An employer that coerced an employee to work during her intended FMLA leave period and, subsequently, reassigned her based on her allegedly poor performance during that period, may well have been harmed the employee in violation of the FMLA, despite protestations that the employee received her full salary during this period and so had not “legal damages,” ruled the Eleventh Circuit in its recent decision Evans v Books-a-Million.
“Go live” date. In January 2006, a payroll manager for national book retailer Books-A-Million advised her employer that she was pregnant. At that time the employee was involved in the implementation of a new payroll system, which was scheduled to “go live” by August 2006. In June, she approached her supervisor to discuss necessary paperwork for her FMLA maternity leave, to become effective on her due date, September 1, 2006. As the time approached for her to deliver her baby, her department was behind schedule in implementing the new payroll system. The “go live” date had been pushed back until November 2006.
Subsequently, the employee was advised that management had decided that she “would not go on leave but would work while on maternity leave.” Despite the employee’s protestations that she did not intend to work after the birth of her child, her supervisor repeatedly told her that she was “really needed.” Moreover, the employee was advised that successful implementation of the new system would account for 50 percent of her annual bonus. Given her supervisor’s insistence, the employee felt she had “no choice” but to continue to work from home after the birth of her child. She was given a laptop computer that would enable her to work from home after her delivery.
In defending its actions against the employee’s claim that her FMLA rights were violated, the employer argued that the employee had no “legal damages” because she was paid for her work.
A district court brought that argument, but the Eleventh Circuit concluded that it erred by dismissing the employee’s FMLA claim.
Work from home. The employee gave birth on August 30, and upon arriving home from the hospital with her newborn on September 1, she immediately began answering work-related calls. For the next two months, the employee was required to work nearly full-time from home. She also had to attend meetings on the new system. However, she was paid her full salary while she worked from home. According to the employee, she returned to the office a week and a half earlier than she originally planned. Upon her return, her supervisor’s attitude toward her was cold and hostile. In the meanwhile, the employee was transferred to a newly created risk manager position, and the company advertised for a new payroll position that included all the employee’s former duties. The employee protested and declined to accept the risk manager position. Thereafter, she was terminated and denied a bonus.
The employee’s filed a complaint alleging, among other things, that Books-A-Million interfered with her right to take parental leave by forcing her to work from home immediately after she gave birth. The district court granted the employer’s motion for summary judgment dismissing the claim. This appeal followed.
FMLA interference. On appeal, the employee alleged that the district court erred in dismissing her FMLA claim. To prove FMLA interference, the employee had to demonstrate “that [she] was denied a benefit to which [she] was entitled under the FMLA,” and that she had been prejudiced by the violation in some way. Here, the district court concluded that the employee suffered no “legal damages” because she was paid for her work. However, the Eleventh Circuit found this conclusion was error. The FMLA provides explicitly for two (distinct) categories of remedies: (1) “damages,” including compensation, benefits, and other monetary losses sustained by reason of the violation; and (2) “such equitable relief as may be appropriate, including employment, reinstatement, and promotion.”
The appeals court observed that it was clear that, in order to prove that she was “prejudiced” by an FMLA violation, the employee need only demonstrate some harm remediable by either “damages” or “equitable relief.” In addition to the question of whether the employer interfered with the employee’s FMLA rights, there were other unresolved issues of material fact requiring a trial, such as whether she was “prejudiced” by any FMLA interference. A reasonable fact finder could conclude that her supervisor emphasized job performance while the employee was home with her newborn. Moreover, any prejudice or harm suffered by the employee may be remediable by reinstatement or “front pay” if reinstatement is not viable.
Last week, Minnesota Governor Mark Dayton issued an executive order directing all state government agencies increase their employment of Minnesotans with disabilities. Over the last 15 years, there has been a steady decline in the proportion of Minnesotans with disabilities employed by the state – from 10.1 percent of the state’s workforce in 1999, to just 3.2 percent in 2013. Executive Order 14-14 directs state agencies to increase that level to 7 percent by 2018.
Issued on August 4, the Governor’s Executive Order instructs Minnesota Management and Budget (MMB) and the State Director for Equal Opportunity to develop a model for recruitment and hiring strategies to increase the employment of people with disabilities. In addition, all state agencies are required to develop plans for promoting employment opportunities for Minnesotans with disabilities, and to begin reporting their progress on a quarterly basis. The Order also directs MMB to develop ways to help employees to more easily update their disability status with their employer.
