A New Joint-Employer Rule Could Change Everything for Franchisors

In the coming months, the National Labor Relations Board will decide on proposed rule that will modify its joint-employer standard. The current standard allows franchisors to be held liable as joint employers for any claims made against franchise owners. The change would effectively dismantle that standard, meaning franchisors would no longer be considered employers of staff at franchise units.

The public comment period for the proposed rule is currently underway, and Fast Casual took a look at how the industry is reacting. According to employment attorney Adam Chotiner, the change would be an unmitigated victory for franchisors.

“In general, this is definitely something that management ... is greatly in favor of,” Chotiner said. “That's one of the reasons companies franchise, so they can say (to franchisees), ‘Here you go, now you and your business go ahead and leave us out of the day-to-day labor relation issues.’”

Teófilo L. Reyes, the National Research Director for ROC United, which advocates for the rights of restaurant workers, says the change will be a blow to employees.

“The NLRB's rule change is detrimental to all restaurant workers who work in franchise operations, and all restaurant workers who will see working conditions deteriorate," Reyes said. “This proposed rule will increase the monopsony power of the industry to keep wages and working conditions artificially low.”

The public comment period will end on November 13, after which a final rule will be written and imposed nationally.