‘Yes, You Are Responsible for Your Franchises,’ Labor Board Scolds Fast Food Chains
In the past, parent companies of fast food chains have gotten out of extensive labor lawsuits by washing their hands of any illegal labor practices by franchisees. Disgruntled employees have tried to sue parent companies in the past — as in this Papa John’s case for wage theft and this McDonald’s case of sexual harassment — but have largely been unsuccessful in wrangling money from the corporations.However, a new National Labor Relations Board ruling says that parent companies are responsible for the actions of their franchises, and may even have to negotiate with unions in the case of a major lawsuit.
The ruling concerned a Houston waste management center, but the outcome would affect all major companies, including fast food chains.
“Many companies are going to take a hard look at their use of staffing agencies; their use of contractors and subcontractors; and if they are a franchiser, their business model with how they relate to franchisees," Rebecca Bernhard, a labor attorney at Dorsey & Whitney, told the Los Angeles Times.
If, for example, employees at a small-town Burger King decided to unionize, they’d be able to take up their concerns not only with their local franchise owner, but with Burger King corporate headquarters in Canada, which, according to experts, marks this as “one of the more significant labor board decisions” in recent decades.