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Gruber: NLRB announcement shakes up joint-employer standard

August 13, 2014
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By Andrew Gruber

It is ironic that the week after Burger King’s new CEO is heralded for a profitability plan designed around the increase of franchises and the reduction of company-owned locations, the general counsel of the National Labor Relations Board directed officials to treat McDonald’s USA as a “joint employer” with its franchisees for purposes of the National Labor Relations Act. Some say that it is the juxtaposition of these two storylines that underscores the tension between the business community and the current administration. Nonetheless, this new direction by the board may impact everything from wages to potential unionization for franchises, staffing companies and subcontractors.

gruber-andy.jpg Gruber

Over the past two years, union-supported McDonald’s workers have waged the “Fight for $15” – a coordinated attempt to increase wages in the fast food industry and call attention to perceived work-related concerns. Such efforts have dovetailed with the social and political push for an increase in the minimum wage and the still-beating Occupy Wall Street movement. McDonald’s workers have engaged in a number of walkouts, protests and rallies – each designed to bring publicity to their movement.

These efforts have the “natural” effect of creating tension between management personnel at the restaurants (many of which are franchise owned and operated) and local workers. This has resulted in the filing of unfair labor practice charges with the board, alleging that management has interfered with workers’ rights protected by the Act. At last count, there were 181 charges pending before the board, at least 43 of which involved allegations that McDonald’s USA was a joint employer with its franchisees, sharing responsibility for the treatment of the workers and the resulting liability.

Richard Griffin Jr., who effectively serves as the board’s chief prosecutor, announced July 29 that the board will seek to hold McDonald’s USA liable for its franchisees’ employment practices. In so doing, he is construing the board’s “joint- employer” standard far broader than the standard the board has followed in years past. Griffin aligns closely with the board’s pro-labor majority, which means the board will likely accept his position.

Indeed, the board is currently contemplating a revision to its joint-employer standard across a broader spectrum. In Browning-Ferris Industries of California, Inc. et al. v. Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters, the board is currently accepting amicus briefs from interested parties on whether to alter the board’s position on joint-employer liability. For decades, the board has determined that legally separate entities qualify as a joint employer only when they share basic employment functions (hiring, firing, supervision). See TLI Inc., 271 NLRB 798 (1984); Laerco Transportation, 269 NLRB 324 (1984). Without such control, a company which contracts its labor force is not a joint employer of such workers – avoiding collective bargaining requirements and liability for violations of the Act.

While the review in Browning-Ferris Industries of California is pending, Griffin’s directive concerning McDonald’s USA shows that certain board officials see a sweeping change on the joint-employer standards. Griffin’s directive is not published and is not binding law, so his underlying analysis of this situation is unknown. However, the Teamsters in Browning-Ferris Industries of California have given insight into what is likely the prevailing thought-process:

“(T)he NLRB’s current standard for defining joint employer status makes it overly difficult to establish joint-employer status. The current test does not address the realities of the modern workplace, where facility operators frequently rely on labor contractors to supply workers, while retaining control over both their and their labor contractor’s workforce. The current standard allows contractors and facility operators to avoid, as a practical matter, the basic legal obligation to recognize and bargain with workers’ chosen representatives, because such employees cannot engage in meaningful bargaining when the party that exercises control and influence over their working conditions is not required to participate or bargain.”

Griffin’s directive with McDonald’s USA shows an apparent willingness to lump the franchisor/franchisee relationship into the labor contractor pool at issue in Browning-Ferris Industries of California. Thus, it is not a stretch to assume that the board’s joint-employer standard will be broadened, and that such standard will reach franchises of nearly all sorts, staffing companies and labor subcontractors. A broadened joint-employer standard would also give unions potentially more support and opportunity for growth. Combined with the board’s new micro-unit rules, unions who could not otherwise organize a geographically diverse workforce would be provided greater opportunities to organize employees across multiple locations, or in a limited number of job classifications, whichever gives it the best chance to succeed.

Businesses are wise to address this issue now – reviewing their labor structure and subcontracts for protections and indemnification – otherwise they may be surprised to learn “who’s the boss.”•

Andrew Gruber is a partner in the Labor and Employment Practice Group of Bingham Greenebaum Doll LLP out of its Indianapolis office. He can be reached at agruber@bgdlegal.com. The opinions expressed are those of the author.

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  1. Have been seeing this wonderful physician for a few years and was one of his patients who told him about what we were being told at CVS. Multiple ones. This was a witch hunt and they shold be ashamed of how patients were treated. Most of all, CVS should be ashamed for what they put this physician through. So thankful he fought back. His office is no "pill mill'. He does drug testing multiple times a year and sees patients a minimum of four times a year.

