Trial opened last week before a NLRB Administrative Law Judge in New York regarding the extent of the NLRB’s joint employer doctrine. The trial seeks to have McDonald’s named the joint employer of the employees of its franchisees. Why? The simple answer is that a joint employer finding would substantially simplify union organizing.
The case promises to be a long slog. Even a cursory look at the opening statement made by Jamie Rucker, lead counsel for the NLRB, shows that it is not McDonald’s but all of franchising that is on trial. The statement took aim at many things common in franchising today: the use of programs to help franchisees identify strong candidates for employment; brand standards, such as the amount of time McDonald’s specifies in which orders are to be taken and filled; suggestions made by operations consultants hired by the franchisor; suggested local-market pay scales; and even standard form libraries. These types of things are the bread-and-butter value that franchisors offer to franchisees. Without them, well, the model is likely to fail. We will continue to monitor the case and update as appropriate.
Any silver lining? Indeed there is. The NLRB’s case against McDonald’s and its franchisees has been very expensive, particularly responding to massive amounts of written discovery demanded by the Board. Published estimates say that McDonald’s has spent in excess of $1 million in responding to discovery alone. But the Board then needs to review all of those discovery responses. And, lo and behold, the Board is learning that is quite expensive as well. So expensive that the NLRB is facing a serious budget crunch for the rest of this fiscal year.
What does that mean for you? It means that the Board has directed its staff to move quickly to settle as many lawsuits as possible so as to conserve staff and budget resources–and to make sure all documents are printed on both sides of the page. Now, we’ll never know if the McDonald’s case directly caused the budget crunch. But it can’t have helped. And that means that putting the franchise model on trial is likely causing harm to all American workers. To me, that’s a shame.