Big Mac Attack: Is the Franchisor a Joint Employer?

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On July 29, 2014, the National Labor Relations Board (“NLRB”) issued a brief statement that could turn labor law in the world of franchising upside down. The NLRB’s General Counsel stated that it plans to go forward with a number of complaints that allege unfair labor practice claims against a McDonald’s franchisee as well as the franchisor, McDonald’s USA, LLC. The NLRB’s position appears to be that the franchisor and franchisee may be “joint employers” of the burger flippers and other employees of a franchisee due to the control that a franchisor imposes on its franchisees.

Under past precedent, the franchisor generally has not been held liable for labor or employment practices of its franchisee unless it maintains the right to control the operations of the franchisee, a test analogous to determining whether a worker is deemed an employee or an independent contractor. Past case law has generally held that in a traditional franchisor franchisee relationship, the franchisor will not be deemed a joint employer and is not responsible for wage and hour violations or other alleged labor and employment violations committed by the franchisee. See, e.g., Singh v. 7-Eleven Inc., in which a federal district court held that 7-Eleven corporate franchisor did not share employment responsibility with its franchisees. Similarly, in a Title VII discrimination case, another district court held that the franchisor was not a joint employer for Title VII purposes because the franchisee “exclusively possessed the rights and responsibilities regarding all employment matters and the day-to-day operations in his store, and his relationship with the plaintiff as his employee.”

Originally published on Law.com on August 12, 2014.

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