NLRB Decision - Joint Employers - Not Franchise Case

If you just skim the surface, you may be led to believe that the National Labor Relations Board just issued a decision determining that franchisORS are "joint employers" of their franchisEES' employees. But this is not the case. The case involved employees of a temporary staffing company that supplied "rented" workers to Browning-Ferris Industries of California, Inc. and whether Browning-Ferris (which is not a franchisor) can be deemed a joint employer of those employees.

Here is the 50-page decision and dissent - CLICK HERE. Other than a reference in a footnote to the "International Franchise Association," the word "franchise" does not appear in the main decision (the first 21 pages) and the majority makes clear (in footnotes to the dissent) that the case does not involve franchises. The word "franchise" does appear in the dissent ...but more on this later.

Here are the basic facts: BFI owns and operates the Newby Island recycling facility, which receives approximately 1,200 tons per day of mixed materials, mixed waste, and mixed recyclables. BFI, the user firm, contracts with Leadpoint, the supplier firm, to provide the workers who manually sort the material. The relationship between BFI and Leadpoint is governed by a temporary labor services agreement. The issue is, for collective bargaining purposes, should BFI be considered a joint employer - in essence, as stated in the decision: "...the Union asserts that absent a change in the joint-employer standard, a putative employer, like BFI, that is a necessary party to meaningful collective bargaining will continue to insulate itself by the 'calculated restructuring of employment and insertion of a contractor to insulate itself from the basic legal obligation to recognize and bargain with the employees’ representative.'” By a 3-2 decision, the Board determined that BFI is a joint employer for collective bargaining purposes.

Now, back to the dissent, the word "franchise" and the footnotes. As my ABA Forum on Franchising colleagues pointed out in our Forum List-Serv yesterday:

• There is some faint hope for franchising.  Footnote 94 mentions the Patterson v. Domino's decision and says "That decision also addressed the particularized features of franchisor/franchisee relationships, none of which are present here."  A franchise is (hopefully) clearly distinguishable from the relationship before the Board which involved a staffing agency providing employees to work on the premises of the purported joint employer.  The Dissent in its discussion of the threat to franchising also notes that the General Counsel in his amicus brief argued that the Board "should continue to exempt franchisors from joint employer status to the extent that their indirect control over employee working conditions is related to their legitimate interest in protecting the quality of their product or brand."  

•  FN 120 is even more to the point: "The dissent is simply wrong when it insists that today’s decision “fundamentally alters the law” with regard to the employment relationships that may arise under various legal relationships between different entities: “lessor-lessee, parent-subsidiary, contractor-subcontractor, franchisor-franchisee, predecessor-successor, creditor-debtor, and contractor-consumer.” None of those situations are before us today, and we decline the dissent’s implicit invitation to address the facts in every hypothetical situation in which the Board might be called on to make a joint-employer determination. As we have made clear, the common law test requires us to review, in each case, all of the relevant control factors that are present determining the terms of employment. In this case we are specifically concerned with only two employers: BFI and Leadpoint.

'Nuff said.