Many restaurant franchisors face potential impact from last week’s National Labor Relations Board ruling on “joint employer” status, but the overall effect will not known until the NLRB issues further rules, a labor law expert said Monday.
“There isn’t anything you can accurately predict other than it’s going to take a while,” labor law expert Julius G. Getman, professor at the University of Texas-Austin School of Law, said in an interview.
Nation’s Restaurant News 2015 Top 100 data look at the major U.S. franchised chains, including No. 1 Subway, with 26,334 franchise units, which is 100-percent franchised; No. 2 McDonald’s, with 12,836 franchised units, or about 89.4 percent of its 14,350 total; and Dunkin’ Donuts, with 8,047 franchised units, or about 99.6 percent of its 8,082 total (see chart below).
Which brands will be likely to see labor-organizing pressures depends not just on unit counts, but also density and how the NLRB crafts further regulations and bargaining units, Getman said.
“The board is going to have develop some commonsense rules,” Getman said.
“Some of it will come from the unions,” he added. “They have to look at place where they have strong local leadership.” Labor organizers will likely want larger groups of units, he said.
“There are a lot of interesting questions remaining,” he said.
On Aug. 27, the NLRB upheld a shift in the standard for determining “joint employer” status in a case that involved Houston-based waste management firm Browning-Ferris Industries, or BFI, and a union that attempted to organize subcontracted workers at one of the firm’s recycling facilities.
In the case, NLRB general counsel Richard Griffin argued in a brief that the 30-year-old standard for defining joint-employer status between a franchisor and franchisee, or contractor and subcontractor, should be scrapped in favor of a broader definition. Griffin argued that a franchisor should be considered a joint employer and could be held liable for the hiring practices of its franchise operators.
The NLRB, in a 3-2 ruling, agreed that the joint employer standard should be redefined, saying the previous definition failed to keep pace with changes in the workplace and economic circumstances. The key in determining joint-employer status is an evaluation of whether the larger entity possesses sufficient control over employees, directly or indirectly through a third party, even if that control is not exercised, the board said.
Griffin’s definition was fundamental in a series of NLRB complaints filed against McDonald’s USA LLC in December, including allegations that worker rights were violated during minimum wage protests in recent years.
Earlier in August, the NLRB denied an effort by McDonald’s USA LLC to challenge the joint-employer definition, allowing the case to proceed.
Restaurant-franchisor companies, meanwhile, are preparing to deal with the NLRB’s further rulings.
The law firm of Fischer & Phillips LLP last week issued advice on what companies should do in the wake of the NLRB rulings.
“Given this new decision, any employer that retains the right to impose even indirect control over the working conditions of temporarily placed employees runs a serious risk of being deemed their joint employer — not only for bargaining purposes, but potentially for unfair labor practice liability as well,” the firm said in a newsletter.
“As a result of this decision, employers and temporary service providers alike should scrutinize the parameters within their written service agreements and their underlying practices for reference to right to control,” the firm recommended. “This includes an analysis of pre-employment qualification and hiring standards, assignment and retention of individual temporary employees, shift schedules, workload and pace of work, and wages and benefits.”
Fischer & Phillips suggested it might be impractical to eliminate many factors completely.
“But to the extent that their presence can be minimized, the parties can at least develop and preserve viable arguments against imposition of joint employer status,” the firm said.
Contact Ron Ruggless at [email protected].
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