On July 29, the NLRB’s General Counsel Richard Griffin announced that he would allow administrative actions to proceed against McDonald’s as a “joint employer” of a franchisee’s employees. Since then, the NLRB has been asked to explain the rationale for that decision. While no formal explanation has been provided, POLITICO’s Brian Mahoney recently reported that Griffin informally discussed his views in a talk at the University of West Virginia law school. A video of that talk is available here. Griffin’s comments are revealing, and he acknowledges that his decision created a lot of “noise.”
In his talk, Griffin indicates that he is advocating that the NLRB adopt the test for joint employer in effect before the mid-1980’s. He concedes, however, that even under the old test (which he refers to as the “traditional test”), a franchisor would not be regarded as a joint-employer if its controls were implemented to protect brand uniformity and quality, the types of control necessary under the Lanham Act to protect the franchisor’s trademark, and essential in any franchise system to ensure consistency across the franchisor’s chain. As he notes in his address, while advocating for change, “[i]n that area we have a problem legally for our theory.” “So here we are arguing for a return to the traditional standard,” Griffin said, “and here are these cases that under the traditional standard find no joint employer in the franchisor-franchisee relationship.”
He noted that franchisors should be treated differently now because technology has allowed franchisors to affect the employer-employee relationship in ways unanticipated by prior Board decisions.
Now there all kinds of ways that franchisors, in real time, can keep track of everything happening at the franchisee level. So for example, there are programs where a national franchisor…has on its mainframe computer real time information about every franchisee’s gross sales, and at the same time they have real time information about the minute-by-minute labor costs going on [at a] particular franchisee. And they have programs that run algorithms that say once these costs get to a certain percentage of these [other] costs, you gotta start sending people home. That type of involvement in the hours and terms and conditions of employment…goes beyond protecting [the franchisor’s brand], and in those instances where those things are present, we think the franchisor ought to be named and held responsible as a joint employer.”
Griffin noted that the “status of [the McDonalds] cases right now is, no complaints have actually issued.” “There are ongoing discussions with the parties about whether to resolve those cases; about, if they’re not resolved, how to try them; and those discussions are not at a conclusive point.” He otherwise declined to elaborate further on the future of franchise cases “because there’s a lot of potential litigation issues there.”