Two Important NLRB Decisions: When Franchisees/Franchisers are a Joint Employer and Forming Micro Bargaining Units in Retail

NLRB General Counsel Alleges McDonald's Has Joint Employer Status With its Franchisees

On July 29, 2014, the General Counsel for the National Labor Relations Board (NLRB), Richard Griffin, authorized NLRB Regional Directors to issue complaints in 43 unfair labor practices cases against McDonald's USA LLC. The cases represent a portion of the 181 cases that the NLRB has received since November 2012 wherein McDonald's is accused of unfair labor practices. Significantly, Griffin's announcement permits McDonald's to be named as joint employers, along with the franchisees who operate the restaurants.

Griffin's announcement comes while another significant case, Browning-Ferris Industries of California, Inc., also regarding the appropriate National Labor Relations Act (NLRA) standards for determining joint employer status, remains pending.

NLRB Rejects Union's Partial Combination of Retail Departments to Form a Micro Bargaining Unit

In a Neiman Marcus Group, Inc., 361 N.L.R.B. No. 11 (2014), the NLRB held that two groups of shoe sales employees did not share a community of interest sufficient to form an appropriate bargaining unit under the Specialty Healthcare standards for micro bargaining units. In Neiman, the union sought to combine shoes sales employees from two different departments of a New York City store: a group of 35 shoe sales employees working in a department called Salon Shoes, with a group of 11 employees working in the Contemporary Footwear section of a larger department called Contemporary Sportswear.

The NLRB concluded that, while the two groups of employees shared many similarities-- both were located in the same store, had common sales goals and objectives, were paid a draw versus commission basis and were not required to have prior experience-- they nonetheless lacked the required community of interest. The NLRB focused on the fact that the two groups fell outside of the departmental lines the employer had established. The NLRB observed that while other factors could outweigh a departure from the employer's organizational structure, such as a significant interchange of employees or common supervision, no such facts were present here. Thus, the NLRB concluded that, “while some factors favor a finding of community of interest, they are ultimately outweighed on these facts, by the lack of any relationship between the contours of the proposed unit and any of the administrative or operational lines drawn by the employer (such as departments, job classifications, or supervision), combined with the complete absence of any factors that could have mitigated or offset that deficit.”

The Neiman case is significant for retail employers who want to prevent unions from forming bargaining units through piece-meal selection of employees because it reinforces the point that employer's own organizational structure – a topic the employer can control-- is important to the micro bargaining unit analysis.