Why Franchise Owners Just Got Very Nervous

September 3, 2015Articles Philadelphia Magazine

In case you’re just back from vacation and have not kept a close eye on the business press, you may have missed the recent Browning-Ferris Industries decision issued on August 27 by the National Labor Relations Board (NLRB). Voting in a 3-2 decision along partisan lines, the NLRB overturned the ‘joint employer’ standard which has existed for the past three decades. This is a highly important decision because if a company is a joint employer, they could then be subject to collective bargaining and a large variety of employment-related claims formally reserved for the direct employer.

For Philadelphia’s strong franchisor and franchisee community, whether they be focused on soft pretzels, salads, coffee or any number of quick-service entrepreneurial opportunities, August 28 meant waking up to a different world. The old standard required that a company utilizing the services of employees of another company would be considered a joint-employer only if it had “direct control” over working conditions – such as the direct ability to hire and fire employees. The new standard states that two or more employers are joint employers if they “share or codetermine those matters governing the essential terms and conditions of employment.”

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