In recent years, Minnesota has fallen behind neighboring states and the federal government in the hiring of individuals with disabilities, according to the Governor’s office. Currently, the states of Wisconsin and Iowa have achieved 5.8 percent, and 4.4 percent levels, respectively. The most recent figures for the federal government show that 5 percent of federal workers are individuals with disabilities. Developed in consultation with disability advocates, Minnesota’s new target of 7 percent will make the state a leader in the region for hiring people with disabilities.
Executive Order 14-14 is the latest initiative enacted by Dayton’s Administration to demonstrate its commitment to help Minnesotans with disabilities live more independently and improve the quality of their lives. Other initiatives include:
- Creating Equitable Policies – The Department of Transportation updated its policies and implemented new trainings to help ensure that all employees with disabilities receive proper accommodations.
- Improving Life and Work Opportunities – Governor Dayton and the Department of Human Services launched Reform 2020, which will make it easier for people to understand and access services and support for Minnesotans with disabilities, while also redesigning and improving services and increasing service coordination and integration.
- Increasing Options and Independence – The Department of Employment and Economic Development’s Vocational Rehabilitation program helps those with disabilities prepare for, find and keep a job, and live as independently as possible. In 2013, the program assisted more than 19,500 people with disabilities.
- Supporting Stable Employment – The Department of Human Services began funding a new initiative to help individuals with disabilities find and maintain employment – helping Minnesotans with disabilities live more independently, and decreasing their need for other state aid.
- Encouraging Diverse Hiring – The Department of Human Rights held a statewide video conference in December to highlight the strategic advantages of hiring people with disabilities.
- Increasing Access to Work Opportunities – The budget signed by Governor Dayton increased funding for State Services for the Blind to help people with disabilities secure and maintain meaningful employment.
More information about Executive Order 14-14 is available on the Governor’s website.
Supervisors tend to talk too much, as every employment lawyer can attest. Why is it necessary to comment on everything and everyone at work?
Recent federal court decisions seem to confirm this. In the space of the past month, supervisor comments alone helped several employees squeak past summary judgment, or even resurrected their claims on appeal. Often evidence of supervisory comments is used to show pretext. It’s a safe bet that in many of these cases, the supervisors had no conscious awareness that their comments could get their employers into trouble.
Consciousness-raising. Conscious awareness of what they are saying is what employment counsel and HR want to instill in their organization’s managerial personnel. Supervisors are thinking about getting the job done; they often aren’t thinking at all about what they are saying. Aside from a reminder to “think before you speak,” and your grandmother’s familiar adage that “if you can’t say anything nice, don’t say anything at all,” what can your organization do to remind supervisors that employees’ ears are always on high alert?
You can start by sharing some stories about the kinds of comments that got other supervisors into trouble. For example:
1. Race discrimination
Us vs. them. Revisiting an African-American operation manager’s race discrimination and retaliation claims, the Second Circuit found pretext evidence in statements by his former supervisor that, with respect to the employee’s ability to discipline his African-American regional managers, “they don’t know how to police each other” and that the regional office “could lighten up a bit.” (Kirkland v Cablevision Systems). The manager was the only African-American area operations manager working for the employer; he had complained multiple times about being singled out for criticism, the last time just a month before he was fired.
You don’t fit in. Citing management comments that an African-American detective “did not fit in” with an elite group of troopers and a white officer would “fit in better” as sufficient to raise an inference of pretext as to the real reason why the Black detective wasn’t assigned to that specialized unit, the Second Circuit vacated summary judgment that had been granted to a public employer (Abrams v Department of Public Safety, State of Connecticut). The detective was rejected despite his supervisor’s recommendation; he was one of only three black detectives in his unit, and for five straight years, all eight detectives selected for assignment to the unit were white.
The veiled comments in the two cases above carried a racial undercurrent that revealed the speakers apparently had an “us vs. them” mentality, which was enough for the appeals court to let a jury consider whether discriminatory treatment occurred. Asking your own supervisors to discuss what they think the comments meant and whether they agree with the court can lead to increased awareness of their own attitudes and behaviors.
