Making good on a warning made in July, the National Labor Relations Board took a breathtaking move late last week to control nearly ten percent of the private output of the U.S. economy. The move came when NLRB General Counsel Richard Griffin announced that he would pursue 78 charges against several McDonald’s franchisees as well as McDonald’s USA, LLC, for alleged national labor law violations.
The NLRB has now followed through on that threat.
A common feature of a franchise contract is the sovereignty of the franchisee regarding facility and labor management. The franchisor enhances and protects brand and, perhaps, product quality. In short, they contractually split liabilities and responsibilities.
The NLRB, however, takes the position that since McDonald’s USA makes incentives and resources available to its franchisees it goes beyond “protection of the brand”. And that, Comrade Griffin believes, makes it a “joint employer with its franchisees” and must share liability for labor law violations. In so doing, the NLRB ignores the expressed contractual provisions and the intent of the parties as well as freedom of contract.
...It should be noted that the 78 charges sustained by the NLRB represent only 26 percent of the 291 charges ginned up by Fast Food Forward, a group put together by the Service Employees International Union (SEIU) to target and strike McDonald’s stores. Their purpose was to (1) form a union without “intimidation from their employers” and (2) obtain a $15 hourly minimum wage.
...The NLRB’s move is huge and has serious ramifications.
It is estimated that there are 3,000 franchise business companies which account for 850,000 businesses operations in the United States. They account for 8.5 million employees, approximately 50 percent of retail sales and generate over $2.1 trillion to the economy. The NLRB’s action would redefine the contractual relationships between the franchisors and franchisees as well as employers and employees in a huge sector of the US economy.
Clearly there’s a monetary advantage here... in the charges for alleged national labor law violations [as they give] the NLRB much deeper pockets for fines and penalties (another form of income redistribution)... The even greater advantage is to Big Labor. If this move is successful, organizing unions by Fast Food Forward/SEIU would be made vastly easier by allowing them to do so on the “joint employer” franchisor (national) level, rather than on a case by case (franchisee) level. Doubling or tripling the membership of the SEIU cannot be said to be an unintended consequence in the NLRB’s strategy.
As Wisenbaker points out, the NLRB was created in 1933 thanks to Franklin Delano Roosevelt's "National Recovery Act".
It's long past its expiration date.
Hat tip: Badblue News.