On August 27, 2015, the National Labor Relations Board (NLRB or Board) revised its “joint employer” standard in a decision that will significantly impact companies that rely upon contractors and franchisees as part of their business model.
According to its decision in Browning-Ferris Industries of California (NLRB 2015), a parent company that hires a contractor may now be considered a joint employer of the subcontractor’s employees at its facilities—even if it has only indirect control over working conditions. Specifically, in this case, the Board held that a waste management company is a joint employer in conjunction with one of its subcontractors, a staffing firm. Therefore, the staffing firm’s employees may now be able to collectively bargain with the waste management company, and not just the staffing firm.
The implications of this decision are tremendous for employers across the country, including those in the fast-food industry and corporate titans like McDonald’s. Currently, the vast majority of the fast food chain’s locations are run by franchisees, with each franchise considered to be the employer of its employees, as opposed to McDonald’s itself. Under the new joint-employer standard, McDonald’s could be required to bargain with workers employed by a franchisee. As such, this decision paves way for the franchise employees to unionize.
In explaining its position, the Board stated in its decision that, “It is not the goal of joint employer law to guarantee the freedom of employers to insulate themselves from their legal responsibility to workers, while maintaining control of the workplace.”
While several businesses are expected to challenge this decision, any and all employers that utilize contractors or franchisees should contact their labor lawyer to discuss the various ways in which this decision will likely impact their business practices.