Franchisor Liability for Franchisees Employment Practices: A Gathering Storm

Transcription

1 Franchisor Liability for Franchisees Employment Practices: A Gathering Storm The Intersection of Franchising and Employment Law August 13, 2014 Erik Wulff erik.wulff@dlapiper.com Presented by: Harriet Lipkin harriet.lipkin@dlapiper.com Dianne LaRocca dianne.larocca@dlapiper.com

2 Agenda

3

4 The National Labor Relations Board 4

5 July 29 News Release

6 The National Labor Relations Board Mark Gaston Pearce Kent Hirozawa Nancy Schiffer Philip A. Miscimarra Harry I. Johnson III 6

7 The Office of the General Counsel Richard F. Griffin, Jr. 7

8 The Process A trial before a NLRB administrative law judge (ALJ) will be scheduled 2 An NLRB lawyer will prosecute the case 4 will be The ALJ s decision submitted to the NLRB for final NLRB decision 5 3 The ALJ will issue a decision Decisions of the NLRB may be appealed and/or enforced in a US Court of Appeals 8

9 June 26 Amicus Brief: General Counsel 9

10 June 26 Amicus Brief: General Counsel The Board should abandon its existing joint-employer standard because it undermines the fundamental policy of the Act to encourage stable and meaningful collective bargaining... The current standard also ignores Congress s intent that the term employer be construed broadly in light of economic realities and the Act s underlying goals, and has particularly inhibited meaningful bargaining with respect to the contingent workforce and other nontraditional employment arrangements. 10

11 June 26 Amicus Brief [A]n entity could be a joint employer if it exercised direct or indirect control over working conditions, had the unexercised potential to control working conditions, or where industrial realities otherwise made it essential to meaningful bargaining. 11

12 June 26 Amicus Brief The General Counsel urges the Board to adopt a new standard that takes account of the totality of the circumstances, including how the putative joint employers structured their commercial dealings with each other. 12

13 June 26 Amicus Brief Under this test, if one of the entities wields sufficient influence over the working conditions of the other entity s employees such that meaningful bargaining could not occur in its absence, joint-employer status would be established. 13

14 June 26 Amicus Brief... franchisors typically dictate the terms of franchise agreements and can exert significant control over the day-today operations of their franchisees... The Board should continue to exempt franchisors from jointemployer status to the extent that their indirect control over employee working conditions is related to their legitimate interest in protecting the quality of their product or brand. 14

15 Franchise Comments and Discussion

16 The U.S. Department of Labor 16

17 David Weil Department of Labor s Wage and Hour Administrator Will oversee the enforcement of the Fair Labor Standards Act, which sets rules for minimum wage, overtime pay and record-keeping standards. The division has broad powers to define what counts as work, set certain wages and punish companies that don't comply. Recently confirmed. David Weil 17

18 Employment Fissuring 18

19 Employment Fissuring Are there ways to allow the beneficial aspects of business models built on adherence to quality and consumer service standards to also assure that they meet their obligations under the law to employees? 19

20 Employment Fissuring Option one would be to treat the individual companies (and their workers) exactly as it would if they directly worked for the major employer... In so doing, the employer acts essentially as a joint employer... With that role comes liability... 20

21 June 26 Amicus Brief franchising arrangements... make the worker-employer tie tenuous and far less transparent. 21

22 Employment Fissuring has taken off beyond the DOL and NLRB. 22

23 The National Employment Law Project 23

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25 June 26 Amicus Brief insert[] But notwithstanding an intermediary the between creation [them] of an and intermediary, the workers franchisors and designate[] typically the intermediary dictate the terms as the of workers franchise sole agreements employer. and can exert significant control over the day-to-day operations of their franchisees. 25

26 The Plaintiff s Bar

27 The U.S. House of Representatives 27

28 State Attorneys General As New York State attorney general, it is my job to... and my office has ensure equal justice under taken strong action against law. The income inequality employers -- including in the plaguing our country is an fast-food industry -- who injustice of enormous have stolen from their magnitude that must be workers even the meager remedied. I stand firmly wages required by law. behind the fast-food workers' calls for a fair day's pay for a fair day's work.

29 State Attorneys General In New York, we are cracking down on fast food franchise owners who cheat their workers. In recent months, we have secured close to $1 million in back pay for about 2,200 Domino's and McDonald's workers across the state.

30 30 30

31 Organized Labor 31

32 Corporate Campaigns The AFL-CIO's Corporate Campaign Strategy roadmap as taken from Ray Rogers' Corporate Campaign, Inc. web site 32

33 33 33

34 What You Can Do: Labor Perspective 1 Examine practices and records at company-owned operations 2 Examine agreements, systems, practices, procedures, manuals, etc. 3 Identify sensitive issues and concerns and become an industry leader 34

35 What You Can Do: Franchise Perspective 1 Bring company-owned operations into material compliance Reexamine relationships and degree of control exercised over franchisees Direct field representatives to refrain from directing franchisees in labor and employment matters while offering company-owned outlets as examples Require franchisees to maintain separate identity 5 Launch an educational and political campaign 35

36 Questions? ERIK WULFF T HARRIET LIPKIN T DIANNE LAROCCA T