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Lessons from Recent NLRB Actions

The National Labor Relations Board (NLRB) Office of the General Counsel recently investigated allegations against various McDonald’s franchises and its franchisor, McDonald’s, USA, LLC. The charges were that the company violated the rights of its employees during various employee protests at different franchise locations.

The most newsworthy aspect of this case: the NLRB authorized those complaints against franchisees and determined that McDonald’s, USA, LLC is a joint franchisor. Now, if there is no settlement reached in these cases, McDonald’s, USA, LLC will be considered a joint employer respondent. This means that franchisees, which own approximately 90 percent of McDonald’s restaurants, aren’t solely responsible for unfair labor practices; some of the burden would rest on McDonald’s the franchisor as well.

The authorization of the complaints has significant implications on the franchise business model as a whole. For the most part, there is no day-to-day interaction between franchisors and franchisees, leaving franchisees with complete control over all aspects of employee management, such as hirings, firings and more. Additionally, employee complaints are typically handled at the franchise level. Because of this arrangement, franchisors have been historically protected from liability when issues like this arise.

Therefore, the NLRB’s announcement could remove the protection that franchisors have typically had from liability over wrongdoing by franchisees. This leaves a lot of questions about the franchise business model. Will franchisors start to play a bigger role in the everyday work of franchise locations? Will large businesses start to move away from franchise business models?

At this point, it’s hard to fully grasp the meaning of what the NLRB’s ruling in the McDonald’s case could mean for franchises, but it’s surely a victory for hourly employees of these franchises. Franchisors like McDonald’s will need to do more to ensure that employees are treated fairly to avoid liability issues.

If you are dealing with a similar issue in the workplace, consult a knowledgeable whistleblower lawyer in Dallas.

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