Franchises Beware: A New Definition of Joint-Employer May Be Coming

In Business, Employmentby GWAO

In the aftermath of a series of complaints to the National Labor Relations Board (“NLRB”) involving unfair labor practices, the board, and now Congress are debating the definition of a joint-employer. If changes are made, operating a franchise as a small business owner or a franchisor may never be the same. Under the law as it exists now, businesses are only considered joint employers if they both exert a significant and direct degree of control over the same employees – usually measured by the parties’ ability to affect the employees’ terms and conditions of employment.

Now, the NLRB is pushing for a broader definition which would include those who have the mere potential to affect terms and conditions of employment or who, based on practicalities within the industry, is essential to the collective bargaining process.

At the moment, the only area directly affected by a change would be labor law and employee attempts at unionization or exercise of rights in a unionized business, but with Congress involved it may only be a matter of time until a broadening of the rules achieves a greater reach through legislative action.