The job of being a McDonald’s executive just got a little bit harder: The National Labor Relations Board officially ruled yesterday, in an outcome the Golden Arches higher-ups had dreaded for some time, that companies with franchise business models are basically co-bosses (“joint employers,” in labor-speak) right alongside their franchisees. This means the chains will soon find themselves at a bargaining table formerly occupied by just the lowly employees and franchise owners.
The decision “could be one of the more significant by the N.L.R.B. in the last 35 years,” a lawyer for the U.S. Chamber of Commerce, which of course lobbied against this ruling, told the Times. It basically flies in the face of everything fast-food chains have used the franchise system for:
For example, if employees at a fast-food restaurant run by a franchisee were to unionize — something almost none have succeeded in doing to date — they would immediately be entitled to negotiate not just with the owner of the individual restaurant but also with the corporate headquarters … The joint employer designation could also make it easier to unionize in the first place. There have been instances in the past in which corporations appear to have terminated a franchise or contractor when that particular outfit was on the verge of unionizing, simply to avoid a union. This is legal for the corporation to do under existing law, but the franchisee or contractor cannot shut down on its own for this reason. As a joint employer, however, the corporation could no longer resort to this tactic.
It’s a big deal for the bargaining power of workers, in other words. International Brotherhood of Teamsters president James Hoffa celebrated it, saying: “Employers will no longer be able to shift responsibility for their workers and hide behind loopholes to prevent workers from organizing or engaging in collective bargaining.”
Naturally, the ruling, which redefines an employer-employee relationship in place since the Reagan years, is less the final word and more of a first volley in what’s likely to become a protracted legal battle. Lobbyists for the restaurant industry have already hit back, demanding the Republican-controlled Congress respond by overturning the ruling.