The National Relations Labor Board (NLRB) recently issued a ruling expanding the “joint employment” concept, making it more likely that entities using third-party employees, such as staffing agency employees and potentially even franchisees, are considered employers of those employees. Although the decision does not apply to franchisors, it appears likely the NLRB will soon consider the application of its updated joint employment concept to franchise relationships.

The decision in Browning-Ferris Industries of California held that employers no longer must have “direct and immediate” control over the essential terms of employment of third-party employees. Rather, an employer needs only indirect or even potential control over employment decisions to be considered a joint employer, even if that control is not exercised. Relevant factors to be considered now include not only direct control over hiring, wages and working conditions, but also but also secondary matters such as discipline, scheduling and overtime.  Although the Browning-Ferris decision does not currently apply to franchise relationships, a case involving McDonald’s is working its way through the system and may ultimately have a similar impact.

Employers using staffing agency employees and other similar employment relationships should take care to ensure they are not inadvertently entering into joint employment agreements. They can do so by avoiding and eliminating provisions that grant actual or potential control over the employee’s employment status, wages and schedule. Franchisors should also consider its employment relationships in this light and keep a sharp eye in the next several years for an NLRB decision regarding McDonald’s franchises.