Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Joint employer ruling raises unanswered questions, says NLRB dissenter, (May 17, 2016)

By John W. Arden, J.D., LL.M.

Addressing the International Franchise Association Legal Symposium yesterday, National Labor Relations Board Member Philip Miscimarra expressed sympathy to those in the franchising community who are struggling with the new joint employer standard created by the Board’s 2015 decision in Browning Ferris Industries of California, Inc. dba BFI Newby Island Recyclery.

Under the new standard, the Board may find that two or more statutory employers are joint employers of the same statutory employees if they "share or codetermine those matters governing the essential terms and conditions of employment." Franchisors have been concerned about what terms of a particular franchise relationship may bring them within joint employer status, imposing new responsibilities and liabilities.

Miscimarra, who dissented in Browning Ferris, explained that reserved indirect control can now make a party—such as a franchisor—a joint employer, even if that control is never exercised. The decision brings up a number of "unanswered questions" regarding issues such as which party is the relevant bargaining unit; what if the business and affiliate cannot agree; how the joint employer determination affects trade secrets; what controls in the presence of both client contracts and collective bargaining agreements; and how NLRB jurisdictional problems should be addressed.

He also noted the McDonald’s case, in which 30 franchisees have been charged with 181 labor violations and the franchisor has been alleged to be a joint employer. This dispute is currently pending before an administrative law judge, with the NLRB having ruled on only procedural issues thus far.

"Most parties try to do the right thing," Miscimarra said. "I feel for everybody who is struggling with the issue." He expressed hope that the Board would provide help in the future.

The 49th Annual IFA Legal Symposium is being held at the JW Marriott in Washington, D.C.

News: FranchisingDistribution