National labor ruling changes landscape for franchise business model

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This change, decided along party lines, defines corporations as “joint employers” if they have significant influence on how a franchisee or sub-contractor hires and fires its workers.

The ruling affects many fast-food workers and airport workers, who may be able to now submit complaints of workplace violations to the corporate office in addition to the person who owns the local business.

Loyd Willaford, an employment lawyer, said there’s a reason for this: “If you go into a McDonald’s anywhere in the country, it looks the same. That’s because McDonald’s tells the franchisee what are working standards in terms of hiring.”

He said companies like McDonald’s exert some amount of control over things like uniforms, schedules, wages and drug testing, thereby sharing the authority on essential conditions of employment.

This can also affect employees of Menzies, for example, who are contracted to do baggage handling for Alaska Airlines.

Willaford said Alaska Airlines can be a “joint employer” if “Alaska has supervisors watching the Menzies workers, and if they see something wrong, they have the ability to recommend discipline.”

Working Washington told KIRO-TV that employees of franchises in the Seattle region don’t plan to unionize right now but have been and will continue to be part of political action to call for improvements to local labor laws.

Willaford said there is potential for groups in other places to use contracts from Seattle with higher wages as leverage for their own bargaining.

David Jones, who is both a franchiser and franchisee, said he finds the new situation “scary.”

Jones is the CEO of Blazing Onion and has franchisees with whom he shares restaurant design and décor, as well as menus.

But he said he does not dictate whom they hire or fire, and does not have any employment rules written down.

Jones said being considered a joint employer would mean “I have to continue monitoring way more than I’m monitoring now, which changes the whole model.”

He said that may not be sustainable for his business structure.

Jones also sees it from the other side as a franchisee, because he owns three Subway locations, two of which are in Seattle.

There is a possibility that his Subway employees could unionize after this ruling.

“We take very, very good care of our employees. And frankly, a union coming in would not be able to give my employees anything that we’re not already giving them,” Jones said.

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