The National Labor Relations Board's Office of the General Counsel announced today that it has issued 13 consolidated complaints against franchisor McDonald's USA, LLC and McDonald's franchisees naming them "joint employers." The announcement follows the July opinion issued by NLRB General Counsel Richard Griffin informing McDonald's and certain of its franchisees of numerous charges filed against them for interfering with worker protests and strikes demanding higher wages, and warning McDonald's that it could be determined to be a "joint employer" of its franchisees' employees.
Because most of those charges have not been settled, the NLRB has now brought formal complaints against McDonald's and certain of its franchisees in Arizona, California, Georgia, Illinois, Indiana, Louisiana, Michigan, Minnesota, Missouri, New York, and Pennsylvania. The complaints allege that McDonald's and its franchisees, as joint employers, engaged in a variety of conduct that, in the NLRB's words, includes:
Discriminatory discipline, reductions in hours, discharges, and other coercive conduct directed at employees in response to union and protected concerted activity, including threats, surveillance, interrogations, promises of benefit, and overbroad restrictions on communicating with union representatives or with other employees about unions and the employees’ terms and conditions of employment.
By alleging that McDonald's and its franchisees, as joint employers, engaged in the above conduct, the NLRB is essentially seeking to overturn decades of franchise legal precedent recognizing that franchisors are fundamentally different and distinct from their franchisees, and that franchisees, and not franchisors, are solely responsible for their own employees.
If these complaints are successful, it would set a dangerous precedent for franchisors and the franchising industry. This has both franchisees and franchisors concerned, with some franchisees worried that they will lose their businesses, and that their employees will lose their jobs.
Given these significant concerns, it is particularly important for franchisors to review their internal policies, procedures, and legal documents to determine what, if anything, can be done differently to try to avoid "joint employer" liability. As I stated in a previous post, this is a good time for franchisors to talk with counsel about ways that those documents can be amended to offer additional elements of protection against being found to be a "joint employer" of franchisees' employees.