The National Labor Relations Board has notified McDonald’s Corp. that it may face unfair labor practices allegations as the “joint employer” of workers at franchised restaurants, the fast-food giant said Tuesday.
A decision by NLRB general counsel Richard Griffin’s office authorized a number of unfair labor practices complaints from McDonald’s workers to move forward, treating McDonald’s USA LLC as a “joint employer” with its franchisees in at least some of those cases, the NLRB confirmed Tuesday. The decision — issued as a directive from the NLRB general counsel to the agency’s regional offices — comes as the board’s five members are reviewing the test for determining joint employer status in an unrelated case involving a waste services company and a staffing agency.
Many chain businesses, such as Subway, McDonalds, Midas Muffler, franchise their operations. Typically the big company sells a “franchise” to a small business, or sometimes a corporation will own several “stores” that are franchised. In the past, Large companies have argued the franchisees are independent businesses and that the franchisor should not be held liable for individual practices they claim not to supervise.
By contrast, the law has treated temp agencies that place individuals at big companies as being “joint employers” with the big company where the employee is placed, putting liability for wrongful termination, unpaid wages or discrimination on both the temp agency and the big employer.
The California Supreme Court has yet to weigh in on this issue, but the trend in law seems to be toward expanding liability to cover franchisors, where the alleged unlawful labor practice is more systematic or company-wide.
If you or a business you own have legal issues that may be impacted by a joint employer issue, or you have other labor/employment questions, please contact us.