposed to whether a franchisor has control over the day-to-day employment decisions such as an employee’s work schedule, hiring and firing decisions, and particular employment practices.

If successful, the NLRB’s attempt to expand the scope of the joint-employer doctrine could have significant implications on other, non-McDonald’s, franchising companies and their franchisees. Indeed, a subsequent court decision to uphold the general counsel’s position has the potential to disrupt the franchise business model and disregard over 30 years of law holding that a typical franchisor is legally distinct from the franchisees and cannot be treated as an employer of the franchisee’s workers. Expectedly, franchisors are strongly opposing this announcement. Interestingly, however, some franchisees are also opposing this announcement for concern that franchisors will simply exert a greater level of control, which franchisees do not want, and/or strengthen and enforce indemnification clauses to combat the directive, which could cost franchisees more money. Below is a more detailed analysis of the NLRB’s directive.

Background

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]