Washington Restaurant Market Watch: NLRB joint-employer ruling is a job killer

Washington Restaurant Market Watch: NLRB joint-employer ruling is a job killer https://wahospitality.org/wp-content/uploads/2014/12/nlrb2014-400x198.jpg

By Paul Schlienz

There could be big trouble ahead for franchisors, thanks to a National Labor Relations Board (NLRB) opinion – and it could potentially harm employees, too.

Under the National Labor Relations Act, companies can be considered employers over with which they contract if they have significant control over their employees. This is the “joint-employer standard,” a rule that helps resolve labor disputes if it’s not clear if the dispute arose from decisions of a direct employer or a larger corporation with which it has a contract relationship.

recent decision by the NLRB’s general counsel to consider McDonald’s and its franchisees as “joint employers,” in a series of labor complaints, overturns 30 years of established law. Potentially, this ruling could have major negative consequences across industries, including foodservice, and discourage entrepreneurs from purchasing franchises, according to Peter Kirsanow, a former NLRB member.

“As a former member of the National Labor Relations Board, I am a firm believer in the agency’s mission to safeguard the rights of employees, remedy unfair labor practices and interpret the law as it applies to private-sector employers and unions,” Kirsanow wrote. “Today, the impartial balance that is supposed to guide the agency’s practices has been replaced with an overreaching agenda clearly tilted to favor the interests of organized labor. Sadly, the board’s recent actions don’t protect the jobs of employees — they eliminate them.”

According to a report by the Competitive Enterprise Institute, this move by the NLRB is merely an attempt to make it easier for unions to organize.

“[The NLRB’s] goal is to give unions greater leverage against the businesses they seek to organize, by turning many American workers’ employment by one company into simultaneous joint employment by two or more companies,” the report said.

The consequences could be dire.

“Holding corporate headquarters responsible for a franchisee’s workforce would make franchising much less attractive as a business model,” the report stated. “The NLRB’s proposed change would end current business practices, dampen economic growth, and incentivize large corporations to move toward large corporate-run operations. It would also impose enormous costs to our economy resulting from higher levels of unionization and more litigation. At stake is the survival of America’s popular franchise system. With more than 770,000 businesses and 8.5 million employees—and temporary staffing with an average of 3.15 million workers per week.”

Ultimately, the solution to this major threat to employers may come down to congressional action.

“Congressional action is warranted,” according to the report. “Litigation could take years to resolve, by which time several entire industries could be thrown into disarray. Congress needs to legislate relief to businesses and workers who would suffer as a result of the NLRB’s aggressive, pro-union agenda.”

Learn more about the NLRB’s joint-employer ruling and why Congress needs to take action on this issue from this National Restaurant Association brief.