Franchisees Urge Congress to Examine the ‘Joint Employer’ Standard

Back in July 2014, the National Labor Relations Board (NLRB) made a controversial choice to redefine the concept of a “joint employer.” That means that McDonald’s corporations can be held responsible for employee complaints of unlawful behavior on the part of franchisees, including wage theft, poor working conditions, and unlawful termination.

The National Labor Relations Board’s definition of “joint employer” isn’t sitting well in the franchise industry. McDonald’s itself condemned the ruling. “McDonald’s does not direct or co-determine the hiring, termination, wages, hours, or any other essential terms and conditions of employment of our franchisees’ employees – which are the well-established criteria governing the definition of a ‘joint employer,’” McDonald’s Senior Vice President of Human Relations Heather Smedstand said in a statement following the ruling.

It seems that most franchisors across the industry agree with McDonald’s. Now franchises from across the country are teaming up to do something about it. Last Tuesday, a group of franchise industry leaders and business owners launched the Coalition to Save Local Businesses (CSLB). The lobby group is actively working to convince Congress that the choice to redefine the definition of “joint employer” would have consequences throughout the franchise industry — and not good ones. The coalition includes franchises from a range of industries and niches, including Golden Corral, Choice Hotels, and College Hunks Hauling Junk.

“To me, this is not a Republican or Democratic issue. This is an issue about hardworking people retaining their ability to own, operate, and manage their own local business,” Matthew Patinkin, an Auntie Anne’s Pretzel’s, Red Mango Frozen Yogurt, and Jamba Juice franchisee, said in a statement. “If the NLRB decides to change the definition of who is the employer, it will certainly impact the way I do business, and could have very negative consequences.”

The International Franchise Association (IFA) and other franchising groups contend that these decisions violate a history of independent control between franchisees and franchisors. Typically, franchisees can make choices regarding employment, such as hiring, firing, and wages, independently of the franchisor. In other words, the franchisors aren’t responsible for those choices. With the new ruling on joint employment, however, that is under fire. Still, it remains unclear whether the ruling will affect the industry at large or whether it is specific to McDonald’s.


Article by Jason Duncan, CEO/Founder of ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.