Democrats Query Labor Board on Hot-Button Joint Employer Issue

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By Chris Opfer

A group of House Democrats wants the National Labor Relations Board to clarify its stance on the hot-button joint employer liability question, including whether franchisers may be required to collectively bargain with franchisee workers.

A total of 13 Democrats May 9 sent a letter to the NLRB asking about a 2015 memo in which Associate General Counsel Barry Kearney said fast-casual franchiser Freshii Development LLC was not a joint employer of workers at a Chicago Freshii franchise. The lawmakers—led by Rep. Scott Peters (Calif.) and including several other members of the moderate New Democrat Caucus—asked Kearney if that analysis still stands after the NLRB expanded the joint employer liability test four months later.

The International Franchise Association and other business groups have railed against the broadened joint employer standard since before it was adopted. They said new liability risks would force franchisers to take more control over franchisee operations and could require businesses to bargain with employees who don’t work for them. House Republicans are expected to introduce legislation to restrict joint employer liability, and the letter is intended to build some support across the aisle.

“We have heard from constituents and other stakeholders about whether, and to what extent, they can rely on the Freshii memorandum as a blueprint for clear guidance on the joint employer issue in the franchisor-franchisee relationship,” the lawmakers wrote in the letter, obtained by Bloomberg BNA. “Uncertainty remains as to whether businesses may rely on the Freshii guidance because the memorandum appears fact-specific to Freshii’s circumstances and the NLRB’s new joint employment test in Browning-Ferris created a new standard for all businesses including franchised businesses.”

The board in Browning-Ferris Industries ruled that a business that exerts indirect control over employees of a contractor, franchisee or staffing agency may be considered their joint employer for bargaining and liability purposes. In a memo issued earlier the same year, Kearney said Freshii was not a joint employer of the Chicago franchise workers under either the traditional test or the one proposed in Browning-Ferris because the company wasn’t directly involved in employment matters and did not indirectly control working terms and conditions.

An NLRB spokeswoman declined to respond to Bloomberg BNA’s request for comment.

Who’s at the Table?

Labor unions and worker advocates have embraced the new standard, saying it gives workers a real voice at the bargaining table by allowing them to negotiate with the employers who actually set the terms of their employment. Celine McNicholas, a former Obama administration NLRB official, told Bloomberg BNA that’s especially important in situations in which businesses use complicated legal arrangements to veil the power they wield over workplace policies.

“When I look at this incredible amount of political capital that is being spent on this fight, what I see is an attack on workers’ ability to unionize,” McNicholas, now labor counsel for the union-backed Economic Policy Institute, said. “If you want to meaningfully bargain, you need to have everybody at the table on the employer side, otherwise you’re never going to be able to actually impact the terms and conditions of employment.”

The Freshii memo revolved around claims that the Chicago franchisee fired a worker for trying to unionize, in violation of the National Labor Relations Act. The Browning-Ferris case concerned whether the California waste management company was required to bargain with sorters, screen cleaners and housekeepers provided by Leadpoint Business Services to work at a BFI recycling plant.

In addition, McDonald’s USA LLC is currently facing unfair labor practice cases—NLRB General Counsel Richard Griffin authorized charges before the board expanded the test—alleging the fast-food giant is a joint employer of workers at franchise restaurants. Domino’s Pizza Inc. is embroiled in a lawsuit in New York, in which the state attorney general says the pizza franchiser is on the hook as a joint employer under a separate law for alleged minimum wage and overtime violations by franchisees.

Those cases focus in particular on the franchisers’ use of software programs and other technology to maintain uniformity in franchisee operations. The franchiser required most franchisees to use standard point-of-sale and scheduling software but did not control how franchisees scheduled their workers or handled other employment issues, Kearney said in the Freshii memo.

Lots of Lobbying

The IFA has led a concerted lobbying effort on Capitol Hill to try to convince lawmakers to move legislation that would undo the Browning-Ferris decision. That includes a possible stand-alone bill and a government funding rider, both of which would need at least some Democratic support in the Senate to avoid a filibuster.

The group has gone to great lengths to paint the issue as a threat to small businesses, particularly franchisee owners that the IFA says want to continue to operate independently from franchisers.

The IFA in December hired former National Association of Home Builders lobbyist Suzanne Beall. Stephen Aaron, a senior vice president at Mercury LLC and former National Rifle Association lobbyist, recently registered to lobby on behalf of the IFA on labor issues.

"In this political environment, it’s important to highlight bipartisan energy in the House to encourage further action in the Senate, especially as the Senate’s calendar will be dominated with nominations in the post-election year.” Beall told Bloomberg BNA via email.

EPI's McNicholas said employees deserve some clarity. She said she'd like to see a variety of labor and employment laws updated to ensure that workers have a meaningful right to negotiate and take legal action when necessary.

“If you could have standards under all of these laws that actually were meaningful for workers to exercise their rights, that would be wonderful,” she said.

To contact the reporter on this story: Chris Opfer in New York at

To contact the editors responsible for this story: Peggy Aulino at; Terence Hyland at

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