New legislation has the power to significantly change the way franchisors and franchisees conduct business – for better or for worse is up to personal interpretation. Earlier this year, the National Labor Relations Board (NLRB) general counsel ruled that McDonald's, USA, LLC could be held responsible for joint labor and wage violations by its franchise operators. The ruling was created after the labor board began receiving complaints from fast-food workers stating that McDonald’s and its franchisees were violating the rights of employees. The goal of the McDonald’s workers who complained to the NLRB is to unionize fast food workers.
Before the Ruling
Before the ruling, franchisors were not held responsible for their front-line workers. Working conditions were to be set by franchisees operating the locations rather than by corporate headquarters.
After the Ruling
As of June 2014, courts have ruled that franchisors are to be considered joint employers. This simply means that the franchisors are responsible for labor violations that are committed by the franchisees. Out of the 181 claims that were reported, 43 of them were found to be true. The NLRB general counsel, Richard F. Griffin Jr., states that if the parties cannot reach settlement between these cases, McDonald’s will be named as a joint employer respondent.
So, What Does This Mean for Franchisors and Franchisees?
Franchisors: If the NLRB ruling is passed, the franchisors will be completely responsible for their workers and the hiring process. Franchisors will need to keep a better watch on every franchise location’s hiring practices to prevent employee complaints.
“If you have an owner-operator network representing your brand and you’re not sure what their hiring practices are – how they’re picking talent, managing performance or what they’re doing with regards to the overall process for talent selection – you ought to be really worried,” said Hireology’s CEO and Chief Hireologist Adam Robinson.
Franchisees: If the labor laws and other regulations are passed, the smaller franchisees may fall below the minimum size requirements granting protection from minimum wage laws, the Affordable Care act and other similar measures, while the larger franchisors will not. This may lead to the franchisees dealing with additional costs, which is the last thing anyone wants to worry about.
If the ruling is passed, a franchisee could lose their freedom when it comes to being the boss of daily decisions and procedures. In order to prevent employee complaints, the franchisor will be responsible for overseeing all hiring, firing and other employee practices.
What Solutions are Out There for Franchisors and Franchisees?
No matter the outcome, either the franchisor or franchisee will be impacted in some way. But there is a solution! The Hireology platform is a systematic, scientific hiring tool that can be utilized by either the franchisor or franchisee. If the ruling does not get passed, franchisees will be able to hire the right people, increase profits and success when using the Hireology platform. Hireology makes the recruiting and hiring process more efficient and effective for franchisees. If the ruling does pass, the control of the Hireology platform will be transferred over to the franchisors. The franchisors will then be in charge of using the platform to create a consistent hiring process and to reduce legal ramifications.
It is always smart to be ahead of the game. Visit http://www.hireology.com/ to learn more about franchise hiring solutions and how the platform can help both the franchisor and franchisee no matter what the NLRB outcome may be.