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‘Joint employer’ dealt another critical blow

The threat of restaurant franchisors being held responsible for the labor practices of franchisees was further weakened Friday when cases pivoting on McDonald’s role as a joint employer were suspended in hopes the matter will be kicked out of court.

The 60-day delay in the suits was the result of two tacit acknowledgements by the National Labor Relations Board that a controversial reinterpretation of “joint employer,” a move undertaken to help unions organize big chains, no longer holds.

Last Wednesday, the office of NLRB General Counsel Peter Robb asked NLRB Administrative Judge Lauren Esposito to delay a longstanding legal action against McDonald’s USA and several franchisees. The suit argues that the franchisor should be held accountable along with the licensees for actions that allegedly violated federal labor rules. The accusations stem from a demand for a $15 minimum wage at demonstrations several years ago by quick-service restaurant workers throughout the country.

Esposito agreed to grant the two-month delay requested by Robb because of two earlier decisions by other NLRB courts. In those matters, the definition of joint employer was narrowed significantly.

Esposito said the delay would enable the court to see if the complaints against McDonald’s USA are still valid in light of those decisions. She also noted that the postponement would give McDonald’s more time to settle the dispute outside of court. Some aspects have already been resolved, Esposito noted.

"McDonald’s USA simply is not a joint employer with its franchisees, and we are hopeful that this development will lead to a long overdue and successful resolution of the pending cases," McDonald's said in a prepared statement. "This provides McDonald’s U.S. independent franchisees an opportunity to resolve these matters on acceptable terms, as they have requested for several years."

McDonald’s had asked in December for the delay, days after the two cases narrowing the joint-employer definition were resolved. Robb added his request last week.

The situation is a dramatic illustration of the NLRB’s about-face from its days under the Obama administration. In that period, the board took step after step to tip power toward employees in disputes with employers.

One of the most controversial was the reinterpretation of joint employer to cover most restaurant franchise relations. Proponents were hopeful that an action against a huge outfit like McDonald’s Corp. would rouse more public sympathy and eagerness to unionize than cases brought on a one-off basis against franchisees, which are typically small businesses.

Restaurant franchisors and other opponents warned that the revised joint-employer standard would destroy the franchise development model because franchisors would be too worried about lawsuits to sign new licensees.

Under President Trump, the NLRB has been reformed, with the five-member panel now sporting a majority of Republicans. Prior to his appointment as general counsel, Robb had been a labor lawyer who typically represented employers, a marked change from his predecessor, Richard Griffin, who had a union background.

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