2. Sex discrimination
Prison riot. Meanwhile, the Seventh Circuit dismissed a prison counselor’s hostile environment claims based on the regular use of her desk for sex by the night shift – the court didn’t see that obviously offensive practice as related to her gender – but it did find a constant barrage of sexually charged comments directed towards her was egregious enough to reverse summary judgment against her discrimination claims (Orton-Bell v State of Indiana). Her first superintendent harassed her, ogled her, and allegedly told her she couldn’t wear jeans because “her ass looked so good that it would cause a riot.” He got fired, but male employees continued to congregate to watch female employees receive pat-downs, making sexual comments all the while, like they needed a cigarette after watching her get patted down because it was almost like having sex.
Here the constant barrage of comments was worse in the court’s view than sex-on-a-desk. Would your managers agree? Most managers recognize that a continuing stream of harassing commentary is inappropriate. But comments don’t have to be constant to be actionable, as evidenced by the cases below:
Just one comment. Saying she “just didn’t like the idea of two men working together,” the words of a case manager who later became a male hospice nurse’s supervisor, and then terminated him, got her into trouble. This one comment was enough for a district court to deny summary judgment, finding a fact question as to pretext, even though there was ample evidence the employee had been counseled for tardiness, policy violations, and rudeness to coworkers (Lianoz v Hospice of Humboldt).
Or only one week of comments. Coworker comments like “women don’t belong working on cars,” egregiously sexual comments, dirty jokes, and an assistant manager’s remark that “girls do not deserve to work [here] on cars,” even though occurring primarily during only one week, were found severe and pervasive enough by another court to establish a hostile work environment. Multiple incidents of both anti-female comments and sexually charged comments specifically directed at the employee created an inference, said the court, that her gender was the motivating factor for other gender-neutral instances of harassment; this gave the court permission to view gender-neutral instances as part of the hostile environment it (Schmidlin v Uncle Ed’s Oil Shops Inc). To be actionable, misconduct must be recurring, not prolonged. The fact that the employee worked with the worst offending coworker for only one week was irrelevant to the court in this case.
3. Age discrimination
Clearly the courts are very sensitive about sexual comments. But attitudes are changing about age-related comments as well. Moreover, talking about age seems to be really common. In most situations, supervisor comments aren’t the only evidence, but they can be the icing on the cake when it comes to convincing a court that there is evidence of pretext, for example:
Let’s (not) talk about age. In a classic example of an employee whose performance is not an issue until a new supervisor arrives, comments by the new supervisor about various employees like “she’s too old, she should probably just quit,” “she’s too old for that position,” and “I hope they’re not hiring an old lady again” about a recent job opening were sufficient to get to a jury on whether the given reason for the employee’s termination was pretext for age discrimination. Even though there was evidence the fired employee had made an inordinate number of job-related mistakes, the remarks here were made by a decisionmaker, they weren’t stray, and they were neither isolated nor ambiguous (Rittenhouse v Early Warning Services, LLC).
In another case, a supervisor’s age-related demeaning comments to such as “How old are you anyway?” “We’re not as young as we used to be,” “Aren’t you a baby boomer?” and “When are you going to retire anyway?” could plausibly interfere with a reasonable employee’s ability to focus and maintain composure at work. Thus, the employee’s allegations of age harassment were not isolated or trivial but rather demonstrated a pattern of discrimination against her based on her age sufficient to survive a motion to dismiss (Landucci v State Farm Insurance Co).
Especially when you’re demoting someone. Asking an employee about her age, plus comments by the company president that another, older employee needed to “slow down,” were enough that a jury could infer pretext for age discrimination in an employee’s demotion and termination. Rejecting defense arguments that pretext evidence was based only on stray remarks, the court found this too was a jury question. Even if the comments were “stray remarks,” they were made at the meeting during which the employee was demoted, which gave them more weight (Patricia Grenier v Key Floral, Inc).
Or say we don’t want to hire older people. Statements by a direct supervisor that his boss was concerned about getting in trouble for hiring the employee because the company owner did not want him to “hire older people” when offered as circumstantial evidence were not stray remarks. First, they reflected bias towards older workers generally and the employee particularly. Second, the owner’s comment was made by someone “in a position to influence” the employee’s direct supervisor, who was the decisionmaker. The owner’s denial merely confirmed the existence of a genuine issue of material fact. There was evidence of multiple age-related comments, including these, as well as the fact that, at 67, he was the oldest employee and that his job was taken over by someone younger (Suggs v Central Oil of Baton Rouge, LLC).
