A National Labor Relations Board (NLRB) ruling released Tuesday could ease unionization at fast food restaurants and imperil the franchising business model.
NLRB General Counsel Richard Griffin, an Obama appointee and longtime union lawyer, ruled that McDonald’s could be held liable for wage and employment violations committed by franchisees.
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His findings departed from the longstanding precedent that corporations are not responsible for the actions of franchise owners, who pay for the right to use the company brand, but control day-to-day operations, such as pay and scheduling.
Griffin’s office evaluated more than 150 complaints from fast food workers who said they were unfairly punished for participating in union-backed strikes and protests. Griffin, who previously served on the national NLRB board before his appointment was declared unconstitutional, ruled that McDonald’s should be considered a joint employer in more than 40 of the cases.
Business groups said the ruling would have dire consequences.
The ruling could damage hiring and demonstrates President Obama’s labor appointees’ "contempt" for longstanding precedent and the board’s duty to serve as a labor arbiter instead of a union advocate, said David French, the National Retail Federation’s senior vice president for government relations.
"It is just further evidence that the NLRB has lost all credibility as a government agency established to protect workers and is now just a government agency that serves as an adjunct for organized labor, which has fought for this decision for a number of years as a means to more easily unionize entire companies and industries," he said in a statement.
The ruling strikes at the very heart of the franchise model, according to French.
The NLRB "completely disregard[ed] established laws that govern the franchise model—a practice that has literally created thousands of small businesses in communities across America and employ millions of citizens of all ages," he said.
McDonald’s plans on challenging the ruling, according to the New York Times.
Griffin’s ruling represents a huge victory for unions that have attempted to organize millions of fast food workers.
Under a typical franchising operation, a union negotiates wages and work conditions directly with franchise owners. By finding that national corporations jointly employ the workers, the NLRB gives unions leverage to negotiate directly with corporations. They could also push national corporations to impose unionization at the national, rather than local, level.
"The SEIU has invested more than $35 million in worker centers to help pave the way for unionization of chain restaurants and retailers—with nothing to show for it. Now the NRLB has simply changed the rules of the game to make Big Labor's union campaign easier," said Ryan Williams of Worker Center Watch.
The five member NLRB, which is controlled by Democrats, is also reviewing the labor standards for franchise owners in Browning Ferris v. Teamsters Local 750. That case focuses on whether employers can be held liable for the employment practices of their subcontractors.
House labor committee Chairman John Kline (R., Minn.) said that Griffin’s decision is designed to influence the outcome of the national board’s review of joint employer standards in Browning Ferris.
"This decision is detached from reality," Kline said. "While the board is considering this very issue, the general counsel is trying to rewrite the franchise model workers, employers, and consumers have known for decades."