Hunton Employment & Labor Perspectives

The National Labor Relations Board (the “NLRB”) and McDonald’s Corp. have reached a settlement agreement in the long-running employment retaliation case brought against McDonald’s that hinges on whether McDonald's Corp., as a franchisor, has enough control over its franchisees to be considered a "joint employer" of the franchisees’ employees.  The case stems from allegations that McDonald’s unlawfully retaliated against franchisee workers who joined the “Fight for $15” movement.  In bringing this case against McDonald’s, the NLRB has argued that even having only “indirect control” over a worker is enough for a franchisor like McDonald’s to be held liable for the employment practices of its franchisees.   The NLRB’s case against McDonald’s was bolstered by the Board’s 2015 Browning-Ferris decision, which departed from decades of legal precedent in holding that entities who merely possessed—as opposed to directly and immediately exercised—control over workers could be deemed joint employers for purposes of assessing liability under the National Labor Relations Act.

The McDonald’s trial, which was scheduled to resume Monday after a two-month stay, was halted shortly after the Board issued its Hy-Brand decision in December 2017, a decision that expressly reversed Browning-Ferris and its new joint employer standard.  On the heels of the Hy-Brand decision, the NLRB filed a motion to stay the McDonald’s proceedings so that it could explore settlement negotiations, citing the Hy-Brand decision.

While the terms of the settlement still must be approved by the Administrative Law Judge, one thing is clear – the development of the law governing joint employer liability under the NLRA still remains uncertain.  A settlement in this case continues to  leave unanswered the question as to whether a franchisor, who has no direct control over its franchisees’ employees, can be considered a joint employer.  And while Hy-Brand has requested a reconsideration from the Board as to its decision to vacate Hy-Brand, Browning-Ferris still may be the standard when determining joint employer liability.