Or suggest “a more youthful approach.” A supervisor’s comments about a newly created VP position that he was going for “a more youthful approach” supported sending a 65-year-old teaching hospital employee’s nonpromotion claim for age discrimination to a jury. During the search to fill the VP position, for which the employee had applied, the headhunter’s notes referred to the employee as “mid 60’s to Retire.” Just before the hospital hired a 51-year-old candidate for the VP job, the operations manager allegedly said he was “looking for a more youthful approach” (Mullinix v Mount Sinai School of Medicine).
Most of these statements appear to reflect offhand remarks made without thinking. What you want to cultivate among your managers and supervisors, however, is a conscious awareness that words matter, and they are often carefully scrutinized – by employees, by their peers, by their own supervisors, and by the courts. What they say can – and will – be used against your organization.
If all this talk about supervisors talking is too much talking, check out this musical reminder to think before we speak:
(By Joe Jones and Reginald Hall)
You talk about people
That you don’t know
You talk about people
Wherever you go
You just talk
Talk too much
OFCCP proposal would require covered federal contractors to electronically submit compensation data as supplement to EEO-1 Report
Covered federal contractors and subcontractors with more than 100 employees would be required to electronically submit an annual “Equal Pay Report” on employee compensation, under a proposed rule announced by the OFCCP on August 6, 2014. The new report would be added as a supplement to the existing EEO-1 Survey reporting requirement. The long-anticipated Notice of Proposed Rulemaking (NPRM) will be published in the August 8, 2014 edition of the Federal Register and open for public comment from August 8 through November 6, 2014. This proposal has been in the works at the OFCCP since 2011, and President Obama signed a Memorandum in April 2014 to expedite the process. A webpage with FAQs and other information on the proposal is available at: http://www.dol.gov/ofccp/EPR.
Proposed reporting requirements. Current regulations require that all employers in the private sector with 100 or more employees, and some federal contractors with 50 or more employees, annually file the EEO-1 Report with the Joint Reporting Committee (a joint committee consisting of the EEOC and the OFCCP). The OFCCP’s proposal would revise its regulations at 41 CFR Part 60-1, which set forth the reporting obligations of covered federal contractors and subcontractors under Executive Order (EO) 11246. Specifically, the proposal would amend the regulation at 41 CFR 60-1.7 to require that:
• employers who file EEO-1 Reports, have more than 100 employees, and a contract, subcontract, or purchase order amounting to $50,000 or more that covers a period of at least 30 days, including modifications, submit two columns of additional information to the EEO-1 Report in a new Equal Pay Report to the OFCCP. Covered employers would submit the following three pieces of information: (1) the total number of workers within a specific EEO-1 job category by race, ethnicity and sex; (2) total W-2 wages defined as the total individual W-2 wages for all workers in the job category by race, ethnicity and sex; and (3) total hours worked, defined as the number of hours worked by all employees in the job category by race, ethnicity and sex.
• covered federal contractors and subcontractors electronically submit the proposed Equal Pay Report using a web-based data tool. The OFCCP states that the web-based portal for reporting and maintaining compensation information will be designed to so that it “conforms with applicable government IT security standards.” The agency will also establish a process for requesting an exemption to the electronic filing requirement.
• contract bidders make a representation related to whether they currently hold a federal contract or subcontract that requires them to file the proposed Equal Pay Report and, if so, whether they filed the report for the most recent reporting period.
The proposal would also extending existing agency sanctions to federal contractors and subcontractors for the failure to file timely, complete, and accurate Equal Pay Reports, and the representation of compliance.
Goals. The Equal Pay Report is one component of a larger strategy to address the reality that, despite five decades of extraordinary legal and social progress, working women still earn only 77 cents for every dollar that working men earn, the OFCCP says, adding that the pay gap is even greater for African American women and Latinas. To this end, the preamble to the proposed rule states that its goals are:
• Increasing contractor self-assessment of compensation policies and practices, and expanding voluntary compliance with the OFCCP’s regulations, to advance the OFCCP’s mission of ensuring nondiscrimination in employment and decreasing the pay gap between males and females and between people on the basis of race.
