United States: NLRB General Counsel Acknowledges Legal Stumbling Block In Joint Employment Issue, Highlights Priorities

Last Updated: October 30 2014
Article by Michael J. Lotito

Speaking at a West Virginia University College of Law event last week, National Labor Relations Board General Counsel Richard F. Griffin, Jr. pointed out the pitfalls in his office's argument that franchisors should be named in unfair labor practice charge complaints as joint employers with their franchisees. According to Griffin, "we have a problem legally for our theory." In July, Griffin surprised many by announcing that his office intends to name a parent franchisor as a respondent in cases involving alleged unfair labor practices committed by franchisees if a settlement is not reached. This decision caused an uproar in the business community – as discussed extensively during a September congressional subcommittee hearing – because it would make significant changes to the franchise model. 

In the Browning Ferris case, the Board asked for briefing on whether the current joint employment standard under the National Labor Relations Act should be changed, and if so, what should it be? The GC said that his office filed a brief arguing that the standard – in place since 1984 – should be changed back to the "traditional" approach. Under the standard in place for the past 30 years, whether an employer is considered a joint employer depends on whether it exerts a significant and direct degree of control over employees and the employees' essential terms and conditions of employment. Prior to 1984, the GC asserted, an employer was also considered a joint employer if it "had the potential" to control such terms and conditions of employment, or if "industrial realities" otherwise made it an essential party to meaningful collective bargaining.  

Griffin advocated returning to the earlier standard because of the "changing nature of employment." Specifically, the GC said that the nature of today's contingent workforce and the franchise industry necessitates this change.  Griffin acknowledged that following his office's July announcement that he would be authorizing complaints against franchisors as joint employers, "a lot of noise" was created.  The GC then pointed out  that prior Board decisions issued under the "traditional" joint employer standard do not support his position. He explained that case law exists in which parties argued that franchisors were joint employers with their franchisees: 

and the Board said "no." Even under the old test. And they established essentially this principle that if the franchisor's involvement in indirect involvement in the terms and conditions of employment comes about as the result of the franchisor trying to protect the uniformity and quality of their brand, that's insufficient involvement to get them as joint employers. So here we are arguing for a return to the traditional standard and here are these cases that under the traditional standard find no joint employer in the franchisor-franchisee relationship. And we say "don't overrule those cases, those cases should remain good law." But, one thing that had come to our attention in the course of a bunch of cases . . . .there is now a lot more involvement in certain contexts of franchisors with the day-to-day operations with their franchisees. 

Specifically, Griffin alleged that because there exists "enormous software capability" allowing franchisors to monitor their franchisees "in real time," the standard should be changed. According to Griffin, this type of involvement in the hours and terms and conditions of employment "goes beyond protecting the brand. . . In those instances we think the franchisor should be named and held responsible as a joint employer."

Other Pending Issues

Griffin touched upon three other issues currently pending before the Board.  First, he advocated overturning Register Guard via the Purple Communications matter, in which the Board has called for public briefing.  Under existing law, employees do not have a Section 7 right to use their employers' computer system to engage in union activities.  Griffin said his office has taken the position that this precedent should be overturned, and instead the Board should apply the Republican Aviation analysis, which balances an employee's Section 7 rights against an employer's property rights. He said he has not "necessarily" taken the position that if an employer allows employees to use its computer system for personal use, it must then allow employees to use the computer system for Section 7 activity.  

Another issue Griffin highlighted during his talk was the inability to pay argument.  Under this doctrine, if a union makes a financial demand during collective bargaining and the employer says it cannot pay the amount demanded, an employer must open its books to the union if requested.  However, this requirement is not triggered in certain circumstances, such as when an employer alleges it does not want to pay the amount for various business reasons.  According to Griffin, this type of "semantic distinction" has been criticized, and he would like to change this policy. He noted, however, that a case that would have squarely addressed this issue was settled about two weeks ago, and similar cases have not yet "reached fruition." 

Finally, Griffin stated was a "big believer in 10(j) injunctive relief," particularly in successorship cases. "Successorship/refusal to hire is now a 10(j) priority and we will be chasing those cases the same way we are . . .going after first contract bad faith bargaining and 'nip-in-the-bud' organizing." 

New Role as General Counsel

As many who read this blog already know, Griffin was one of the contentious Board recess appointees who stepped down as part of the 2013 Senate deal that resulted in the approval of all five current Board members. Shortly after leaving the Board as a member, Griffin was confirmed as the agency's General Counsel. Griffin remarked, "apparently the Senate seemed to think that while I was inappropriate for confirmation as a Board member, I was perfectly fine to be confirmed as the General Counsel – a  position which, frankly, is a much more responsible position."   

Griffin's tenure as GC has likewise been contentious at times. Last month, a group of senators introduced legislation that would, among other things, provide for independent judicial review of the General Counsel's decision to issue a complaint, give parties 30 days to seek review of a General Counsel's complaint in federal district court, and grant parties the right to obtain General Counsel memoranda and all relevant documents within 10 days of receiving a complaint.  That bill is still pending.

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Michael J. Lotito
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