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State, Federal Law Differ on Franchisors As Joint Employers

BY Craig R. Tractenberg
November 02, 2015

Editor's Note: Last month, we published an article about the long-awaited decision of the National Labor Relations Board (NLRB) in Browning-Ferris Industries of California, Inc. , 362 NLRB No. 186, which was issued on Aug. 27. The decision set forth new guidelines under which a company could be determined to be a joint employer so that it would be subject to collective bargaining. We continue this all-important discussion with an update from a different author.

The National Labor Relations Board (NLRB) has targeted major franchise brands as joint employers. This effort is designed to assist employees deemed at the bottom of the pay scale, deemed “vulnerable.” Targeting McDonald's Corp. as a joint employer with its franchisees is motivated by an articulated policy to facilitate effective bargaining over wages and working conditions. (SeeNLRB Office of the General Counsel Issues Consolidated Complaints Against McDonald's Franchisees and Their Franchisor McDonald's USA LLC as Joint Employers,” published by the NLRB on Dec. 19, 2014.

Contrast this with the U.S. District Court for the Northern District of California's recent decision in Ochoa v. McDonald's, 2015 U.S. Dist. LEXIS 129539 (Sept. 25, 2015), which holds that under California employment law, the franchisor is not a joint employer. Why are the state and federal paths diverging?'

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