Joint Employer Action Anxiously Anticipated

On July 29, 2014, the National Labor Relations Board’s Office of the General Counsel set the labor and employment world on fire by authorized complaints against McDonald’s, determining that the franchisor McDonald’s is a joint employer with McDonald’s franchisees and thus liable for the actions of the franchisees.

Were franchisors typically held liable for the actions of their franchisees, as the NLRB General Counsel has proposed in an amicus brief, the franchise system as we know it would implode.

With October now past, it has been over three months. Yet, despite the General Counsel’s determination, no formal complaint has been filed by the full National Labor Relations Board (NLRB) against franchisor McDonald’s as a joint employer.

This lack of action from the Board comes as something of a surprise, given the time and high-profile attention paid to the matter and given that the norm is for the Board to follow the advice of General Counsel Richard Griffin, himself a former Board Member.

Furthermore, NLRB Associate General Counsel for the Division of Advice Barry Kearney heightened anticipation about two weeks ago during a Bloomberg BNA webinar “The Current State of Joint Employer Law: How Can Both Employers and Unions prepare for the Future?” Kearney’s Division of Advice is credited with proposing the new standard for joint employers, and during the webinar, Kearney suggested that the NLRB would formally issue the complaint against McDonald’s before the end of October.

While the employer community was spared that fright over Halloween, the specter still looms.

Kearney intimated that McDonald’s does not appear prepared to settle the matter. Settlement would have obviated the need to issue the formal complaint. Apparently talks now merely address mechanics for the one or more trials that may result from NLRB action.

With settlement talks on death’s doorstep, with over three months passed since the General Counsel’s determination, and with an announced putative October deadline missed, the question arises whether the NLRB is playing politics with this case. Specifically, is this Administration’s leftist majority on the Board holding their fire until after the November 4^th elections?

After Kearney’s prognostication during the webinar two weeks ago, NLRB General Counsel Griffin was moved to break his silence on the matter one week ago during a speech at the West Virginia University College of Law in Morgantown. Griffin reiterated Kearney’s evaluation that discussions about how to try the McDonald’s joint employer case(s) were ongoing, but put the timeline for issuance of a formal complaint behind what Kearney predicted.

Additionally, Griffin appeared to back off the aggression evinced in the brief of the General Counsel in the key, ongoing Browning-Ferris Industries case regarding joint employer status. Referring to a franchisor protecting brand uniformity and quality, Griffin stated, “In that area we have a problem legally for our theory.”

Griffin continued, “So here we are arguing for a return to the traditional standard, and here are these cases that under the traditional standard find no joint employer in the franchisor-franchisee relationship.”

Griffin, in both his capacity as a Board Member and as General Counsel, has repeatedly pushed for thwarting precedent, but uncharacteristically claimed during the WVU College of Law appearance that he did not favor changing joint employer precedent when necessary to protect brand uniformity and quality.

Obviously Griffin has felt considerable heat from the business community since indicating a hard-left turn in the joint employer standard. Properly understood, however, his apparent rhetorical faint should be understood as nothing more than sleight of hand. Business should not be lulled into believing that Griffin is softening.

Rather, a thorough examination of the General Counsel’s brief in the BFI case shows that Griffin intends to have the “typical” franchisor-franchisee relationship be considered a joint-employer relationship.

Griffin considers true protection of brand uniformity and quality to be a smaller minority of the cases.

Griffin’s proposed change of 30 years of precedent of “direct and immediate control” to “indirect” or “potential” control is sweeping.

Beyond that, Griffin wants to add a fudge factor of “industrial realities” that would allow him to find joint employer status in virtually all cases where his proposed totality-of-the-circumstances test were used.

Business should not be tricked and must prepare for the worst joint-employer action, though Halloween has come and gone.