NLRB Ruling On "Joint Employer" Status Eliminates Jobs, Hurts Industry
By Christine Kern, contributing writer
Ruling could cripple the 8.5 million employees currently part of the franchise industry.
In December, the National Labor Relations Board’s general counsel made a decision to consider McDonald’s and its franchisees as “joint employers” in a series of labor practice complaints, an action that has the potential to spark severe, negative consequences across industries and discourage people from purchasing franchises, according to former NLRB member Peter Kirsanow.
Complaints were filed in 78 cases claiming that McDonald's workers across the country were fired or intimidated for participating in union organizing and in a national protest movement calling for higher wages, according to Reuters, and the complaints will be considered beginning in March 2015. Decisions are made by administrative law judges and may be appealed to a five-member NLRB and ultimately to the federal court system.
McDonald’s and its franchisees plan to fight the claims. Lisa McComb, a company spokeswoman, explained, “These allegations are driven in large part by a two-year, union-financed campaign that has targeted the McDonald’s brand and impacted McDonald’s restaurants.”
Mary Joyce Carlson, counsel for the Fast Food Workers Organizing Committee, the union-backed group behind the protest movement, supported the NLRB decision, arguing that McDonald's should be viewed as a joint employer because of the control it exerts over franchises, including dictates regarding food preparation and service..
In a recent op-ed for Investors.com, Kirsanow discussed the NLRB’s December actions, which overturned 30 years of established law by holding franchisors responsible for the labor practices of their franchisees. “This unfair and profoundly misguided re-interpretation of the ‘joint employer’ doctrine…has broad and very troubling implications across multiple industries,” Kirsanow wrote.
The move, he contends, could ultimately result in less independence for franchise owners and fewer jobs being created, not just for brands like McDonalds, but also for retail establishments, hotels, education providers, staffing agencies, auto services, waste management companies, construction companies, and a host of other U.S. businesses.
“As a former member of the National Labor Relations Board, I am a firm believer in the agency’s mission to safeguard the rights of employees, remedy unfair labor practices and interpret the law as it applies to private-sector employers and unions,” Kirsanow wrote. “Today, the impartial balance that is supposed to guide the agency’s practices has been replaced with an overreaching agenda clearly tilted to favor the interests of organized labor. Sadly, the board’s recent actions don’t protect the jobs of employees — they eliminate them.”
Previous practice identified joint employers as those who have responsibility for matters directly related to employment of an individual, such as hiring, firing, supervision and discipline in order to be considered joint employers. The National Restaurant Association opposes the NLRB’s actions, which threaten the franchise business model and have the potential to affect many of the restaurants in the U.S.
According to Reuters, the decision could have the harshest impact on franchisees if companies decide to abandon the franchise model, said Robert Cresanti, vice president of the International Franchise Association, whose membership includes McDonald's. The franchise association says 8.5 million U.S. workers are employed by franchises.