The National Labor Relations Board approved a measure last month that expands the definition of “joint employer” under the National Labor Relations Act. The definition now states that organizations that possess the authority to control terms and conditions of employment can be considered a joint employer.
This decision is expected to cast more liability in the franchisor/franchisee relationship onto the franchisor for labor violations. Joint liability for violations between franchisors and franchisees could threaten the franchise business model, as franchisors may opt to exert greater managerial control over their locations and enter into direct bargaining with employees as a way of ensuring acceptable agreement conditions. Selecting this option would remove much of the function of a franchisee. This expected industry direction would have a greater effect on national companies with a large regional footprint.
This NLRB decision is expected to receive legal challenges, and has been brought to the attention of Congress, who may look to legislatively overrule the decision. PFMA will keep members informed of further developments on this issue.
This decision is expected to cast more liability in the franchisor/franchisee relationship onto the franchisor for labor violations. Joint liability for violations between franchisors and franchisees could threaten the franchise business model, as franchisors may opt to exert greater managerial control over their locations and enter into direct bargaining with employees as a way of ensuring acceptable agreement conditions. Selecting this option would remove much of the function of a franchisee. This expected industry direction would have a greater effect on national companies with a large regional footprint.
This NLRB decision is expected to receive legal challenges, and has been brought to the attention of Congress, who may look to legislatively overrule the decision. PFMA will keep members informed of further developments on this issue.
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