Joint employer rule change: Boon to industry or employee slap-in-the-face?

| by S.A. Whitehead
Joint employer rule change: Boon to industry or employee slap-in-the-face?

The public comment period is well underway for the joint employer rule published by the National Labor Relations Board, which relates directly to franchising restaurant companies. And you had better believe there are a lot of voices chiming in between now and the close of the feedback period on Nov. 13.

Restaurateurs — particularly larger corporate franchising brands — have a lot at stake, since the rule would essentially end the joint employer argument for the foreseeable future and keep franchisors from getting dragged into National Labor Relations Board liability claims and even collective bargaining situations.Instead, under the proposed rule, all of that would go directly to the franchisee for the specific restaurant or restaurants involved, according to management-side employment attorney, Adam Chotiner, chair of the Labor and Employment Practice Group at Shapiro, Blasi, Wasserman & Hermann, in Boca Raton, Florida. 

"In general, this is definitely something that management ... is greatly in favor of. That's one of the reasons companies franchise, so they can say (to franchisees), 'Here you go,  now you and your business go ahead and leave us out of the day-to-day labor relation issues.' "        -Attorney Adam Chotiner

He said such companies stand to lose a lot if the rule fails to make it into reality. Chotiner said he knows that from the way things were under the Obama Administration when the NLRB's 2015 Browning Ferris original decision opened restaurant franchising corporations to such claims.

"These large franchisor companies in the restaurant industry — we're talking about the McDonalds of the world — when Browning Ferris (which deemed both franchisors and franchisees so-called "joint employers") came out and had to be applied. It was a significant change in that landscape. Suddenly, the McDonald's (types of corporations) found themselves being involved in these frontline labor-management issues with their franchisees that they never had to deal with before. You can imagine, they weren't happy."

Chotiner said the recent shift to a Republican-controlled White House and NLRB has seen the action taken on such complaints slow to a trickle, even though the Browning Ferris joint employment rule is still in effect, despite some attempts to undo it previously. 

But as Chotiner puts it, under Republican control, the NLRB is a lot less motivated to act in ways that ruffle the feathers of big businesses like restaurant corporations. 

"With who is in the White House now, I can tell you that these efforts have been curtailed (action on NLRB claims) significantly," Chotiner said. "The NLRB, as a general enforcement matter, is not pursuing these kinds of things nearly as much as they did a few years ago."

The rule that the NLRB published in mid-September is an attempt to trample joint employer obligations into oblivion once and for all since under its allocations, franchisors would no longer be considered employers along with their franchisees. Rather the franchisee — whether he or she owns one store or 1,000 — would be legally considered the complaining employee's sole employer, thus the only party liable or necessary in collective bargaining. 

"The NLRB's rule change is detrimental to all restaurant workers who work in franchise operations, and all restaurant workers who will see working conditions deteriorate. This proposed rule will increase the monopsony power of the industry to keep wages and working conditions artificially low."    

-Roc United National Research Director Teófilo L. Reyes

Chotiner — who strongly believes that the proposed rule will become reality — said it would also shift the way a business's employees are counted and totaled, affecting everything from tax and benefit coverage to training mandates that activate at a certain number of employees. Since franchisees and even franchisee groups have far few employees than the corporation employees systemwide, it's likely fewer laws would apply for things like training and benefit requirements. 

"In general, this is definitely something that management ... is greatly in favor of," Chotiner said. "That's one of the reasons companies franchise, so they can say, 'Here you go,  now you and your business go ahead and leave us out of the day-to-day labor relation issues.' ...

"It (would) make it harder for the NLRB to hold franchisors responsible for anything, whether that's requiring bargaining if a union is certified (or) going after the franchisor for unfair labor practice issues. ... And it makes it impossible for unions to picket the franchisor. Those are the real-world implications."

Most frontline restaurant employees are probably not aware of the implications hanging in the balance during this public comment period, said  Chotiner, who thinks they will only affect such employees who are union members. Roc United National Research Director Teófilo L. Reyes, however, disagreed.

"The NLRB's rule change is detrimental to all restaurant workers who work in franchise operations, and all restaurant workers who will see working conditions deteriorate,"  Reyes said in an interview with this website.  "This proposed rule will increase the monopsony power of the industry to keep wages and working conditions artificially low. ...

"Together with non-compete, non-poaching, and forced arbitration, the joint employer rule change reduces the ability of workers to seek relief for unfair practices."

Reyes said the organization is submitting comments and continuing efforts to support restaurant workers in the opposition to this rule, along with other efforts. Or as the group put it in its closing comments to this website on the issue, "Workers at franchises who constantly hear that work improvements are impossible due to the constraints imposed by the parent corporation will be interested in this ruling."


 


Topics: Business Strategy and Profitability, Financial News, Franchising & Growth, Human Resources, Legal Issues, Operations Management, Staffing & Training, Workforce Management



S.A. Whitehead

Award-winning veteran print and broadcast journalist, Shelly Whitehead, has spent most of the last 30 years reporting for TV and newspapers, including the former Kentucky and Cincinnati Post and a number of network news affiliates nationally. She brings her cumulative experience as a multimedia storyteller and video producer to the web-based pages of Pizzamarketplace.com and QSRweb.com after a lifelong “love affair” with reporting the stories behind the businesses that make our world go ‘round. Ms. Whitehead is driven to find and share news of the many professional passions people take to work with them every day in the pizza and quick-service restaurant industry. She is particularly interested in the growing role of sustainable agriculture and nutrition in food service worldwide and is always ready to move on great story ideas and news tips.


Sponsored Links:


Related Content


Latest Content

Subscribe for QSR trends & news


QSR Industry News

Resources

Quick Service Restaurant Trends

Features

Restaurant tech: 1 change = dozens more