Companies, colleges and others who
have outside contractors operating their on-site food services should beware of
the risks they face in the rapidly evolving arena of employment law. The widely publicized finding of the National
Labor Relations Board General Counsel that McDonald’s is responsible for the
employment actions of its franchisees is fair warning.
The NLRB’s General Counsel has
“found merit” in charges that McDonald’s and some of its franchisees “violated
the rights of employees,” according to a NLRB press release. “If the parties cannot reach settlement in these
cases, complaints will issue and McDonald’s USA LLC will be named as a joint
employer respondent.”
Another warning comes in the NLRB’s
current consideration of the relationship between companies and on-site
contractors. The case involves a company
and its on-site service contractor. A
union is trying to have the company declared a joint employer who must
participate in the collective bargaining between the contractor and the union. The case is pending.
If these views stand, it isn’t a far reach to
see how an organization could be held responsible for the employment actions of
food service and other contractors on its premises.
The U.S. Department of Labor, other regulators
and labor unions have long tried to tie the host company or institutions to its
service companies’ employees as a joint employer. Sometimes, the host has made it easy to be
linked – and held responsible financially – for actions over which it has, at
best, only indirect control.
The NLRB defines joint employment as
when “two entities . . . share or co-determine those matters governing the
essential terms and conditions of employment [including] matters relating to
the employment relationship such as hiring, firing, discipline, supervision and
direction.”
When an organization requires its
onsite food service contractor to submit candidates for key management
positions and makes the selection itself, it’s opening the door to a finding
that it is a joint employer.
Other actions organizations often
take that can lead to a finding that it is a joint employer with its on-site
contractor include:
• Negotiating with the contractor
over the wage rates, pay raises and benefits the contractor offers its
employees working on the premises.
• Directing the contractor to
promote, demote, transfer or take another action affecting one or more of the
contractor’s employees.
• Telling the contractor what hours
its employees should work, rather than what hours of service to provide.
• Paying bonuses or making other
payments to the contractor’s employees or authorizing the contractor to make
the payments and reimbursing the expense.
• Treating the contractor’s
employees as “members of the family” with privileges the same as, or similar
to, those of its own employees – access to the on-site fitness center, for
example.
The basic defense against a claim of
a joint employer relationship is a strong, clear statement in the operating
contract that the contractor is the sole employer and has sole authority over
all aspects of its employment relationships.
But if management interferes,
even indirectly, in the actions of its on-site contractor related to the
contractor’s employees and their wages, working conditions and the like, then
the barrier created in the contract crumbles.
Clarion Group can analyze your dining and hospitality services and contractual relationship with your provider to help you avoid creating a joint employer relationship -- and improve operational and financial performance of you services. For information, contact Tom Mac Dermott, president (603/642-8011 or TWM@clariongp.com) and visit our website, www.clariongp.com.
