In a 3-2 decision along party lines on Thursday, the National Labor Relations Board (NLRB, or Board) dealt a significant blow to fast food restaurants and other businesses that rely on the franchisee model as well as those organizations that utilize staffing agencies to supply their workers. In this highly anticipated decision, the NLRB overturned more than 30 years of established law by significantly expanding its joint employer standard. The Board Majority characterized its former longstanding joint employer analysis as “out of step with changing economic circumstances,” specifically noting the growth in contingent employment relationships, as well as that more than 2.87 million of the nation’s workers were employed through employment agencies in August 2014. If this decision survives on appeal, employers that currently rely upon staffing agencies will be forced to reevaluate their business models for obtaining labor, and franchisors must decide whether to assert more or less control over their franchisees.
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