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Labor Board warns that McDonald’s may be “joint-employer” under NLRA

The National Labor Relations Board (“NLRB”) has warned that if McDonald’s cannot settle disputes it has with some of its franchisee’s employees, it may treat McDonalds as a “joint-employer” under the National Labor Relations Act (“NLRA”).  The International Franchise Association has condemned this possibility and attorneys who frequently appear before the NLRB worry that such a finding would materially change the relationship between franchisors and their franchisees.

“If the NLRA were read to treat franchisors as joint-employers under this law, the implications would be enormous for franchisors around the country,” according to Pietrangelo Cook attorney Carl Jacobson.  “Not only would franchisors have real exposure for the conduct of their independent franchisees, but such a treatment could ultimately result in the creation of nationwide collective bargaining units, which would be completely contrary to the basic tenants of franchise law.”

The NLRB is charged with enforcing the NLRA, and routinely investigates claims filed by employees that their employers have violated the NLRA’s express protections for protected concerted activity.   Simply put, if a franchisor were considered a joint-employer under the NLRA, it would mean that an employee of a regional McDonald’s franchise could file a charge against the owner of that regional restaurant as well as the corporate franchisor.

From the NLRB’s statement on the matter:

“The National Labor Relations Board Office of the General Counsel has investigated charges alleging McDonald’s franchisees and their franchisor, McDonald’s, USA, LLC, violated the rights of employees as a result of activities surrounding employee protests.  The Office of the General Counsel found merit in some of the charges and no merit in others.  The Office of the General Counsel has authorized complaints on alleged violations of the National Labor Relations Act.  If the parties cannot reach settlement in these cases, complaints will issue and McDonald’s, USA, LLC will be named as a joint employer respondent.

The National Labor Relations Board Office of the General Counsel has had 181 cases involving McDonald’s filed since November 2012.  Of those cases, 68 were found to have no merit.  64 cases are currently pending investigation and 43 cases have been found to have merit.  In the 43 cases where complaint has been authorized, McDonald’s franchisees and/or McDonald’s, USA, LLC will be named as a respondent if parties are unable to reach settlement.”

You can read the statement from the President of the International Association of Franchisors, excerpted below, here.

“The NLRB’s Division of Advice recommendation that franchisors and their franchisees be designated as joint-employers is both wrong and unjustified. This legal opinion would upend years of federal and state legal precedent and threaten the sanctity of hundreds of thousands of contracts between franchisees and franchisors, a bedrock principle of the rule of law.

Franchisees and their employees do not work for franchisors. The franchise owners who have built more than 770,000 businesses and employ millions of people control their own businesses. Franchisees have their own employer identification number with the Internal Revenue Service and file their own taxes. Franchisees establish day-to-day operations, employment practices and policies for their own businesses. Franchisees decide who to hire and fire, and also set wage rates, benefits and employees’ work schedules.”

For more information contact:
Anthony C. Pietrangelo
PH: 901-685-2662
FX: 901-685-6122
apietrangelo@pcplc.com