National Labor Relations Board General Counsel Richard Griffin has come under fire recently for not issuing a memorandum explaining and detailing his rationale for his controversial recommendation this past July that McDonalds could be treated as a joint employer with its franchisees.

Copyright: 3ddock / 123RF Stock Photo
Copyright: 3ddock / 123RF Stock Photo

While still not releasing a written report or memo, Mr. Griffin finally spoke on the matter last week at a West Virginia University College of Law event.  Mr. Griffin categorized the “joint employer” issue as one of four “law reform efforts” happening at the NLRB.   Mr. Griffin relayed the history of the “joint employer doctrine” and stated that from 1935-1985 the NLRB applied a less stringent standard test he calls the “Traditional Test.”  Under the Traditional Test, the NLRB analyzed whether the “putative joint employer had a direct or indirect effect on the terms and conditions of employment and right to control.”  The right to control  “didn’t have to be actual, it could be potential – in other words, it could be a contractual relationship between the two entities that gave one of them authority to do something” and it wasn’t necessary under the NLRB  prior law that the entity had the authority actually do it – just that it had the authority to do it.

Then in 1984, according to Mr. Griffin, the NLRB ratcheted up the standard.   The test became one where a putative joint employer must have a direct and immediate impact on substantial terms and conditions of employment.  Moreover, such control has to be actual – not potential.   Mr. Griffin wants to return to this Traditional Test and states that one of the types of situations that calls out for this Traditional Test is in the area of franchisee-franchisor relationships.

However, he also explained that even when previous NLRB general counsels would authorize complaints against franchisors, the NLRB (using the pre-1985 Traditional Test) would not find the franchisor a joint employer if the franchisor’s indirect involvement resulted from the franchisor trying to protect the uniformity and quality of its brand.  In other words, if a franchisor was simply taking action to protect its brand then it was insufficient involvement to find a franchisor a joint employer with its franchisee.

Mr. Griffin explained that he does not want to overturn those earlier cases but found that many of the new cases go beyond a franchisor simply protecting the uniformity and quality of its brand.  He pointed to new software capabilities that monitor everything happening at the franchise level in real time including keeping track of minute-by-minute gross sales and labor costs.  Such information allows a franchisor, for example, to “dictate” when employees should be sent home.  Mr. Griffin argues that it is this type of involvement in employee hours, terms and conditions of employment that goes beyond protecting the brand and in those cases the franchisor should be a joint employer with the franchisee. Of course, where some see “dictates” others can very well see “good guidance” and “suggestions”.

Considering the breath of information that modern technology makes available to franchise systems, it will be interesting to see where the NLRB ultimately draws the line.

The full video of Mr. Griffin’s speech is available here.