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National Labor Relations Board Joint Employer Stipulation Could Change Franchisor Model


The National Labor Relations Board (NLRB) is considering whether to use a broader definition of the term “joint employer” — a move that could bring sweeping changes to the restaurant and retail/wholesale franchisor model.

The determination of whether a large fast food company exhibited more control than it should have over its franchisees was the most recent catalyst for the proposed change, but several earlier cases have challenged the more than 30-year-old standard for determining joint employment. If the new definition, which was proposed by the NLRB’s General Counsel Richard Griffin, is adopted, franchisors could see significantly expanded wage and hour and other employment practices liabilities as well as operational challenges.

Franchisors could now be responsible for alleged discrimination, harassment, wage, labor practices, and other allegations that typically may have been directed at franchisees only. Franchisees, in turn, could see a reduction in control or end up out of business altogether.

The proposed expansion of “joint employer” could become final as early as 2016, and the change could have implications far beyond the restaurant and retail industries — to all companies that subcontract or outsource.

“NLRB Joint Employer Stipulation Could Change Franchisor Model” analyzes the sweeping implications the NLRB’s change could have on:

  • Key labor/employer protections and practices.
  • Wage and hour and employments practices liability.
  • Compliance obligations and regulatory risks for franchisors.

“NLRB Joint Employer Stipulation Could Change Franchisor Model” also outlines steps you can take to mitigate risks if the proposed change were to become law.