NLRB Decision Could have Far-Reaching Effect on Franchises

A recent decision made by the National Labor Relations Board (NLRB) regarding McDonald’s, USA, LLC could have effects on franchises of all companies across the country.

NLRB Investigation

According to the NLRB’s website, their Office of the General Counsel investigated charges brought against McDonald’s franchisees and the franchisor, McDonald’s, USA, LLC, for violating rights of employees in light of events that occurred surrounding employee protests. While the Office of the General Counsel found some of the charges were of merit and other were not, they decided to authorize complaints on alleged violations of the National Labor Relations Act. If a settlement between the parties is not reached on the reported issues, the NLRB will issue complaints that will name McDonald’s, USA, LLC as a joint employer respondent in the matter. In addition, the NLRB is prepared to name McDonald’s, USA, LLC and/or its franchisees as a respondent in the 43 cases found to have merit against the company out of the 181 filed against them since November 2012, if the parties to those matters are also unable to reach settlement.

McDonald’s is expected to dispute the decision. Their position reportedly revolves around the fact that the company does not make decisions on hiring, wages, or other employment matters in the context of its franchises. They believe the decision is contrary to decades of established law in this area. A panel of administrative law judges is expected to hear the employees’ claims next, and depending on its decision, McDonald’s could appeal to a full labor board in Washington. Again depending on the outcome, the case may end up reaching as far as the Supreme Court.

The Response

News outlets are wasting no time in reporting on and responding to the NLRB decision. One notable newspaper is opining that the ruling regarding McDonald’s could open the door for the formation of unions by franchise employees. Not only that, but in effect, this could mean that McDonald’s could be held jointly liable for any labor or wage violations committed by the company’s franchise operators. If the NLRB’s decision is upheld, it would effectively erase practices long upheld in the fast-food industry, in addition to inviting employees of these franchises across the country to unionize.

According to the same article, business groups are responding to the decision as outrageous. Other legal experts are saying the decision is far-reaching and could be a sign of the NLRB’s willingness to also hold other major companies out as joint employers in such cases. McDonald’s even stated that the decision could affect businesses outside the fast food industry, including small businesses like dry cleaners and car dealerships.

Hospitality Law

The area of hospitality law often requires the special attention of experienced attorneys who have a thorough understanding of business issues. The lawyers at the law firm of Hendrickson & Long, PLLC have successfully represented clients in a multitude of cases covering different areas of hospitality law. Please feel free to contact us today to schedule a consultation. Our office is located in Charleston, West Virginia.