Franchising & Distribution Law Blog

Reversing course from more than 30 years of precedent, the National Labor Relations Board significantly expanded its standard for determining when two entities constitute a single joint employer over a unit of employees. In so doing, the NLRB creates questions about a number of entity relationships such as parent corporation/subsidiary, contractor/subcontractor and franchisor/franchisee relationships.

In a decision that could have far-reaching legal implications for franchisors, on July 29, 2014, the General Counsel of the National Labor Relations Board (“NLRB”) ruled that McDonald’s was a joint employer of its franchisees’ employees. This decision stems from allegations that McDonald’s and its franchisees violated employees’ rights following protests pertaining to wages and working conditions.