Pushing Back on Joint Employer Rules: Are Employees of a Franchisee Also Employees of the Franchisor?
Congress has taken steps to nullify a proposed National Labor Relations Board (NLRB) rule on joint employer liability.
On October 27, 2023, the NLRB published a Rule that establishes a new joint employer standard for determining whether two employers simultaneously employ a particular employee or employees. Under the rule, an entity may be considered a joint employer of another employer’s employees if the two share or codetermine the employees’ essential terms and conditions of employment.
The rule would have the effect of making a Franchisor an employer of an employee of the Franchisee. That is, a Franchisor who did not hire, and cannot fire, a person working for a franchisee would be considered their joint employer and liable for labor code violations. The NLRB specifically declined the request by commenters to exempt franchise businesses. If the rule is upheld, there will be repercussions to the franchising business model.
The proposed rule is currently scheduled to take effect on February 26, 2024. An administrative agency rule can be nullified by a joint resolution of Congress. 5 U.S.C. §801. A joint resolution to nullify the proposed rule was passed by the House on January 12, 2024. H.J.Res. 98. As of January 16, 2024, the resolution is with the Senate.
