NLRB Announces that McDonald’s USA, LLC could be considered a “Joint Employer” with its Franchisees

On July 29, 2014 the National Labor Relations Board’s (NLRB) Office of General Counsel made a ruling against McDonald’s USA, LLC that it, along with its franchisees, could become a party to the resolution of National Labor Relations Act (NLRA) violations as a “joint employer.” This ruling is in response to the numerous charges filed by McDonald’s employees alleging violations of the NLRA and the protests held nationally at various McDonald’s locations.

When an employee alleges a violation of the NLRA, a charge is filed with the NLRB. The Office of General Counsel will investigate the charge and issue a complaint if the charge is found to have merit. At any point in the process, the parties are free to negotiate a settlement and settlement is strongly encouraged before a complaint is issued. If the parties are unable to negotiate a settlement, a hearing is held by an administrative law judge and an opinion is issued. The opinion can be appealed through the NLRB, to the actual Board, and to the federal appeals court depending on the location where the charge was filed.

Although the Office of General Counsel has only indicated that the complaints against McDonald’s USA, LLC would be issued as a “joint employer” if the parties failed to negotiate a settlement, this statement by the Office of General Counsel has dangerous implications for franchised businesses. To avoid the risk and potential liability associated with being deemed an employer of its franchisees’ employees, franchisors do not hire, fire, determine the wages or otherwise control the terms of employment of the employees of its franchisees. The recent decision by the Office of General Counsel could severely disrupt the franchisor-franchisee relationship and expose franchisors to just the type of liability risk they have been so careful to avoid.

In the case of McDonald’s, if the parties are unable to informally resolve these charges, an administrative law judge will determine whether the finding by the Office of General Counsel is accurate and whether McDonald’s USA, LLC is a “joint employer.” Check back often as Moye White follows this potentially game changing decision.