5 Steps for Franchisors to Avoid Joint Employer Claims

August 8, 2014 – In The News

David Faustman was featured in the Law360 article, "5 Steps For Franchisors To Avoid Joint Employer Claims." Full text can be found in the August 8, 2014, issue, but a synopsis is below.

After the National Labor Relations Board’s general counsel ruled that McDonald’s Corp. ought to be regarded as a “joint employer” of workers at franchised restaurants, lawyers expect an increase in employment claims against franchisors and companies who outsource services. Even so, many still feel companies can take preventative measures to avoid running into such legal dilemmas.

David Faustman comments on the matter, saying, “Franchisors need to make it very, very clear in documentation that they are not involved in any way and have no right to be involved in the personnel decisions or in the direction of the workforce.”

He expands by adding that while offering the franchisee a company handbook that includes best practices may be appropriate, if a franchisor imposes a personnel handbook on the franchisee's employees, that move could come back to haunt it.

Faustman then comments, “If the personnel handbook from the franchisor’s headquarters must be used and distributed by the franchisee, that could get the franchisor in the soup.”

Having a regional manager teach a franchisee’s employees how to wrap the perfect burrito may seem harmless, but it could offer fodder for a suit, he elaborates.

“To show an employee how to do that as an instructional matter, I would argue that doesn’t create joint employment, but it does present the opportunity for plaintiffs with disingenuous motives to prove that. It could give them some ammunition,” concludes Faustman.