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NLRB Attempting to Expand Liability for Franchisors and Employers Utilizing Third-Party Workers

This week, the National Labor Relations Board’s General Counsel announced that he considered McDonald’s USA, LLC to jointly employ McDonald’s franchisees’ employees. Richard Griffin, who effectively serves as the NLRB’s chief prosecutor, will seek to hold McDonald’s USA liable for its franchisees’ employment practices. In doing so, he is construing the NLRB’s “joint employer” standard far broader than the standard the NLRB has followed for years. Although Griffin’s announcement is not binding law, he aligns very closely with the NLRB’s pro-labor majority, which means the NLRB will likely accept his position. 

New Union-Friendly Rules

This is yet another example of the NLRB giving a boon to labor unions to the detriment of employers. Griffin’s announcement comes on the heels of the NLRB issuing other new union-friendly rules, such as rules helping unions stage “ambush elections” and organize “micro-units” of employees. These new rules have already emboldened unions, helping them effectively target new workforces in the retail/service, logistics, healthcare and manufacturing industries, among others. 

Potential Employer Impact

The new joint employer standard would give unions even more support. The new standard would apply to most private sector businesses, creating problems for employers who:

  • Subcontract work,
  • Rely on staffing agencies,
  • Have franchise relationships, or
  • Otherwise outsource any work that benefits them.

Even the typical employer who uses an outside cleaning service could be vulnerable, as such an employer arguably controls the custodial employees as much as the typical franchisor controls its franchisees’ employees. When combined with the NLRB’s new micro-unit rules, this would allow unions who could not otherwise organize a full workforce to instead organize employees across multiple locations or in a limited number of job classifications, whichever gave them the best chance to win an election.

Employers should also note that Griffin views employment issues similarly to the key policy-making officials in other federal agencies, such as the Department of Labor and Equal Employment Opportunity Commission. Therefore, it is possible that these other agencies will subsequently expand their joint employer standards as well. 

What Can Employers Expect?

At a minimum, employers can expect unions to further increase their organizing efforts. Given how much attention unions have gained through the “Fight for $15” fast food protests (which our practice group has helped employers defend against), unions may now extend these types of protests to other industries.

As the NLRB continues to make the law more union-friendly, it becomes even more important for employers to understand their rights and develop effective plans for responding to union organizing campaigns. Our labor and employment practice group regularly counsels both large and small employers in these matters. If we can be of assistance to you or your clients, please do not hesitate to contact us.

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