AH&LA condemns the National Labor Relations Board decision on joint employers as threat to the franchise business model.

AH&LA condemns the National Labor Relations Board decision on joint employers as threat to the franchise business model.

1099_14th_Street_–_National_Labor_Relations_Board_-_sign-cropped(Sept. 1, 2015) In one of its biggest decisions under the Obama Administration, the National Labor Relations Board (NLRB) ruled last week that companies can be held responsible for labor violations committed by their contractors. The American Hotel & Lodging Association (AH&LA) says the ruling creates a dangerous new legal precedent and threatens to undermine franchise owners’ control over their businesses.

The controversial ruling was released on August 27, when NLRB found waste management firm Browning-Ferris should be considered a “joint employer” with a Phoenix-based staffing agency that provided contracted employees for a Browning-Ferris recycling facility.

This decision is a sharp departure from previous NLRB decisions that stated companies were only responsible for employees who were under their direct control. Under this new standard, joint employment now exists even where one company only has the right to exert indirect or potential control over the terms and conditions of another company’s employees.

This new ruling could have significant repercussions for any business using contracted employees.

“With the 92 percent of lodging properties in the United States owned by franchisees and small businesses, we are very concerned that these changes to the joint-employer standard will have a profound negative impact on economic investment and job growth across our industry. The NLRB’s decision to expand the definition of joint employer could severely limit opportunities by diminishing the autonomy of millions of small business owners and dissuading potential entrepreneurs from wanting to start a new business,” said Katherine Lugar, AH&LA’s president and CEO.

“For more than 30 years, the franchisor/franchisee relationship has been based on the fundamental understanding that franchisors and franchisees are not joint employers because they do not exercise direct control over the same employees’ responsibilities. Now, many of our small business owners could very well lose their ability to make decisions about what is best for the men and women they work with every day. The focus of the government should be to encourage and empower businesses, not stifle them.” Read the full statement here.

According to a legal alert released by WLA allied member Fisher & Phillips, any employer that retains the right to impose even indirect control over the working conditions of temporarily placed employees runs a serious risk of being deemed their joint employer – not only for bargaining purposes, but potentially for unfair labor practice liability as well.

As a result of this decision, the legal alert notes that “employers and temporary service providers alike should scrutinize the parameters within their written service agreements and their underlying practices for reference to right to control. This includes an analysis of pre-employment qualification and hiring standards, assignment and retention of individual temporary employees, shift schedules, workload and pace of work, and wages and benefits.” Click here for the full legal alert. 

AH&LA, which co-chairs the Coalition to Save Local Businesses, announced that it will fight to protect the current joint-employer standard through all legislative, regulatory and legal options available to us. It will be hosting a members-only webinar in the coming weeks to provide a thorough analysis of what this decision means for our industry and what you can do to prepare for potential changes. For more information, contact Brian Crawford, who handles workforce issues, at: bcrawford@ahla.com.


Additional Information

Hoteliers, associations slam NLRB decision (HotelNewsNow.com, August 28, 2015)

NLRB rules against business in pivotal joint-employer decision (TheHill.com, August 27, 2015)

NLRB Starts Down The Slippery Slope With Controversial New Joint Employer Ruling (Fisher & Philips LLC, www.laborlaw.com, August 28, 2015)


Photo: “1099 14th Street – National Labor Relations Board – sign” by Geraldshields11 – Own work. Licensed under CC BY-SA 3.0 via Commons