‘Local Franchise Ownership’ Wins as U.S. Proposes Rollback of Joint-Employer Rules

One of the pillars of franchising is the concept of local ownership – the local franchisee’s responsibility for local operations. The latest federal regulations underscores that local ownership, reversing several years of “joint-employer” rulings that placed more responsibility on the franchisor.

Under the Obama-era rulings, the National Labor Relations Board ruled that corporate McDonald’s shared responsibility (and liability) for local owners’ management of employees. The 2018 NLRB is proposing a new joint-employer standard, which returns to the pre-2015 standards, stating in part: “An employer may be considered a joint employer of another employer’s employees only if it possesses and exercises substantial, direct, and immediate control over the essential terms and conditions of employment.” The new language is open to public comment for 60 days.

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