Franchise veterans jumped right to the four-alarm issue in their Restaurant Leadership Conference session on government issues affecting the restaurant industry. “The joint employer issue is coming to get you,” declared moderator and International Franchise Association CEO Robert Cresanti, kicking off one of the higher-decibel sessions of the event.
He didn’t have to convince his fellow panelists. “It’s a frickin’ nightmare,” barked Michael Lotito of Littler Mendelson, one of the industry’s most prominent labor law firms.
As they explained, the government has seesawed back and forth on whether franchisors should be legally responsible for the employment policies and practices of franchisees. The National Labor Relations Board had redefined the relationship in 2015 to regard the parties as joint employers, equally subject to lawsuits or regulatory sanction—only to reverse itself in December 2017.
It then reversed the reversal a few weeks later, overturning a decision because of a technicality that had nothing to do with legal reasoning: A member of the board had failed to recuse himself despite a potential conflict of interest.
“We still have a problem,” said Lotito. “Although they withdrew the opinion, they didn’t replace it.” Labor regulators clearly would prefer not to equate franchisors as joint employers of franchisees’ staff, but legal technicalities prevent them from proceeding on that preference.
The solution, panelists agreed, is a permanent definition set by legislation. A measure already approved by the House of Representatives would spell out that most franchisors and franchisees are not joint employers. The Senate has yet to act.
Cresanti and his fellow panelists implored the audience to get involved in the push for the industry-friendly definition.
“It affects you all,” said Lotito. He explained that the potential impact may be more widespread than restaurateurs realize. As an example, he cited the decision announced the day before by Starbucks to close all of its domestic company-run stores for staffwide racial-sensitivity training.
“If you’re a franchisor and you directed your franchisees to do that, you’ve created a joint employer relationship,” said Lotito.
The discussion took a detour when panelist Andy Puzder, the former CEO of CKE Restaurants, recounted his experience of being nominated by President Trump to become secretary of labor. Pitched resistance from the labor community and the chance of not being confirmed in the Senate convinced Puzder to announce he was no longer interested in the job.
“It’s one thing to play football,” said Puzder. “It’s another thing to be the football. This was a smear campaign.”
He recounted having opponents of the nomination demonstrate outside his home. He described a piece of mail depicting a body with a noose around its neck.
He blamed the outcry on organized resistance, without specifying who the organizers were.
“None of the facts mattered,” said fourth panelist Bryan Lanza, who served as deputy communications director for the Trump-Pence campaign and continued to advise the president afterward. “We left him out on the ridgeline too long, and he got shot.”
The session was titled, "Swimming in the Swamp—Keeping Your Head Above Water."
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