The National Labor Relations Board Office of the General Counsel announced this afternoon that it has authorized complaints on 43 unfair labor practice charges filed against McDonald’s franchisees and their franchisor, McDonald’s, USA, LLC. Significantly, the General Counsel has indicated that absent settlement in these cases, he will issue complaints against the respective franchisee and McDonald’s, USA, LLC as a joint employer respondent.
This announcement by the General Counsel of allegations his office will pursue in litigation before an Administrative Law Judge is widely being mischaracterized as a “ruling” or “decision” of the National Labor Relations Board itself. We are likely years from such a conclusive finding. Still, the General Counsel’s announcement is a clear proclamation of his legal position on the joint employment issue — a legal position, once again, at odds with decades of precedent.
The Board has long been expected to toss aside decades-old standard for determining whether two or more businesses may be found to be “joint employers.” In May 2014, the Board invited interested parties to submit amicus briefs in Browning-Ferris Industries, a case involving the routine application of the Board’s existing standard. Under that standard, two or more employers must “share or co-determine matters governing essential terms and conditions of employment.” Perhaps consistent with the approach announced today, the NLRB’s General Counsel’s brief argued that the Board should abandon its current joint employer standard in favor of an amorphous “totality of the circumstances” test. (McKenna Long & Aldridge filed an amicus brief on behalf of the Retail Litigation Center). The briefing period for amici closed on June 26, 2014, and the case appears to be ripe for decision. Obviously, the actual National Labor Relations Board decision in Browning-Ferris may have significant impact on the resolution of these McDonald’s cases as they go forward.
At a hearing of the House Subcommittee on Health, Education, Labor & Pensions on June 24, 2014, Andrew Puzder, the CEO of CKE Restaurants expressed his concerns about the Board’s shift in approach thus:
If franchisors are considered joint-employers with their franchisees, the cost of increased staff and increased risk will most likely translate into franchisors charging higher royalty rates and fees, perhaps significantly higher. Franchisor control over a franchisee’s labor force, and the risk and higher royalty rates and fees associated with it, have the potential to chill the desire of franchisors to franchise and of franchisees to acquire a franchise or to develop new units, at a time when the country desperately needs economic growth.
Many of these charges have been filed in concert with the Fight for Fifteen movement, funded significantly by the S.E.I.U. Since November 2012, at least 181 charges have been filed across the country against McDonald’s franchises. The General Counsel indicated today that 68 were found to have no merit, and presumably have been, or will be, dismissed. To date, 43 of these cases are thought by the General Counsel’s Office to have merit, and will be the subject of litigation absent settlement.