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Care For A Joint? Courts And Gov. Agency Battle Over Franchises

A divide may be forming between courts and the National Labor Relations Board over the “joint employer” ruling.

In a statement issued to The Daily Caller News Foundation Friday, the International Franchise Association argued, “A ruling by a federal judge this week yet again affirmed the definition of ‘joint employer’ as it relates to franchise businesses, in direct contrast to recent moves by the National Labor Relations Board to scrap the definition and make individually-owned, small-business franchisees one and the same with their corporate franchisors.”

Last year, the NLRB issued a controversial decision that made franchisors “joint employers” with the individual franchisees they contract out to. The decision has the potential to dramatically overturn decades of established laws and greatly affect the franchise model for restaurants and other small businesses that contract with a larger brand name.

On Tuesday, a judge ruled in Vann v. Massage Envy Franchising LLC that the franchisor was not the employer of the individual businesses they contract out to.

“In a case involving a massage therapist who alleged violations of minimum wage laws, Judge Roger T. Benitez of the U.S. District Court for the Southern District of California ruled on January 6 that Massage Envy, a corporate franchisor, was not the employer of therapists in its franchisees’ California stores,” IFA noted.

They added, “Judge Benitez found that although the national company set standards, procedures and rules for local store operators, the individual alleging violations failed to show that Massage Envy was a joint employer with its franchisees.”

“The ruling is the second major judgment in recent months which upheld a decades-old understanding of the meaning of joint employer,” The IFA concluded. “In late August, 2014, the California Supreme Court declined to hold franchisor Domino’s Pizza LLC liable in a sexual harassment case.”

Matt Haller, senior vice president of Media Relations and Public Affairs, told TheDCNF, “It’s pretty clear, again, that the NLRB continues to ignore established law.”

“Clearly, franchisors are not joint employers with their franchisees,” Haller said.

The NLRB has defended their ‘joint employer’ decision by stating that franchisors have too much control over the independent franchisees they contract with for them to be consider their own operations.

As the NLRB argued, “Through its franchise relationship and its use of tools, resources and technology, engages in sufficient control over its franchisees’ operations, beyond protection of the brand, to make it a putative joint employer with its franchisees, sharing liability for violations of our Act.”

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