National Labor Relations Board Possibly Easing Path to Franchise Unionization

NLRB is likely to adopt a more lenient standard for establishing joint employer status, opening the door for labor unions in organizing fast food franchisees and franchisors. Unions would be able to organize employees at one franchise and then force the larger parent companies to the bargaining table while only organizing a small portion of workers. Large corporate entities could see a domino effect in which the actions of a small group of employees open the doors to unionization among millions of workers under the corporate umbrella.

Employer Benefits Change May Be Seen as Retaliation

It is permissible for workers not represented by a union to strike under Section 7 of the NLRA, which gives employees the right to engage in “concerted activities for mutual aid or protection.”  These strikers may not be retaliated against. After a one-day strike ended at a fast food establishment and the workers returned to work, one of their benefits (a free meal each day they worked) had been eliminated.

Although non-union employers can change benefits terms at will, a judge found that the free meal benefit elimination was in retaliation and therefore, eliminating the benefit was a violation of Section 8(a)(1) of the Act and the employer was thereby ordered to reinstate the free meal benefit.  Restaurant employers can expect more situations like this as the union movement increases in the food and beverage industry.

NLRB Strikes Papa John’s Franchisee Arbitration Agreement

Papa John’s franchisee was not permitted to require its employees to sign an arbitration agreement waiving his right to bring a class or collective action in court or arbitration because it violated the NLRA and was unenforceable.

The NLRB tries to protect employees’ ability to act in concert with each other. NLRB believes that any employer attempts to preclude employees from filing class actions violates the Act. The Fifth Circuit overturned NLRB decisions, but the NLRB will continue to enforce its position against mandatory arbitration in the other 8 federal Circuits unless and until the Supreme Court rules on this issue.