The NLRB has issued a ruling that McDonald's Corporation may be considered a joint employer of McDonald’s franchisees’ workers. If allowed to stand, this ruling will redefine the relationship between franchisors and franchisees by declaring both to be joint employers. This is bad law, bad for business, and bad for employment.
The NLRB ruling will be immensely disruptive to all the franchisors and franchisees in the country. Indeed, it would destroy the harmony between a franchisor and its franchisees.
Currently, franchisors exert no control over hiring, firing, assigning workers to different shifts, determining the length of those shifts, deciding which worker performs which functions, etc. and if franchisors are now to be deemed joint employers of those who work in each local franchise, they would need to hire additional workers to be on site. You can’t manage a workforce in Peoria or Mesa or Tupelo from Chicago (or, in the case of McDonald’s, Oak Park). How would a franchisor cover these additional costs? They would have to receive a larger percentage of the franchisees’ income. They also might find it expedient to enter into a nationwide bargaining agreement with a union that would represent the workers in all the franchises, figuring that it would be more manageable for them to deal with one collective bargaining agent than having to micromanage labor issues in a large number of franchises.
...Clearly, the new NLRB ruling threatens to destroy jobs at a time when the overall job market remains less than robust. As is so often the case, government intervention in the name of helping America’s workers will end up imposing a severe toll on many of those workers.
Why would the NLRB promote a ruling certain to negatively impact small businesses and workers? Because it "is designed to help labor unions, a key element of President Obama’s powerbase."
Little wonder, as Hendrickson notes, that American companies are fleeing overseas.
Hat tip: BadBlue Money.