• Providing probative compliance information, including data on industry and/or labor market standards, to promote industry-wide deterrence within the federal contractor community and lead to modified compliance behavior in the compensation arena.
• Making data-driven enforcement decisions that support the efficient use of limited enforcement resources. The OFCCP states that it will strategically deploy its resources to focus on conducting compliance evaluations of contractors that are more likely to have compensation discrimination violations.
• Shifting, to the maximum extent possible, compliance evaluation costs from contractors that are likely to be in compliance with OFCCP’s existing regulations prohibiting pay discrimination to contractors that are more likely not to be in compliance.
• Contributing to the stability of working Americans by helping minimize the pay gap and promoting broad societal policy objectives of nondiscrimination and equal pay. The OFCCP anticipates increasing its capacity to identify more violations and obtain prompt remedies through a better-informed scheduling process for the estimated 4,000 compliance evaluations it conducts annually. The agency also asserts that effective anti-discrimination enforcement can promote economic efficiency and growth.
Costs. The cost of the proposed rule would be $684 per contractor establishment or $2,176 per contractor company, according to the OFCCP’s estimates, and the first-year cost of the proposed rule would be $46,250,189, which includes the one-time burden, annual recurring, and annual operations and maintenance costs. The agency asserts that it is avoiding costly new recordkeeping requirements and minimizing to the extent feasible the compliance burden by using existing reporting frameworks contractors already maintain in electronic payroll records, including W-2 earnings, and the longstanding categories and definitions that apply to the EEO-1 Report.
Release of data. Under the proposal, the OFCCP would release aggregate summary data on the race and gender pay gap by industry and EEO-1 category to the public annually as soon as practicable. This data will enable contractors to review their pay data using the same metrics as the OFCCP and take voluntary compliance measures, the agency asserts. Moreover, the OFCCP plans to provide training and technical assistance to contractors that will explain the standards and how contractors could use them to conduct their self-assessments. This information could reflect the industry and/or labor market, or some other relevant aggregate grouping of the data received by the OFCCP.
In the OFCCP’s view, the publication of this data for contractors to use would significantly promote deterrence and voluntary compliance with their obligations under EO 11246. Further, the agency claims that the advancement of the societal goals of nondiscrimination in the workplace, and closing the pay gap, are the by-products of deterrence and compliance. Therefore, the agency is interested in comments on the cost to contractors of conducting these self-assessments of the data provided pursuant to the Equal Pay Report against published industry standards.
In addition, the preamble of the proposal asserts that the disclosure of compensation data summarized at the industry level will enable contractors to assess their compensation structure along with those of others in the same industry, and provide useful data to current and potential employees. The OFCCP reasons that some of these employers will not want to be identified as having pay standards that are significantly lower or different from those of their industry peers, since this may encourage valuable employees to consider moving to other employers, or discourage applicants who see that higher paying jobs may be available elsewhere. Employers do not want to be known as one of the lowest paying members of their industry, and may voluntarily change their pay structure, the OFCCP believes.
Confidentiality concerns. According to an OFCCP “Fact Sheet” on the proposal, the Equal Pay Report would not collect any individual pay information or any information on factors such as education or experience that may affect pay. The agency states it will protect the confidentiality of the Equal Pay Report data to the maximum extent permitted under existing law.
IPEDS report. The OFCCP is also interested in amending the regulation to 41 CFR 60-1.7 by adding a requirement that employers who file the Department of Education’s Integrated Postsecondary Education Data System (IPEDS) report, have more than 100 employees, and have a contract, subcontract, or purchase order amounting to $50,000 or more that covers a period of at least 30 days, including modifications, also file the OFCCP’s proposed Equal Pay Report. Thus, the OFCCP is particularly interested in comments related to the need to collect additional compensation data from postsecondary academic institutions in light of the scope of their existing reporting obligations with the U.S. Department of Education.
