Redefining Joint-employer Status: Impact on the Franchisor and Franchisee Relationship
In a long-awaited ruling regarding the case involving waste management firm Brown-Ferris Industries, the National Labor Relations Board on Thursday upheld a controversial shift towards redefining the joint-employer status between franchisor and franchisee. This potentially impacts a number of different industries, including Restaurant. Ultimately the decision argued that a franchisor should be considered a joint employer and could be held liable for the hiring practices of its franchise operators.
The board’s recent ruling stated, “We will no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority.”
This definition was fundamental in a series of NLRB complaints filed against McDonald’s in December, including allegations that worker rights were violated during minimum wage protests in recent years. Earlier this month, the NLRB denied an effort by McDonald’s to challenge the joint-employer definition, allowing the case to proceed.
“Everyone is waiting for the other shoe to drop: The finding that McDonald’s corporate is a joint employer with its franchisees. In the franchise industry, that would be a very large, seismic change,” said Gregory Handscome, attorney with the firm Fisher & Phillips.
What is the bottom line?
With the recent ruling and shift in the joint employer definition, along with a significant pending McDonald’s case, we could potentially see a shift in the franchisor and franchisee relationship. As this situation develops, it is important to consider how this might impact franchisor operations in regards to controlling and limiting liability as it relates to their franchisee’s new hire and employment practice perspective.
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