The Labor Department has reportedly removed protections that held large companies accountable for the actions of their franchisees. The so-called “joint employer standard” law was one of the most controversial laws by the National Labor Relations Board, which enforces U.S. labor law. The rule created during the Obama administration essentially said that corporations could be held accountable for labor violations of subcontractors or franchisees.
Corporations pulled into disputes
Corporations had opposed this joint employer rule, fearing it would be liable in disputes involving workers who were not their employees. Nonetheless, large companies would outline certain standards by which employees must conduct themselves as well as certain standards such as how often a McDonald’s franchise must clean their bathrooms. In October of 2017, McDonald’s agreed to pay $3.75 million to settle a major joint-employment suit of labor violations in California even though the company still claims that the company does not employ these workers.
Clarifying existing law?
Advocates claim the Obama law was not creating new law. Instead, it simply made it easier for employees, employers, contractors, unions and others to understand the rights and obligations for employers and workers. The new change reinstates the previous rule that the companies are joint employers only when they exercise direct control of employees.
Laws likely to change
The laws regarding employer and employee rights in variety of business settings – from franchises to corporations to small private businesses – are often shifting. It is crucial for businesses to understand what they can and cannot do, but that often changes. The smart approach involves consulting with attorneys and business experts who can help employers understand and reduce the risk of liability and expense in disputes involving businesses and workers.