Testimony & Letters

Open Markets Signs on to Letter Opposing NLRB Change in Joint Employer Rule

January 14, 2019

Today, the Open Markets Institute joined five law professors and one public interest group in a letter to the National Labor Relations Board criticizing a proposed rule that would make it harder for workers to organize and collectively bargain with franchise businesses.

Under the current, Obama-era standard, a fast food franchisor and franchisee can be treated as a single employer under labor law. This allows workers to bargain collectively across franchise locations and build worker power against a franchisor like McDonald’s, which exercises a large degree of control over its individual franchisees.

The letter points out that fast food franchisors, like McDonald’s or Wendy’s, claim inconsistent identifies in different areas of law. In the labor law context, franchisors claims that each individual franchisee is an independent business and thus distinct from the franchisor. Such an interpretation would allow franchisors to avoid bargaining with nationwide units of employees. For workers, organizing and collectively bargaining with hundreds of individual franchisees (who possess little business autonomy) is much more difficult than organizing and bargaining with a single national franchisor.

For antitrust law, however, franchisors claim that they and their franchisees make up a “single entity.” This would allow franchisees to get away with agreements not to recruit each others’ employees (so-called “no-poach agreements”). In other words, a franchisor like McDonald’s claims that franchisees, for the purpose of antitrust law, ought to be considered two different offices or divisions of the same company.

The Trump NLRB’s proposal would allow franchisors to exploit this inconsistency in the law and let franchisors adopt different legal identities when it suits them.

You can read the comment here.