The NLRB-McDonald's ruling could be the beginning of a franchise war
It has been accurately observed that a single sentence in a terse ruling issued last week by the general counsel of the National Labor Relations Board has the potential to bring U.S. labor law into sync with the 21st century.
The ruling involves at least 43 labor violation cases filed against McDonald's since November 2012. (Another 64 are pending.) In those 43 cases, the general counsel ruled that it will treat McDonald's as the workers' "joint employer," along with its franchisees. They can be judged jointly accountable for workplace conditions.
Thus with a single stroke did the agency punch a hole in the claim used by retailers and restaurant chains to dodge responsibility for their front-line workers: that working conditions are set by the small businesses operating the franchises, not by corporate headquarters.
This claim long has been transparently bogus. McDonald's, like many other franchisors, exercises rigorous control over almost all aspects of a franchisee's operations -- uniforms, food quality and preparation, store design, hours, prices. The branded company monitors these standards with secret shoppers, and backs them up with economic cudgels that can make indentured servitude look like a big party. A well-performing franchisee can be offered more stores, and a poor performer might find a competing store opening down the street.
NLRB rules against business in pivotal joint-employer decision
Business groups had been on the warpath in anticipation of the Browning-Ferris decision.
The National Federation of Independent Business (NFIB), for instance, warned it could “blow up” longstanding business models.
The National Retail Federation (NRF) denounced the ruling as an instance of “unelected government bureaucrats creating roadblocks in the path of job creation.”
“This is further evidence that the NLRB has given up its position as an objective arbiter of workplace issues and sees itself as an advocate for organized labor as a means of imposing new workplace obligations and legal liabilities on well-known corporations,” said David French, the NRF’s senior vice president for government relations.
Companies are already threatening to cut ties with staffing agencies that help recruit temporary workers and subcontractors that provide janitorial and security services because they don’t want to be responsible for another company’s employees.
They say they would rather bring those jobs in-house to establish more control over the situation.
“It will make it much harder for self-employed subcontractors to get jobs,” said Beth Milito, senior legal counsel at the NFIB. “Subcontractors will come under pressure by their clients to change their employment policies or they’ll be cut out of the picture altogether."
