Business

Franchise Group Wants Labor Board to Explain “Joint Employer” Ruling

With complaints against franchisors piling up at the National Labor Relations Board after a July agency ruling involving McDonald's, the International Franchise Association is asking for something that NLRB General Counsel Richard Griffin Jr. hasn't yet provided: an explanation of his reasoning.

The foundation of the franchise business model is starting to wobble under the weight of a ruling last summer by the National Labor Relations Board (NLRB), says the International Franchise Association. And IFA wants to know why.

In the July ruling, NLRB General Counsel Richard Griffin Jr. concluded that McDonald’s can be treated as a “joint employer” in a series of labor-practice complaints against its  franchisees. In other words, McDonald’s can be held jointly responsible for its franchisees’ employment practices, even though it owns only 10 percent of the restaurants.

In an unprecedented move, you appear to have ignored decades of established law governing joint employment and franchising.

IFA President Steve Caldeira told The Wall Street Journal [subscription] that the ruling would “open a Pandora’s box of dangerously and needlessly costly and time-consuming labor complaints.” And IFA is particularly concerned that Griffin has not explained his legal reasoning.

Last week, Caldeira expressed those concerns [PDF] in a letter to Griffin, noting that since the decision, 61 charges have been filed against 27 other franchise-based companies or franchisees. Griffin’s decision “has opened the floodgates for the NLRB to investigate whether any franchisor should be named as a joint employer,” he wrote.

“In an unprecedented move, you appear to have ignored decades of established law governing joint employment and franchising,” Caldeira added.

IFA notes that 129 members of Congress from both parties have similarly asked that Griffin provide the facts and legal rationale that support his decision.

“In light of the serious consequences that could follow from your decision, we respectfully request that you make public your supporting reasoning and relevant data,” said one such letter [PDF], signed by Sens. Mitch McConnell (R-KY) and Rob Portman (R-OH), along with two dozen other senators.

Subtle Hints

In the days before IFA sent its letter, Griffin made his first public comments on his ruling. In a West Virginia University law school classroom last month, he noted that an NLRB complaint naming McDonald’s as a “joint employer” could pose “a problem legally.”

“The status of those cases right now is, no complaints [by NLRB] have actually issued,” Griffin said, according to Politico. “There are ongoing discussions with the parties about whether to resolve those cases; about, if they’re not resolved, how to try them; and those discussions are not at a conclusive point.”

According to MSNBC, Caldeira suggested that Griffin’s comments highlight how “ridiculous” the ruling was.

“To be very clear, franchisees pay an initial franchise fee and ongoing royalty payments to use franchisors’ trademarks,” he said. “Otherwise, franchisees are independent.”

(Justin Sullivan/Getty Images)

Ernie Smith

By Ernie Smith

Ernie Smith is a senior editor for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. MORE

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