A Big Mac with a Side of Unionization: Labor Board Rules Against Franchise and Small Business Owners

The National Labor Relations Board continues to outdo itself as it bends over backwards to cater to the interests of Big Labor bosses.

It might have been more prudent for the NLRB to avoid controversy, given that just last June the U.S. Supreme Court unanimously ruled that three of its former members – including now General Counsel Richard Griffin – had been unconstitutionally appointed by President Barack Obama.

But since then, they have been back with a vengeance: They approved the formation of a “micro-union” at a Massachusetts Macy’s store, allowing small subgroups of workers to unionize themselves separately from co-workers and overturned decades of labor organizing standards in the process.

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Even more recently, the NLRB made another decision that once again undermines longstanding labor precedent. This latest overreach threatens a very common, effective business arrangement that supports millions of American jobs.

In a case against McDonald’s, Griffin decided that individually-owned franchises can now be named as “joint employers” of their workers along with their parent franchisor corporations. This could potentially alter hundreds of thousands of American workplaces forever.

Franchisees are small business owners who independently operate units of a larger company; the franchisor. They run the businesses themselves, often putting in long hours over many years to achieve the success they share with their employees. Franchises can be family affairs as well, with several generations learning the same trade and eventually working alongside each other. In many ways, franchising is an expression of the most basic elements of the American Dream.

The real-world impact is crucial as well – franchises support 18 million jobs and pump $2.1 trillion into the American economy.

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Some of these franchise operations are very large like McDonalds or Burger King. Others are much smaller, like one of those pack and ship stores you take holiday gifts to, or the local quickie print, neither having more than a small handful of employees.

But now, President Obama’s NLRB wants to take authority out of the hands of independent small business owners. By naming parent franchisor companies as “joint employers” with their franchisees, the very foundation of the relationship has been severely shaken. In fact, it effectively tears up literally hundreds of thousands of binding contracts, changing the workplace relationship of employer and employee in ways we cannot even begin to comprehend.

The franchisor/franchisee arrangement supports jobs in various industries, but is especially common in the restaurant industry. In fact, the National Restaurant Association estimates that 90 percent of restaurants in this country are independently-operated or franchised businesses.

The NLRB case that led to this decision was an investigation into McDonald’s, which has more than 3,000 franchisees. Since McDonald’s, USA, LLC has now been named a joint employer with their individual franchisees, the franchisees now face a loss of autonomy. The uncertainty fostered by this decision extends to the jobs these businesses support.

Demonstrators in support of fast food workers protest outside a McDonald's as they demand higher wages and the right to form a union without retaliation Monday, July 29, 2013, in New York's Union Square. Activists say hundreds of workers have walked off their jobs. They are demanding a minimum wage increase and calling for better benefits. (AP Photo/John Minchillo) 

The origin of this NLRB decision, however, may provide some insight into the Board’s motivations. The McDonald’s case in question stemmed from protests against the company launched by a group called Fast Food Forward, which is supported by the Service Employees International Union. Big Labor bosses like those at the Service Employees International Union will likely achieve their own set of benefits from this ruling: targeting McDonald’s workers for unionization as employees of McDonald’s, USA, rather than as employees of their individual franchises.

At a time when labor memberships, and thus, dues, continue to dwindle, union bosses are doing anything and everything they can to secure more members and more money.

Their goal is nothing new, but it is unconscionable that a federal agency – the NLRB – is facilitating their efforts by upending decades of precedence that protect independent business owners and their employees. It’s the ultimate disenfranchisement.

Fred Wszolek is a spokesperson for the Workforce Fairness Institute (WFI).

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