It is Time for Something New: A 21st Century Joint-Employer Doctrine for 21st Century Franchising

[Excerpt] The joint-employer doctrine is perhaps the hottest issue in labor and employment law for 2015 and the foreseeable future. In the September 2015 Browning-Ferris ("BFI”) decision, the National Labor Relations Board (the "NLRB" or the "Board"), the administrative agency that enforces the National Labor Relations Act (the "NLRA" or the "Act"), issued what is expected to be the first of two decisions, expanding the joint-employer doctrine. In the BFI decision, the so-called putative employer (e.g., the lessor of employees or a franchisor) is now considered the employer of individuals who had in the past been considered employees of the supplier employer. Like in Browning-Ferris, a number of McDonald's employees and the Service Employees International Union ("SEIU") are arguing that the world's largest franchisor is the joint employer of all its franchisees' employees. At first blush, one might believe that this is another esoteric labor and employment law issue that only lawyers and scholars care about. However, depending on how the Board and courts rule on this issue, the joint-employer doctrine could fundamentally change business in the United States by destroying the franchise model.

Dealing with Shifting Labor Employment Sands

Changes in regulations and tighter interpretations of existing regulations engaged participants in 14th annual Labor and Employment Roundtable, hosted by the Cornell Institute for Hospitality Labor and Employment Relations. They also reviewed changes in union organizing rules. Two Supreme Court decisions dealt with the challenging application of accommodating workers’ health and religious needs, while a new ruling by the National Labor Relations Board calls into question the supposedly arm’s length relationship of employee leasing firms and their clients, as well as franchisors and franchisees. The NLRB also has shortened the campaign time for union elections. In one Supreme Court case, Young v. United Parcel Services, Inc., the Court pointed to a simple principle when employers implement policies for those with illness or medical conditions. Policies must be consistent with regard to how on-job and off-job health issues are treated, and the company’s policy must not be driven by economic considerations. That is, the Court stated that an employer’s denial of a light-duty assignment for an employee could not be based on cost or convenience. The case relating to religious accommodation also involved an economic hinge. In an earlier case, the Court had held that religious accommodations are limited to that which would have no more than a de minimus cost on the employer. In this case, EEOC v. Abercrombie & Fitch Stores Inc., Abercrombie had declined to hire a woman wearing a headscarf on the assumption that she would need a religious accommodation. The Court frowned on the idea that an employer would take religious accommodations into account when deciding whether to hire a person. The franchising industry is attempting to make sense of the NLRB ruling regarding joint employment, in which the board ruled that franchisors that maintain some kind of control over their franchisees’ employees should be considered joint employers of those employees. This is a complicated matter, and the situation is still in flux. Finally, with regard to the telescoped union campaign ruling, these are supposed to benefit the unions. So far, however, there’s no indication that the change has affected the overall outcome of union election campaigns.