Background. This proposal has been in the OFCCP regulatory pipeline since August 10, 2011, when the agency OFCCP published an Advance Notice of Proposed Rulemaking (ANPRM) in the Federal Register (76 FR 49398 – 49401) regarding its consideration of the development of a tool that would be designed to effectively identify contractors that are likely to violate Executive Order 11246. The ANPRM did not contain the proposed tool; rather, the agency sought stakeholder comments on issues relating to the scope, content, and format of the tool to ensure that it is an effective and efficient data collection instrument. Over 2,400 comments were submitted prior to the closing of the ANPRM comment period on October 11, 2011.
Noting that this tool was in development at the OFCCP, President Obama, on April 8, 2014, signed a Presidential Memorandum (Memorandum) instructing the Secretary of Labor to establish new regulations requiring federal contractors to submit to the Department of Labor (DOL) summary data on compensation paid to their employees, including data by sex and race (79 FR 20751- 20752). Enforcement of equal pay laws is “impeded by a lack of sufficiently robust and reliable data on employee compensation, including data by sex and race,” the Memorandum explains, adding that the President’s National Equal Pay Task Force identified this lack of data as a barrier to closing the persistent pay gap for women and minorities.
The Memorandum directed the Secretary of Labor to issue a proposal on these new regulations within 120 days of April 8, 2014. On May 5, 2014, the OFCCP submitted the NPRM to the Office of Budget and Management (OMB) for review, and on August 5, 2014, the OMB approved it for Federal Register publication.
According to the OFCCP, the newly announced NPRM reflects:
(1) extensive stakeholder input collected prior to and during the 2011 ANPRM;
(2) the specific criteria set forth in the Memorandum to maximize the efficiency and effectiveness of the OFCCP’s enforcement programs, minimize the burden placed on federal contractors, and use data to encourage greater voluntary compliance with the law; and
(3) additional stakeholder input collected during listening sessions held following the release of the Presidential Memorandum.
The NLRB stirred a hornet’s nest on Tuesday when its Office of the General Counsel announced that McDonald’s will be named as a joint employer respondent with regard to any unresolved charges against its franchisees stemming from worker protests. The reactions were quick and pointed. It is important, however, to keep in mind the context of the development — for purposes of issuing a complaint — that the General Counsel is alleging a joint employer relationship. The Board has not issued a ruling that McDonald’s is in fact a joint employer of any of its franchisees’ employees, or that the global company bears any liability. But the move could signal one more shift in the already changing labor landscape.
It’s also no secret that the Board is reconsidering its long-standing joint employer standard. In May, NLRB extended an invitation to parties and interested amici to filed briefs addressing the Board’s joint employer standard, as raised in Browning-Ferris Industries (No 32-RC-109684). On April 30, 2014, the Board granted the employer’s request for review of a Regional Director’s decision and direction of election, finding it raised substantial issues warranting review.
Joint-employer relationship denied. McDonald’s denied any joint employer relationship with its franchisees, stating that the global fast-food giant “serves its 3,000 independent franchisees’ interests by protecting and promoting the McDonald’s brand and by providing access to resources related to food quality, customer service, and restaurant management, among other things, that help them run successful businesses.” This relationship, according to McDonald’s, does not establish a joint employer relationship under labor law. “This decision to allow unfair labor practice complaints to allege that McDonald’s is a joint employer with its franchisees is wrong,” Heather Smedstad, Senior Vice President Human Resources, McDonald’s USA, said in a statement. She also made it clear that the corporation intends to contest the allegation.
“McDonald’s also believes that this decision changes the rules for thousands of small businesses, and goes against decades of established law regarding the franchise model in the United States. McDonald’s, as well as every other company involved in franchising, relies on these existing rules to run successful businesses as part of a system that every day creates significant employment, entrepreneurial and economic opportunities across the country,” Smedstad continued. “McDonald’s does not direct or co-determine the hiring, termination, wages, hours, or any other essential terms and conditions of employment of our franchisees’ employees — which are the well-established criteria governing the definition of a ‘joint employer,’” the executive explained.
Franchise community alarmed. Not surprisingly, the General Counsel’s decision to allege McDonald’s is a joint employer with franchisees, should complaints issue, has sparked much concern in the franchise industry. International Franchise Association President & CEO Steve Caldeira, CFE, quickly released a statement regarding what he described as a “the decision by the NLRB Division of Advice recommending franchisors and franchisees can be designated as joint-employers,” calling it “both wrong and unjustified.” He continued, “This legal opinion would upend years of federal and state legal precedent and threaten the sanctity of hundreds of thousands of contracts between franchisees and franchisors, a bedrock principle of the rule of law.”
