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NLRB's Browning Ferris Ruling Could Apply in 'Crazy Ways'


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Another bombshell came from the National Labor Relations Board yesterday, when it ruled Browning Ferris Industries qualifies as a “joint employer” alongside one of its subcontractors for the purpose of negotiations with unions. Franchisors are rattled, even though waste management company Browning Ferris isn’t a franchisor, and other recent cases and decisions have gone the other way.

“I think this is a big one,” said Elizabeth Sigety, who heads the franchise group for Fox Rothschild. “The joint employer test is going to a standard that scares the franchise industry, and rightfully so.”

In the past, the standard was around control, she said; that is, does the franchisor exercise direct control over an employment practice, for example. “It’s now kind of a shared decision-making type of standard. If they have input, if they collaborate, if they confer,” a franchisor may be branded a joint employer along with its franchisee, she said.

The labor board wrote in its decision that parent companies should not be absolved of their obligations to workers far down the subcontracting chain. “It is not the goal of joint-employer law to guarantee the freedom of employers to insulate themselves from their responsibility to workers, while maintaining control of the workplace,” the board wrote.

The NLRB has aggressively taken this stance since last August, when it ruled it would

consider McDonald’s as jointly responsible in multiple lawsuits against franchisees. Since then, the definition of joint employer has become a moving target.

“Everybody doesn’t know where the line is. As a lawyer I have a hard time telling my clients what to do,” Sigety said.

Most notable in yesterday’s ruling, Sigety says, is the wording of the minority opinion, in which two members that disagreed with the majority “went through a list of industries that could be affected” by the ruling, “and they listed franchising.”

The number of industries “potentially encompassed within the standard appears to be virtually unlimited,” the minority opinion said.

“I think it’s very broad,” Sigety said about the Browning Ferris ruling. “ You could think of all sorts of crazy ways this could apply, and nobody really knows.”

Confusing the scene, two other recent cases around the joint employer issue were decided in favor of the franchisor, one involving Freshii and another Massage Envy.

The Browning Ferris case grew out of an organizing effort by the Teamsters, which sought to include Browning Ferris at the bargaining table along with Leadpoint Business Services, a subcontractor. A regional director for the NLRB said Browning Ferris did not exert enough control over Leadpoint workers to be considered a joint employer, but the Teamsters appealed. Yesterday’s federal ruling changes that standard.

Business groups including the International Franchise Association and the National Restaurant Association are crying foul, and are considering their next move, including a possible appeal.

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Laura MichaelsLaura Michaels is editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Beth EwenBeth Ewen is senior editor of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is restaurants editor at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
 twitter.com/mlarson1011.
 

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