Freshii Case May Show How to Avoid 'Joint Employer' Status
Franchisors can take heart from recent guidance on the Freshii case, in which the National Labor Relations Board said Freshii was NOT a joint employer with its franchisee.
You read that right: The NLRB’s office of the general counsel concluded the franchisor was not a joint employer of its franchisee’s employees under either the board’s current legal standard or the broader standard proposed by the general counsel in the last year.
This of course runs counter to the industry-shattering declaration by the NLRB last August, proclaiming McDonald’s to be a joint employer with its franchisees.
“They concluded at least in this one case, the Freshii franchise system is not a joint employer. The reason that was given was actually fairly instructive and somewhat encouraging, even though it’s limited to the facts” of the particular case, said Lee Plave, an attorney with PlaveKoch.
“I think this takes a lot of the wind out of the sails” of those who say “the sky is falling” in franchising, he said. “To me it’s a big thing.”
Cheng Cohen issued an alert today explaining what franchisors should learn from the Freshii case, which involved the termination by a Freshii’s franchisee of two employees who were attempting to unionize the franchisee’s workforce.
The NLRB, said Cheng Cohen, “looked at several factors and concluded no joint employment relationships existed” for the following reasons, and suggested these are best practices for franchisors:
1. While the franchisor provided guidance on human resource matters, the franchisee had the power to decide whether to adopt the franchisor’s personnel policies, and the franchisee had, in fact, created its own employee handbook with its own personnel policies.
2. The franchisor had no involvement in hiring, firing, disciplining or supervising the franchisee’s employees, their compensation or their work schedules.
3. The franchisor’s pre-opening training programs dealt primarily with restaurant operations, not employment matters.
4. The monthly field reviews were limited to inspecting the franchisee’s adherence to the franchisor’s mandatory brand standards.
5. Despite the franchisee’s request for advice on its employees’ organizing efforts, the franchisor remained silent and did not instruct the franchisee on how to respond.
Concluded Cheng Cohen: “While this development does not signal a shift in the general counsel’s position on what the joint employer standard should be, it does illustrate the possibility of an appropriate outcome for a careful franchisor.”