At the time of press, the NLRB had not made public any Advice Memorandum related to joint employers or to McDonald’s.
“Millions of jobs and the livelihoods of hundreds of thousands of independent franchise small businesses are now at risk due to the radical and unprecedented nature of this decision,’ Caldeira suggested. “Ruling that franchises are joint-employers will be a devastating blow to franchise businesses and the franchise model. Franchise job growth and new business formation have outpaced non-franchise growth for the last five years but will undoubtedly come to a screeching halt if this decision is affirmed by the NLRB’s New York Regional Office.”
Caldeira said that “[t]his recommendation is a drastic and overreaching solution,” and that ample federal, state and local remedies are available and used regularly to enforce current law. He pointed to the remedies of more limited NLRB action, state attorneys’ general action, and private rights of action to deal with labor violations. “Destroying the fundamental tenets of the franchise model would eviscerate the most successful business model in existence,” according to Caldeira.
Lawmakers react. On Capitol Hill, the development drew the ire of leading Republican lawmakers. House Education and the Workforce Committee Chairman John Kline (R-Minn.) issued a statement responding to the development, saying that the General Counsel has “determined McDonald’s Corp. and its franchisees are ‘joint employers’ — a decision he called “detached from reality.”
“While the board is considering this very issue, the general counsel is trying to rewrite the franchise model workers, employers, and consumers have known for decades,” Kline charged. “This is yet another activist decision from the general counsel’s office. Big Labor has scored once again at the expense of workers and employers. Let’s hope wiser heads prevail and this absurd decision is rejected.”
On the Senate side, Senator Lamar Alexander (R-Tenn.), the senior Republican on the Health, Education, Labor and Pensions Committee, also reacted quickly. “Imagine being an owner of a franchise business and being told that all the employees that you recruit, hire, train, pay, promote, and work alongside day after day are actually another company’s employees, too,” he said. “The NLRB General Counsel’s absurd determination ignores decades of precedent and plain old common sense in what can only be an effort to help labor unions add more members. It’s time to change the Board for good and ensure it’s the umpire it’s intended to be, not the advocate it’s become.”
Employee side of the equation. To place the controversial development in broader context and get a glimpse of the employee side of the equation, Employment Law Daily reached out to Marquette University Law School professor Paul Secunda. The decision by the NLRB General Counsel to treat McDonald’s, and presumably, other fast food restaurants, as joint employers could potentially have a large impact on protecting workers’ labor rights under Section 7 of the NLRA, he said.
“Of course, just because McDonald’s could be found liable, does not mean that they will, and many of the cases (68) were already found by the General Counsel not to have merit,” Secunda noted.
He also pointed to the significant challenges still facing workers who seek to organize unions at such workplaces or who seek to file an unfair labor practice claim against the company for unfair treatment. “On the election side, such fast food restaurants still have very transient workforces and it might be hard to keep the momentum of an organization campaign going as employees come and leave such jobs,” he suggested.
“On the unfair labor practice side, there are no compensatory or punitive damages for such claims under the NLRA,” Secunda noted. “The normal remedy is reinstatement with some form of backpay. Those types of damages may certainly help some workers. But the remedies for failure to bargain with a recognized union are very weak and may make it no more likely that a restaurant like McDonald’s will ever enter into a collective bargaining agreement with its workers.”
Turning his attention beyond the traditional Wagner Act model of labor law where unions are organized and then bargain with their employers for contracts, Secunda observed: “It may be that this joint employer decision is more important because of the alternative strategies that workers are increasingly using outside the traditional models of unionism, like the protests and pickets involved in these McDonald’s cases.”
Those strategies, according to Secunda, may prove more effective — regardless of whether a union is involved — if workers can involve a franchisor like McDonald’s in their allegations of unfair pay, benefits, and working conditions. “Not only does McDonald’s have a proverbial deeper pocket, but from a public relations perspective, it does not allow the corporate headquarters to deflect allegations down to the level of the franchisee.”
If McDonald’s is in fact found liable for committing an unfair labor practice, the decision finding it to be a joint employer will be undoubtedly be appealed to the D.C. Circuit or another court, and its fate there remains to be seen, Secunda point out.