NLRB Joint Employer Rule Clarifies Responsibility for Franchise Workers

The NLRB’s final rule sets a clear test for when separate entities may be treated as joint employers of the same employees. Under the rule, entities may be joint employers if they share or codetermine essential terms and conditions of employment. That determination can affect which organization is responsible for collective bargaining obligations, unfair labor practice liability and enforcement of workplace policies at franchised locations.

The rule identifies seven specific areas used in the joint employer analysis. Those areas are wages and benefits, scheduling, assignment of duties, supervision, rules, hiring and firing, and health and safety. The Board returned to a common law agency approach that looks at whether an entity has the authority to control employment terms, whether or not that authority is actually exercised. The NLRB notes that determinations are fact specific and the agency provides a fact sheet and explanatory materials on its page.

For workers, the clarified standard changes how they and their representatives evaluate bargaining prospects and potential unfair labor practice charges. When more than one entity can be found to have authority over core employment decisions, employees may be able to seek bargaining with a franchisor as well as a franchisee, or hold multiple parties accountable for labor law violations. That can broaden remedies and bargaining leverage in the fast food sector where franchisors often supply scheduling tools, training programs and operational rules.

For franchise owners and corporate HR teams, the rule serves as a framework for auditing areas of operational control. Tools and policies related to scheduling, training, discipline and performance standards may be scrutinized as evidence of shared control. Those findings can alter legal responsibilities and prompt changes in contracts and operational practices.

Because the analysis is fact specific, businesses should map who has authority over each of the seven listed employment terms and consider adjustments to reduce ambiguity. The NLRB’s materials provide the authoritative federal explanation of how the Board applies the standard.