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Expanded Definition of Joint Employer

In July of 2014, the General Counsel of the National Labor Relations Board (NLRB) authorized the Board’s Regional Directors to name McDonald’s USA LLC as a “joint employer” in complaints by employees against franchisees. The determination paves the way for a franchisor to be held liable for the actions of independent franchisees. For thirty years, the legal standard for joint employment has required that any potential employer must control the conditions of employment including: hiring, firing, compensation, benefits, hours, disciplinary procedures and supervision. In the hotel franchise business model, hotel franchisees are the sole employer, because hoteliers maintain exclusive control over these conditions of employment. If franchisors became legally responsible for franchisees’ actions relative to their employees, franchisors would be compelled to try to establish control over staffing decisions and daily operations in an effort to avoid liability. In that case, franchisees would lose their independence and become de facto employees of the franchisor.

More information on this important issue:

AAHOA Policy Brief

Jagruti Panwala: Testimony Before the House Committee on Education and the Worforce

AAHOA Statement for the Record: Senate Health, Education, Labor and Pensions Committee