Restaurant franchisors once again found themselves potentially liable for the employment practices of franchisees when the National Labor Relations Board reversed itself Monday on the narrowed definition of “joint employer.”
The industry was seemingly out of danger when the panel ruled in mid-December that the term was not applicable to the franchisor-franchisee relationship in most instances. That decision was welcomed with hurrahs from franchisors, who feared they otherwise would be serially sanctioned and sued for franchisees’ alleged labor-rule infractions. The broad definition of joint employer seemed dead.
But a panel consisting of three NLRB members vacated that December decision today, ruling that another NLRB director, labor lawyer William Emanuel, should not have voted in that matter, known as the Hy-Brand case, because of a conflict of interest.
The Hy-Brand decision pivoted in part on an earlier issue brought before the board, a case involving the waste-management company Browning-Ferris. Before being appointed by President Trump to the NLRB, Emanuel worked for the labor law firm Littler Mendelson, which had represented one of the litigants in the Browning-Ferris case.
An official appointed to investigate the ethnics of Emanuel’s involvement decided on Feb. 9 that the director should have recused himself from the Hy-Brand case.
A three-person NLRB panel formed to apply that ruling decided to vacate the Hy-Brand case. In short, the broader joint employer standard is back in force.
The question is for how long. Another case that pivots on the definition of joint employer could be brought before the NLRB. It is not clear if the Hy-Brand case could be reargued.
Industry advocates say the about-face could have a silver lining. Groups such as the National Restaurant Association and the International Franchise Association have been pushing for legislation to pin down and codify the definition of joint employer, instead of leaving that function to NLRB rule-making decisions.
The legislative measure, known as the Bradley Byrne bill, has already been approved by the House of Representatives. Today’s NLRB decision “will create a sense of urgency for the Senate to finally decide this issue once and for all,” said Cicely Simpson, EVP of public affairs for the NRA. “Legislation is permanent.”
“We are hopeful senators can step into the breach created by today’s decision and exercise their right to codify a definition of joint employer for small business owners everywhere and end the constant ping-ponging back and forth,” said Matt Haller, SVP of government affairs and public relations for the International Franchise Association.