Washington Restaurant Market Watch: NLRB on joint employers

Washington Restaurant Market Watch: NLRB on joint employers https://wahospitality.org/wp-content/uploads/2015/03/NLRB_659x439-659x198.jpg

By Paul Schlienz

Last week, Washington Restaurant Market Watch examined the National Labor Relations Board’s (NLRB) rulings on union elections and their potential impact on restaurant operators. This week we continue our series on the NLRB with a look at its view of joint employers.

Under current law, two businesses are considered to be joint employers if they both actually exercise substantial, direct and immediate control the hiring, firing, discipline, supervision and direction of workers. The NLRB is trying to expand that definition of “joint employer” to add indirect control, unexercised potential control and “economic and industrial realities.”

Since July 2014, the NLRB has viewed the McDonald’s Corporation as a joint employer with its franchisees. In response, the National Restaurant Association, International Franchise Association and other industry groups have contested the move, pointing out that this opinion could potentially destroy the franchise model.

The NLRB’s attempt to change the joint-employer standard was inspired by organized labor’s efforts to find additional ways to unionize restaurant workers. Unions would prefer to make one big push to organize a large corporation rather than attempt, one by one, to organize small businesses with a handful of employees. By linking franchisees more closely to their parent companies, unions can portray small businesses as big business, and go after parent companies in order to organize these workplaces.

This complete change in the traditional view of joint employment, however, has potential impact that goes far beyond franchises.

“People think the NLRB is talking only about franchising because of the McDonald’s case, which is very prominent, but the opinion it’s reviewing right now might be used to change the definition of joint employers to the point that two employers could be responsible for a supposed joint employee who actually doesn’t have anything to do with franchising,” said Angelo Amador, the National Restaurant Association’s vice president of labor and workforce policy. “If you hire staff for events or any kind of contractor relationship, you are at risk. Imagine that a delivery truck comes in to your restaurant at 10 p.m. or delivers during non-serving hours. Potentially, somebody, under the opinion the NLRB is looking at, could say that you are the employer of the delivery truck driver despite that this an employee that clearly doesn’t work for you.”

The changes to the relationship between franchises and their parent companies as envisioned by the NLRB, would not only damage the franchise model, but would hurt the entire economy. With the franchise model under fire, fewer jobs would be created, less capital would be invested, fewer taxes would be paid and economic activity will decrease.

Where the NLRB’s opinion on franchises will lead remains to be seen, but Amador urges restaurant operators to make their voices heard on the issue.

“People need to let their congressional representatives know that the NLRB’s opinion is a concern to us,” said Amador. “It’s not too late to take action. We’re working with Congress to get a fix to make sure the law is not changed through the decisions the NLRB is handing down.”

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