DLA Piper Adds Practical Take to Browning Ferris Ruling
Multiple law firms have weighed in since the August 27 Browning Ferris ruling, and I’m passing along yesterday’s effort by DLA Piper attorneys because it is among the most measured.
(I’m not a big fan of the “tear-your-hair-out” missives that so many lawyers are issuing these days. Too many seem like attempts to scare franchisors to death so they will, perhaps, send more billable hours to their attorneys.)
To refresh you memory, the National Labor Relations Board ruled that “indirect” or even “reserved” control over employees is now potentially sufficient to establish a joint employment relationship, as DLA Piper’s Kevin Harlow, Erik Wulff and Harriet Lipkin put it. They write:
“Franchisors will continue to face great uncertainty as the NLRB’s view on the new test of joint employer, and how it applies to franchising, unfold. This uncertainty will linger until there is (a) a definitive court ruling overturning the NLRB’s decision, (b) change in the political composition of the NLRB, or (c) legislative intervention—which certainly is unlikely before the next federal election.”
In other words, the sky is not falling on franchising today, tomorrow or anytime soon, despite the headlines and hand-wringing.
The authors note the NLRB opinion explicitly stated it was not addressing the franchising industry, “and there are mixed signals as to how this might unfold” for franchising. They added advice nevertheless.
“We continue to counsel franchisors as we have, even before the advent of the new joint employer standard, to avoid or remove any semblance of control over franchisees’ employment practices from franchise agreements and operations manuals…also to avoid or remove all other controls that are not necessary for protection of the brand and the system.”
In other words, back away from the often excessive controls many attorneys advised their franchisors to add to their agreements over the years. (You can see why it’s easy to be cynical about lawyerly advice on the topic—lots of fees to add the controls, now lots of fees to subtract them.)
The only way to completely avoid the legal risks of an “unrestrained application” of the new joint employer standard, the authors write, would be for franchisors to abandon their entire business model. Hence, the only practical option is to seek to minimize the risks. DLA Piper’s attorneys say franchisors should: “redouble their efforts to engage in best practices” in their own employment relations and to “encourage franchisees” to do likewise; educate franchisees that a joint employer finding is as “disastrous for them as for franchisors”; and “continue to demonstrate publicly how franchising is an unparalleled path to the American dream of entrepreneurship.”
Although it’s a bit over the top, I like that last flourish of patriotism to end a useful and restrained piece of advice.