NLRB Ruling Allows Franchisors to Be Considered "Joint Employers"

A recent ruling by the National Labor Relations Board (NLRB) could mean major changes to how franchises operate in the future. As reported in The Business Journals, the NLRB ruled on Aug. 27 that a company can be considered a “joint employer” if it has any type of control over workers’ employment terms and conditions — even if that control is indirect or never even exercised.

The new ruling opens the door for franchisors and outsourcing companies to be considered partially responsible for workers employed by their franchisees, staffing companies, etc. According to The Business Journals, the International Franchise Association has expressed concern that this could push franchisors into taking a greater level of control over the hiring and employment practices of their franchisees, which the organization said could be a turn-off for small business owners (the franchisees) who would normally oversee these practices on their own. Many believe that the new ruling could damage the current franchise model and stunt economic growth.

Another concern that many have is that the new ruling can make it easier for employees of fast-food franchises to unionize, or for unions to take action directly against franchisors. This already became an issue of concern in the past when the NLRB named the McDonald’s Corp. a joint employer in certain cases involving allegations of unfair labor practices against some of its franchisees. Business and franchise groups are expected to take action to challenge the recent ruling.

Legal Support for Franchisees

At Franchise Legal Support, we remain up-to-date on the latest issues that affect the franchising industry. We also stand ready to assist franchisees with various types of legal issues, whether they involve the process of purchasing a franchise, establishing a legally sound franchise agreement, or dealing with breach of contract issues. If you have any franchise-related legal concerns, please do not hesitate to consult with our California franchise law attorney. Contact us today for a free consultation!

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