New rule on franchising broadens definition of “joint employer”

Changes due to take effect in late December

​In recent years, labor law has protected corporate franchisors from liability for practices at individual franchise locations. But that changed on October 26, when the National Labor Relations Board (NLRB) broadened the definition of a joint employer, deciding that both franchisors and franchisees can be held liable for unfair labor practices.
Under the new definition, the NLRB will consider franchisors and franchisees joint employers if each has “an employment relationship with the employees” and “share or codetermine one or more of
the employees’ essential concerns or conditions of employment.” For example, franchisors will become joint employers if they have the potential to influence activities including:
· Setting wages, benefits or other compensation
· Scheduling and hours worked
· The assignment of duties
· Supervision of duties being fulfilled
· Defining job responsibilities and how they’re fulfilled, as well as disciplinary practices
· Hiring and firing
· Conditions of the workplace
The National Restaurant Association has expressed concern that as a result of this change, corporate restaurants could face lawsuits and be held accountable for risks outside of their control – such as a manager not paying overtime or a franchise employee harassing a coworker. It could also make it easier for franchises to unionize and organize when negotiating with their corporate parent. Unless the rule is rejected during the congressional review process, it will take effect on Dec. 26.