NLRB blocks McDonald’s challenge of ‘joint employer’ ruling

The National Labor Relations Board has shut down McDonald’s attempts to overturn a preliminary ruling that the franchisor should be regarded as a “joint employer” of franchisees’ staffs.

In a decision reached Friday but not circulated widely within the franchise community until today, the NLRB said it saw no reason to provide McDonald’s with a chance to challenge the ruling or to strike down the pending redefinition of franchisors as joint employers.

The restaurant giant had argued that Administrative Law Judge Lauren Esposito had wrongly denied an attempt in January to appeal the re-designation, which had been made right before the December holidays. McDonald’s had argued at the time that NLRB General Counsel Richard Griffin did not rely on facts in pressing his complaint that the home office was deeply involved in all aspects of a franchise’s operation and thus should be responsible in part for its personnel policies.

Without any facts to refute, McDonald’s in effect argued before Esposito, it could not muster an argument against being reclassified.

Turned down by Esposito, the company appealed to a review panel of the NLRB. It challenged Esposito’s rejection of the first appeal attempt and asked that the joint-employer decision be struck.

The panel, consisting of the NLRB’s chairman and four members, rejected McDonald’s attempt to re-open the matter and affirmed the justification of Griffin to regard the franchisor as a joint employer.

“We find that the allegations in the complaint are sufficient to put McDonald’s on notice that the General Counsel is alleging joint employer status based on McDonald’s control over the labor relations policies of its franchisees,” the decision reads.

Reclassifying McDonald’s and other franchisors as joint employers of franchisees’ staffs would undermine a longstanding convention of restaurant franchising. Typically franchisees are responsible for recruiting, training and dealing day to day with their employees, and are usually the parties legally accountable for those activities. Designating franchisors as joint employers would make the deep-pocketed corporations also accountable, exposing them to lawsuits and regulatory actions.

Franchisors have warned that they would likely change their expansion philosophies if the NLRB’s decision stands. Many have said they would likely resort to more company development, or would deal only with longstanding franchisees whose labor policies are familiar. 

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