Published Date: 08/18/2014
By George Ports
The National Labor Relations Board’s (NLRB) General Counsel ruled that McDonald’s, as a franchisor, can be held liable for employment decisions made by its approximately 13,000 US franchised outlets. This ruling, which involves 43 labor violation cases (the other 64 charges were found to be without merit), states that the NLRB will treat the McDonald’s USA, LLC as the employees’ joint employer along with its franchisees if parties cannot reach settlements in these cases. The NLRB’s office of the General Counsel had investigated allegations that McDonald’s and their franchisees had violated employee rights as a result of employee protests.
Labor unions see this as a huge victory for “fast food” employees. If this decision survives challenges in the courts, it would drastically change the face of franchise systems as we know them in the US. This ruling would make it easier for labor unions to negotiate a “master contract,” which is a collective bargaining agreement that covers organizations on a regional or national level. Franchising is common not only in the “fast food” industry but also in other industries such as real estate, hotels and auto dealerships. This system has worked in that it has permitted franchisees to have control over costs including payroll, allowing them to be profitable.
The concept of joint employment is nothing new. CAI’s Pat Rountree recently wrote a newsletter article about joint employment (Joint Employment Status Protections) in which she walked members through a number of scenarios regarding this issue. This ruling by the NLRB’s General Counsel puts a whole new spin on, and connotation to, the term joint employment and would force corporations to radically change their business models.
To read more about this NLRB ruling, go to their website at http://j.mp/mc-ds.