In an October 29 report, POLITICO Pro’s Brian Mahoney offered a behind the scenes insight into the thinking of National Labor Relations Board (NLRB) General Counsel Richard F. Griffin, Jr. on his initiatives to alter the Board’s “joint employer” standard. Quoting from Griffin’s remarks to a West Virginia University College of Law audience in Morgantown, West Virginia, the article disclosed Griffin’s concerns with the legality of his position.

The joint employer controversy stems from Griffin’s July 29 announcement that he would consider finding a franchisor and its franchisees to be “joint employers” for purposes of the labor laws, including unfair labor practice charges, union elections, and collective bargaining involving franchisees. In May, the Board issued an invitation for briefs in Browning-Ferris Industries of California, Inc. d/b/a Newby Island Recyclery & FRP-II, LLC, d/b/a Leadpoint Business Services (No. 32-RC-109684), which concerns whether the NLRB’s joint-employment standard should be changed for the contractor-subcontractor relationship.

Apparently, while committed to pursue a change in Board precedent for determining a joint employer relationship, Griffin confesses privately to doubts as to whether his position will survive legal challenge as applied to the franchisor-franchisee relationship. In his West Virginia remarks, Griffin is quoted as admitting his rationale could face significant legal obstacles: “In that area we have a problem legally for our theory,” Griffin said.

“The status of those cases right now is, no complaints have actually issued,” Griffin told the audience. He said discussions continue “about whether to resolve the cases; about, if they’re not resolved, how to try them; and those discussions are not at a conclusive point.” Under Griffin’s interpretation, as he explained, a company could be designated a joint employer if it had “any direct or indirect effect on the terms and conditions of employment.” A company was a joint employer, he said, even if it merely had “the potential to affect terms and conditions of employment.”

The current NLRB standard, which dates from decisions the Board made in the mid-1980s, is that to be considered a joint employer, an entity must have “a direct and immediate impact on the substantial terms and conditions of employment. “And it has to be actual,” Griffin said, “not merely potential.” Yet even the Board test from before the 1980s gave explicit deference to the franchisor-franchisee relationship. The old test to which Griffin seeks to return held that a franchisor could have indirect involvement in determining terms and conditions of employment yet still avoid being designated a joint employer if doing so were necessary to protect brand uniformity and quality. That, of course, is one purpose of the franchise business model.

“So here we are arguing for a return to the traditional standard,” Griffin said, “and here are these cases that under the traditional standard find no joint employer in the franchisor-franchisee relationship.”

Although Griffin said he did not favor overruling the case law regarding franchise operations, he stated that computer technology has allowed franchisors to affect the employer-employee relationship in ways unanticipated by prior Board decisions. Now, he said, computers enable franchisors to track closely in real time the productivity of franchisee employees and how franchisees schedule employee shifts.

Griffin refused to elaborate further on the future of franchise cases “because there’s a lot of potential litigation issues there.”

Based on past experience, however, overturning Board precedent is unlikely to deter NLRB Chairman Mark Gaston Pearce, even though finding joint employer status might destroy the franchise model.

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The attorneys in Ogletree Deakins’ Traditional Labor Practice Group have vast experience in complex and sophisticated traditional labor law matters. This includes experience advising and representing employers of all sizes and across virtually all industries in connection with union representation campaigns, collective bargaining negotiations, strike preparations, labor arbitrations, and National Labor Relations Board proceedings.

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