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New NLRB Advice Memorandum Offers Glimmer of Aspire to Franchisors

New NLRB Advice Memorandum Offers Glimmer of Aspire to Franchisors

On April 28, 2015, the nation’s Labor Relations Board (NLRB) issued a guidance memorandum addressing when franchisors can be viewed as “joint employers” using their franchisees for purpose of the nation’s Labor Relations Act (NLRA). By concluding that the restaurant franchisor and it is franchisee didn’t constitute a “joint employer” under either the NLRB’s longstanding joint employer standard or even the more lenient standard suggested in 2014 by NLRB General Counsel Richard Griffin, the brand new memorandum provides important guidance to franchisors.

NLRB Joint Employer Background

Once we formerly reported, NLRB General Counsel Richard Griffin issued a directive in This summer 2014 that permitted 43 unfair labor practices complaints involving McDonald’s to proceed – against both franchise employers themselves and against McDonald’s USA LLC being an alleged “joint employer.” By doing this, the overall counsel advised the NLRB to go away from the longstanding “joint employer” standard.

Underneath the existing standard, a franchisor must “share or codetermine individuals matters managing the essential conditions and terms of employment” to be able to constitute a “joint employer.” In comparison, the overall counsel has contended for that adoption of the broader “industrial realities” test, which looks to some franchisor’s control of day-to-day operations of their franchises, whether or not the franchisor exercises any direct control of the franchises’ employees. The overall counsel has described that the aim of expanding the “joint employer” doctrine would be to make franchisors share responsibility for his or her franchises’ violations from the NLRA.

The brand new joint employer standard suggested through the general counsel understandably is responsible for significant concern among franchisors and employers generally. Using the relevant standard potentially susceptible to change, franchisors haven’t been in a position to determine potential contact with franchisee misconduct. Additionally, some employers have expressed concern that the expanded NLRB joint employer standard could be utilized for the foundation for expanding the joint employer standard under other employment laws and regulations too, like the federal Fair Labor Standards Act.

April 28, 2015 Advice Memorandum

The brand new April 28, 2015, advice memorandum in the NLRB provides some clearness around the new joint employer standard, a minimum of regarding the overall counsel’s position. Within the memorandum, the NLRB discovered that a cafe or restaurant chain franchisor, Freshii Development LLC (Freshii), and it is Chicago-area franchisee, Nutritionality Corporation. (Nutritionality), weren’t joint employers under either the NLRB’s prior standard or even the suggested new “industrial realities” test. In concluding that the joint employer relationship didn’t exist between Freshii and Nutritionality, the NLRB considered the next key details:

  • The franchise agreement particularly mentioned that Freshii “neither dictates nor controls labor or employment matters for franchisees as well as their employees.”
  • Freshii didn’t require its franchises to make use of its sample worker guide and employment policies.
  • Freshii wasn’t positively involved with its franchises’ point-of-purchase systems or appointment scheduling software.
  • Freshii wasn’t active in the hiring, firing or scheduling of employees in the franchise stores.
  • Following a franchise store grew to become operational, franchises were accountable for worker training.
  • Franchises were solely accountable for setting worker wages and benefits.
  • Franchises were solely accountable for disciplining and discharging their workers.
  • Nutritionality disciplined and discharged employees without talking to Freshii.
  • Freshii didn’t have participation with Nutritionality’s alleged unfair labor practice and, actually, continued to be silent after Nutritionality requested for advice.

Essentially, Freshii limited its oversight of Nutritionality to brand quality protection and performed no role in Nutritionality’s relationship with and management of its employees. Thus, the NLRB reasoned that even underneath the broader “industrial realities” test, “meaningful collective bargaining between Nutritionality and then any potential collective-bargaining associated with the workers could exist in Freshii’s absence,” so that Freshii wasn’t some pot employer.

The April 28 advice memorandum supplies a useful blueprint for franchisors trying to avoid joint employer status when the NLRB later adopts the overall counsel’s position. Simultaneously, the memorandum is fact-specific, and a lot of uncertainty remains about this matter because the franchisor-franchisee relationship at trouble in the memorandum differs considerably from many franchise plans. Once we formerly reported, the NLRB has searched for briefing on considerably expanding the joint employer doctrine because the general counsel urges, along with a potentially landscape-altering decision is anticipated within the coming several weeks. Although franchisors may take some solace within the Nutritionality memorandum, additionally they should still monitor developments in the NLRB carefully.

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