Franchising

The NLRB's Standard

The McJoint Employer

The Future of Joint Employers

The most important route to improvement here is a legal clarification.

You should explain that "joint employer" here covers the structural fundamental of franchising. The issue is whether for purposes of the federal labor law, franchisees are the employers of the people who work in franchised businesses. The traditional rule is the one that follows the intended design of the franchise model from the franchisor's point of view. Where the other forms of legal relationship follow the model (so that for purposes of incorporation, taxation, insurance, and dozens of other legal regimes, the franchisee is an independent business having complex and interwoven contractual relations with the franchisor, unless the franchisor chooses to acquire and operate that business) NLRB in 2015 chose for the first time to pierce the architectural pattern, and use "joint employment" as a concept with reach to reach the franchisor under the NLRA.

This may be ultimately the right decision. It's attractive social policy, for all the reasons you give. The argument is strong that it lies within the statutory powers Congress enacted. But it is hardly surprising that the pushback is substantial, and that with the Republican Party in full control of Congress and the White House, there's legislation. But it can't get enacted in the Senate, for sure, so the matter revolves in the partisan gravitation of the NLRB.

If you give more attention to the legal and political economy context of franchising, the next draft, wherever you bring it out from a policy point of view, will necessarily be in closer touch with the complexities.

Trump-Era Labor Abuse: The Newest Addition to the Dollar Menu®

-- By PatrickMarris - 28 Feb 2018

On November 7, 2017, in an anti-labor move surprising to exactly no one, House Republicans - along with eight Democrats - passed a bill that could wrest from low-wage workers a mechanism through which such workers can protect their already minuscule bundle of rights. If enacted, the bill, laughably named the "Save Local Business Act," would limit the application of the term "joint employer" to only those employers who "directly, actually, and immediately, and not in a limited and routine manner, exercise[] significant control over the essential terms and conditions of employment." Such essential terms and conditions include "hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions, and tasks, or administering employee discipline." Without a strong joint employer standard, businesses are far more easily able to create corporate structures that allow avoidance of worker-friendly labor laws. The bill would codify a standard that drastically weakens the joint employer standard.

The NLRB's Standard

Prior to 2015, the National Labor Relations Board used a joint employer standard similar to the standard that would be created by Save Local Business Act. In the 2015 Browning-Ferris decision, however, the NLRB created a standard which required only that a company exert "indirect control" over terms and conditions of employment to qualify as a joint employer. This shift was much maligned by interest groups closely allied with such local business darlings as McDonald's, Hyatt Hotels, and every white nationalist's favorite pizza brand, Papa John's.

Bolstered by the Browing-Ferris standard, more than 800 McDonald's workers employed at five separate franchises sued McDonald's for labor abuses. The lawsuit resulted in an unprecedented $3.75 million settlement, $1.75 million of which was earmarked for backpay and damages. Furthermore, the settlement seemingly signaled the beginning of a new era for low-wage workers - an era in which formerly powerless workers could fight labor abuses committed by mega-corporations, including - potentially, at least - the bane of the unionist's existence, Walmart.

But in December 2017, the NLRB , in Hy-Brand Industrial, expressly overruled Browning-Ferris and opted to reinstitute the pre-2015 standard, quashing the hope of bringing even slight improvement to the powers of workers. This was, of course, only one of the many anti-labor moves made by the federal government in Trump's first year.

Though the NLRB very recently reinstated the Browning-Ferris standard due to a potential conflict of interest in its 2017 decision, the Save Local Business Act - and the direction of Trump's NLRB - would ensure momentum lies with McDonald's et al.

The McJoint Employer

The Save Local Business Act was introduced by Representative Bradley Byrne of Alabama. In the current election cycle alone, Byrne has received $8,000 from the International Franchise Association, $5,000 from the American Hotel and Lodging Association, $5,000 from the Association of KFC Franchisees, and $5,000 from the National Restaurant Association, all groups lobbying for large corporations that would benefit from a strict joint employer standard. It's difficult to imagine House Republicans didn't titter to themselves - change from McDonald's securely in pocket - as they named this bill.

This is not to say, of course, that Democrats are more in touch with the working class. They may well not be. But Republicans are drenched in hypocrisy, generating a creed of working-class and small business support while accepting 89 percent of the 2016 congressional donations made by the International Franchise Association, 92 percent of the 2016 congressional donations made by the Association of KFC Franchisees, and 84 percent of the 2016 congressional donations made by the National Restaurant Association. Contrast these data with data on labor union contributions. More than 99 percent of federal campaign contributions made by the Service Employees International Union went to Democrats. More than 98 percent of federal campaign contributions made by the Laborers Union went to Democrats. And more than 99 percent of federal campaign contributions made by the AFL-CIO went to Democrats. For all of their faults - of which there are many - House Democrats have tended to vote in support of workers.

The Future of Joint Employers

The Save Local Business Act is not yet law. It may never be. But the Federal government is nevertheless working to curtail labor protections and shape policy relating to joint employers. Peter Robb, Trump's appointee as general counsel for the NLRB, has already begun settling an NLRB case against McDonald's for abuses of workers - a case distinct from the judicial action already discussed - in which the NLRB has invested 150 days of trial. Though the prior settlement was viewed as positive step for workers's rights, a settlement in the administrative case would be viewed - at least by Sharon Block and Benjamin Sachs of Harvard Law School - as "abandoning . . . a groundbreaking inquiry into whether a major employer like McDonald's should be held accountable for violating the rights of its low-paid workers." Such a question, according to labor activists, deserves the attention of a judge. And though with the recent overruling of Hy-Brand Industrial the NLRB has reverted to the Browning-Ferris standard, Trump will appoint a fifth member to the Board in 2018, thus creating a Republican majority. With this majority, Trump's NLRB can "engage[] in a full-fledged legal assault on unions that's poised to wreak havoc on collective bargaining" by dismantling the worker-friendly joint employer standard.

With the NLRB and Congress working diligently for the interests of McDonald's, Walmart, and other mega-corporations and with a wildly anti-worker president, even in the event the Save Local Business Act is never enacted, the future for workers at low-wage franchises is not certain. But with the current landscape and political realignment imminent, that future is bleak.

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