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National Restaurant Association - Labor board’s new standard could be trouble for restaurants

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Labor board’s new standard could be trouble for restaurants

It could be a while before we know its true impact, but the National Labor Relations Board's vague new joint-employer standard poses a serious threat to both the franchise model and the growth potential for all restaurants, according to a former NLRB member. 

What has changed: The NLRB, with two recent decisions, ruled that businesses can be held responsible for the labor practices of companies they do business with if the board finds the company exercises "indirect, potential, and ultimate control" over another business's labor practices. Franchisors, for example, could be held responsible for labor practices of franchisees, even though labor decisions are made by independent franchise owners. 

Peter Kirsanow, an attorney and former NLRB member who worked with the National Restaurant Association to file an amicus brief in one of the cases used to set the new joint-employer standard, says the board's vague, new standard has created a host of new challenges for restaurants. 

“In the 80-year history of the [NLRB], we have not seen such a significant departure from established law as we’ve seen in the last few years,” Kirsanow said during a recent NRA webinar. “This board has been extremely aggressive in deciding cases and instituting rules that favor unions and unionizations, not necessarily employees. It’s demonstrable that the fate of employees will be harmed, in some cases very significantly, by these decisions.”

Kirsanow gave his analysis of the joint-employer standard in the webinar, “The NLRB’s New Joint-Employer Standard Based on Indirect/Reserved Control: What it means for restaurants.” The webinar is free for NRA members. Listen, and you’ll learn:

  • why the new standard could pave the way for unionization efforts
  • why businesses will need to scrutinize their business partnerships more closely for potential risk.
  • How the new standard will impact franchisors, franchisees and employees of restaurant franchises. 

Lawmakers in Congress recently introduced the Protecting Local Business Opportunity Act to roll back the joint-employer standard to its previous form, which required businesses to exercise “actual, direct and immediate” control over “essential terms and conditions of employment” to be considered joint employers. 

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