On Friday, Dec. 19, the National Labor Relations Board
General Counsel’s office issued complaints against McDonald’s and 13 of its
franchisees, alleging that they jointly retaliated against workers who
participated in the many fast food minimum wage protests that occurred around
the country earlier this year.
Many business analysts are projecting that a Board
decision finding that McDonald’s is a joint employer with its franchisees would
rock the fast food industry as well as the many other industries that rely
heavily on the franchising model for their economic viability. While the
McDonald’s complaints are getting a lot of attention, the Board itself is
expected to make a decision any day now in Browning-Ferris Industries of
California, Inc., in which it is expected to overturn a 30-year-old standard
for determining if joint employer status is appropriate in the context of the
relationship between a temporary staffing company and its client. These
developments could not only result in improving union organization odds, but
also an upheaval in how these common business models typically operate.
The NLRB’ General Counsel is taking the position that
McDonald’s “through its franchise relationship and its use of tools, resources
and technology, engages in sufficient control over its franchisees’ operations,
beyond protection of the brand, to make it a putative joint employer with its
franchisees, sharing liability for violations of” the National Labor Relations
Act. According to the General Counsel, “This finding is further supported by
McDonald’s, USA, LLC’s nationwide response to franchise employee activities
while participating in fast food worker protests to improve their wages and
working conditions.” A copy of one of the complaints, which was filed in Region
13 (Chicago) can be found here. Thus far, no complaints have been issued in
either Region 8 (Cleveland) or Region 9 (Cincinnati).
In Browning-Ferris, Browning-Ferris obtained temporary
employees from Leadpoint Business Services pursuant to a contract between the
two companies. In attempting to organize the Leadpoint employees who were
working at BFI, the union also alleged that BFI was a joint employer of the
workers. An administrative law judge concluded that Leadpoint was the sole
employer of the workers, noting that Leadpoint provided its own human resources
function on-site at BFI; recruited, screened and hired all of the employees it
assigned to BFI; and provided its own on-site managers and supervisors for the
workers it employed at BFI. The union appealed and invited the Board to revisit
its 30-year-old standard for determining joint employer status. In reaching his
decision, the ALJ relied on the current joint employer standard, which has been
in place since 1984, in which the Board concluded that a joint employer
relationship exists if two entities share or co-determine the essential terms
and conditions of employment of the employees in the petitioned-for bargaining
unit.
The union appealed and has urged the Board to adopt a
broader standard that considers any indirect control that one entity may exert
on the terms and conditions of another’s employees. For instance, in
Browning-Ferris, the union argues that BFI exerts indirect control over the
Leadpoint employees because (1) BFI owns the facility at which they work; (2)
maintains production and operational policies that impact employee hours; (3)
requires Leadpoint to perform certain screening methods on employees before
they are assigned to BFI; and (4) BFI has the right to direct Leadpoint to
terminate any employee’s assignment at BFI. Presumably, another influence that
BFI would have over the employees terms and conditions of employment would be
the price or reimbursement rates it was willing to pay for the temporary
services that Leadpoint provides. The lower the price, the less Leadpoint can
afford to pay its employees.
As noted in one of the amicus briefs, however, the
expansion of the joint employer standard would have numerous adverse effects on
businesses that utilize temporary workers. First, businesses create operational
and production policies and reimbursement rates paid to temporary service
providers not for the purpose of impacting worker terms and conditions, but
rather to efficiently and safely run its business. A joint employer finding
would negatively impact these legitimate business interests. In addition, the
proposed indirect standard would discourage businesses from including
responsible contractor policies and supplier codes of conduct in their
agreements for fear of being labeled a joint employer, could prompt businesses
to terminate existing temporary service relationships to avoid joint employer
status, and would create potential liability for the unfair labor practices of
the supplier company.
We will provide updates along the way as the McDonald’s
complaints move through the administrative process and when the Browning-Ferris
decision is issued. In the meantime, franchisors and businesses either
providing or using temporary services will want to consider their options if
they were to be considered as joint employers in the context of their current
business relationships.
Source: Employee
Benefit News
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