Three congressional committee chairmen have demanded that the National Labor Relations Board turn over all documents related to its controversial decision to classify fast-food giant McDonald’s Corp. as a “joint employer” with its individual franchise restaurants in a labor rights complaint. The lawmakers said they were “troubled” because of comments NLRB General Counsel Richard Griffin made in October apparently conceding that the case was on shaky legal ground.
In a speech at West Virginia University College of Law on Oct. 24, Griffin said, “We have a problem, legally, for our theory” in the joint employer case because there is NLRB case law that contradicts it even under the revamped legal standard that he thinks should apply.
“[W]e have concerns that you intend to pursue labor violations in this manner despite your admission that the legal grounds for doing so may be flawed,” the lawmakers said in a letter sent Thursday to the NLRB. It was signed by Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander, R-Tenn., Senate Homeland Security and Government Affairs Committee Chairman Ron Johnson, R-Wisc., and House Education and the Workforce Committee Chairman John Kline, R-Minn.
A Senate spokesman for the HELP Committee said that the lawmakers had not gotten a response. A spokesperson for the NLRB declined to comment.
The NLRB is a quasi-independent federal agency that enforces the National Labor Relations Act, the main federal law covering labor disputes. It’s members are nominated by the White House and confirmed by the Senate but it otherwise acts independently.
In December, the board issued labor rights complaints against McDonald’s Corp., arguing that the company was legally responsible for violations at its individual restaurants even thought a majority of them — 80 percent, according to the corporation — are technically privately-owned businesses.
That case, and a related one called Browning-Ferris that also involves the joint employer issue, have attracted considerable concern in the business community. In effect, the NLRB has argued that employees can have two bosses, even if the workers only answer to and get paid by one. Critics warn that adopting the legal standard Griffin has sought will change the very definition of an independent business and create a legal liability problem that will force many corporations to pull out of franchising altogether.
“Every Congressional district in the country will be negatively impacted by the job losses and lost economic activity if NLRB expands the definition of joint employer,” said Matt Haller, spokesman for the International Franchise Association.
In the speech, given several weeks before the complaints were issued against McDonald’s Corp., Griffin acknowledged the controversy, but argued that the joint employer definition should be changed anyway.
He said the board should instead adopt a looser legal standard that it had used prior to 1984. This older standard allowed a business to be deemed a joint employer with another entity if the first one had a contractual relationship with the second one that gave it “potential” influence over the second entity’s employees, he said.
Griffin then said that even under this standard the NLRB’s complaint against McDonald’s Corp. would be in trouble.
“In that area, we have a problem, legally, for our theory. And that is, under the traditional (i.e., pre-1984) legal theory prior general counsels had authorized complaints against franchisors … arguing that franchisors were joint employers with their franchisees and the board said no even under the old test,” Griffin said.
That was, he said, because the board said efforts by a franchisor to protect the quality and reputation of their brand were “insufficient involvement” to trigger the joint employer standard.
“So here we are arguing for a return to the traditional standard and here are these cases that under the traditional standard find no joint employer in the franchisor/franchisee relationship. And we say, ‘Don’t overrule those cases. Those cases should remain good law,'” Griffin said.
He nevertheless argued that recent advances in information technology that allow franchisors to track their franchisees’ sales and tell them to make adjustments if business dips “goes beyond protecting the brand” and therefore ought to trigger the joint employer standard.
Griffin, a former top attorney for the International Union of Operating Engineers, forthrightly acknowledged that the reason he was pushing for the policy change was to make it easier for unions to organize businesses like McDonald’s Corp.
“We say, essentially, that the board should return to its traditional understanding of the joint employer standard and the reason we say that is not just because we think it is right and that the board in 1984 and since has been wrong, but because the changing nature of employment over the interim period means that in order to have effective collective bargaining, you need entities that meet the traditional standard involved in the collective bargaining process,” he said.
