WASHINGTON – The National Labor Relations Board (NLRB) published a newly proposed rule that limits the extent to which companies can be held responsible for how their franchisees treat workers. An Eater article explains that “at the center of this controversial decision is the concept of “joint employers”—essentially, who is held responsible for how workers are treated when more than one entity controls or supervises their work (e.g., McDonald’s the corporation and the independent franchise owner).”
Under the proposed rule, “an employer may be found to be a joint-employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner that is not limited and routine. Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship.”
The previous ruling, set in 2015 during the Obama Administration, allowed employers that controlled other companies’ workers indirectly to be considered joint employers.
The NLRB’s proposed rule affects many businesses that operate under a franchise model, including McDonald’s, Subway and Taco Bell. Eater reports that “labor and worker advocacy groups argue that the new ruling would permit big corporations to look the other way when their franchisees commit labor violations such as failing to pay overtime or failing to ensure a safe workplace, and hinder franchise workers’ ability to unionize.”
The public has 60 days to submit comments under the proposed rule.