  2. Brian W, I fear I have not been sufficiently entertaining to bring you back. Here is a real laugh track that just might do it. When one is grabbed by the scruff of his worldview and made to choose between his Confession and his profession ... it is a not a hard choice, given the Confession affects eternity. But then comes the hardship in this world. Imagine how often I hear taunts like yours ... "what, you could not even pass character and fitness after they let you sit and pass their bar exam ... dude, there must really be something wrong with you!" Even one of the Bishop's foremost courtiers said that, when explaining why the RCC refused to stand with me. You want entertaining? How about watching your personal economy crash while you have a wife and five kids to clothe and feed. And you can't because you cannot work, because those demanding you cast off your Confession to be allowed into "their" profession have all the control. And you know that they are wrong, dead wrong, and that even the professional code itself allows your Faithful stand, to wit: "A lawyer may refuse to comply with an obligation imposed by law upon a good faith belief that no valid obligation exists. The provisions of Rule 1.2(d) concerning a good faith challenge to the validity, scope, meaning or application of the law apply to challenges of legal regulation of the practice of law." YET YOU ARE A NONPERSON before the BLE, and will not be heard on your rights or their duties to the law -- you are under tyranny, not law. And so they win in this world, you lose, and you lose even your belief in the rule of law, and demoralization joins poverty, and very troubling thoughts impeaching self worth rush in to fill the void where your career once lived. Thoughts you did not think possible. You find yourself a failure ... in your profession, in your support of your family, in the mirror. And there is little to keep hope alive, because tyranny rules so firmly and none, not the church, not the NGO's, none truly give a damn. Not even a new court, who pay such lip service to justice and ancient role models. You want entertainment? Well if you are on the side of the courtiers running the system that has crushed me, as I suspect you are, then Orwell must be a real riot: "There will be no curiosity, no enjoyment of the process of life. All competing pleasures will be destroyed. But always — do not forget this, Winston — always there will be the intoxication of power, constantly increasing and constantly growing subtler. Always, at every moment, there will be the thrill of victory, the sensation of trampling on an enemy who is helpless. If you want a picture of the future, imagine a boot stamping on a human face — forever." I never thought they would win, I always thought that at the end of the day the rule of law would prevail. Yes, the rule of man's law. Instead power prevailed, so many rules broken by the system to break me. It took years, but, finally, the end that Dr Bowman predicted is upon me, the end that she advised the BLE to take to break me. Ironically, that is the one thing in her far left of center report that the BLE (after stamping, in red ink, on Jan 22) is uninterested in, as that the BLE and ADA office that used the federal statute as a sword now refuses to even dialogue on her dire prediction as to my fate. "C'est la vie" Entertaining enough for you, status quo defender?

  3. Low energy. Next!

  4. Had William Pryor made such provocative statements as a candidate for the Indiana bar he could have been blackballed as I have documented elsewhere on this ezine. That would have solved this huuuge problem for the Left and abortion industry the good old boy (and even girl) Indiana way. Note that Diane Sykes could have made a huuge difference, but she chose to look away like most all jurists who should certainly recognize a blatantly unconstitutional system when filed on their docket. See footnotes 1 & 2 here: http://caselaw.findlaw.com/us-7th-circuit/1592921.html Sykes and Kanne could have applied a well established exception to Rooker Feldman, but instead seemingly decided that was not available to conservative whistleblowers, it would seem. Just a loss and two nice footnotes to numb the pain. A few short years later Sykes ruled the very opposite on the RF question, just as she had ruled the very opposite on RF a few short years before. Indy and the abortion industry wanted me on the ground ... they got it. Thank God Alabama is not so corrupted! MAGA!!!

  5. OK, take notice. Those wondering just how corrupt the Indiana system is can see the picture in this post. Attorney Donald James did not criticize any judges, he merely, it would seem, caused some clients to file against him and then ignored his own defense. James thus disrespected the system via ignoring all and was also ordered to reimburse the commission $525.88 for the costs of prosecuting the first case against him. Yes, nearly $526 for all the costs, the state having proved it all. Ouch, right? Now consider whistleblower and constitutionalist and citizen journalist Paul Ogden who criticized a judge, defended himself in such a professional fashion as to have half the case against him thrown out by the ISC and was then handed a career ending $10,000 bill as "half the costs" of the state crucifying him. http://www.theindianalawyer.com/ogden-quitting-law-citing-high-disciplinary-fine/PARAMS/article/35323 THE TAKEAWAY MESSAGE for any who have ears to hear ... resist Star Chamber and pay with your career ... welcome to the Indiana system of (cough) justice.

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