In a landmark challenge to traditional labor law, the
National Labor Relations Board is attempting to lump together McDonald’s and
its independent franchises as joint employer, which leaves many questions on
what this could mean for other collective benefit plan structures.
NLRB General Counsel Richard F. Griffin, Jr. said his office
has “found merit” in some of the charges against the world’s largest fast food
company and will name McDonald’s as a joint employer respondent. But as Oak
Brook, Illinois-based McDonald’s plans to figure out where the company will end
up, labor lawyers that represent large and small employers with similar
employment and labor disputes offer a roadmap of likely scenarios.
“We don’t know [where this is going], but more generally we
do know it’s heading for an employer train wreck, and none of this is good,”
explains Michael J. Lotito, co-chair of Littler Mendelson’s Workplace Policy
Institute. He adds that the decision could leave certain franchises vulnerable
down to the line to the Equal Employment Opportunity Commission’s enforcement
as a large employer rather than smaller franchise business.
Since November 2012, the NLRB, an independent federal agency
that seeks to safeguard employee rights to organize and has a hand in other
labor disputes, said it has had 181 cases involving McDonald’s. While 68 were
found to have no merit, about 64 cases are pending investigation and 43 have
been found to have value – where McDonald’s franchises and McDonald’s itself
will be named as respondents, if settlements are not reached.
In a statement provided by the company, McDonald’s says it
safeguards the interests of its more than 3,000 independent franchisees by “by
protecting and promoting the McDonald’s brand and by providing access to
resources related to food quality, customer service, and restaurant
management.”
“This relationship does not establish a joint employer
relationship under the law,” the food company said. Meanwhile, McDonald’s notes
that it will “contest this allegation in the appropriate forum,” but adds that
the NLRB decision also “changes the rules for thousands of small businesses,
and goes against decades of established law regarding the franchise model.”
At Ballard Spahr, Steven W. Suflas, managing partner of the
firm’s New Jersey office, explains that this could be “first wave” of an NLRB
onslaught on established joint employer labor law.
“This is really significant and it has really little to do
with McDonald’s, and deals with much more broader issues,” Suflas explains.
From a benefits standpoint, he said there are legal ramifications also playing
out, as the NLRB drafts its game plan.
“To the extent that you have franchisees that are
participating in the benefit plan that is provided by the franchisor, that’s
one of the factors that the NLRB is trying to hang their hat on to bring the
franchisor into the direct employment relationship,” Suflas says. “Benefits is
one piece of the larger rubric.”
Robert A. Fisher, a partner at Foley Hoag that represents
employers in all aspects of labor and employment law, says that is unclear what
this potential move could mean for benefits. But Fisher explains that the
uncertainty surrounding health care and retirement offerings will likely all
come down to what has been agreed upon in ink.
“The first place you are going to start is obviously, ‘what
does the benefit plan say?’ Most benefit plans – if they’re drafted
appropriately – will define an employer in such a way that it’s not going to
reach the franchisor,” Fisher states.
Moreover, the Affordable Care Act, and the differentiation
of having part-time and full-time workers, has been a challenge that has
increasingly troubled the service and food industry. For small businesses, the
Small Business Health Options Program has been deemed suitable for many small
mom-and-pop employers who need health plan coverage. However, Lotito explains
that there are more unknowns here too as it applies to health care law and
other labor interests.
“For purposes of ACA, do you have a commingled situation?”
Lolito asks. “I guess the magic threshold is 50 employees, and the question, is
do you commingle all of these employees? I think that from an employee benefits
standpoint, if the union wins an election against a franchisee union and says,
‘well you guys are just one employer, why don’t you discontinue your health
care plan – which includes the franchisor and why don’t you begin making
contributions to the union’s health and welfare program?’”
But according to Lotito, he says the NLRB is singling out
specific employer groups for a reason.
“They’re picking on an industry, and industry that is
composed of small employers,” he explains. “The small employers, they don’t have
the resources to go fight the federal government.”
But while all likely scenarios point to NLRB’s new
McDonald’s focus to stretch out for numerous years until actual answers are
offered by the NLRB and the federal appeals courts, the labor board may soon
offer some concrete points regarding a joint employer case involving waste
management company Browning-Ferris Industries of California Inc. In
Browing-Ferris, union attorneys are challenging whether BFI and staffing agency
Leadpoint Business Services can be considered a joint employer.
Suflas says there could be a judgment in this challenge to
the franchise model in “next couple of months,” which can be used later to
govern the McDonald’s cases.
Source: Employee
Benefit News
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