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Disenfranchising Franchises

(Justin Sullivan/Getty Images)

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Another day, another radical move from the Obama administration. In a big win for the more opportunistic corners of the organized-labor movement, the National Labor Relations Board decided this week that, in a range of labor cases involving McDonald’s, it will consider the corporate parents of franchise businesses liable for the labor agreements reached between franchises and their employees. The NLRB has maintained otherwise for 30 years, refusing to consider corporations with franchises to be part of a “joint employer” arrangement.

Why decide that corporations are employers of employees whom they don’t hire, don’t pay, and can’t fire? Because the decision likely makes it easier for employees at franchise businesses to unionize on a national level and to bring wholesale complaints against national corporations. This is a bad deal for franchise owners, of course, who run hundreds of thousands of American small businesses, and it will hurt, or fail to help, their workers.

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Those workers have shown little interest in unionization and mass movements that the NLRB decision could enable. Incidentally, a number of the decisions that could change the joint-employment precedent concerned last year’s strikes in which hundreds of fast-food workers (out of the industry’s millions of employees) demanded a $15-an-hour minimum wage. That theoretically national movement is a concoction of Big Labor organizations such as SEIU. They are much less interested in raising McDonald’s workers’ wages than they are in expanding the financial and political resources they can draw on for progressive causes.

That this decision rests on political ambition, not economic realities, is reflected in its sheer illogic. Franchises hire, fire, pay, and discipline their employees — those responsibilities have always determined the employer in employment law. Meanwhile, McDonald’s suggests things like how often the bathrooms ought to be cleaned and determines how much Big Mac sauce needs to be squirted on each tile of meat. The power that McDonald’s corporate exercises with the latter regulations is the NLRB’s justification for holding it liable for workers’ treatment just as a franchise owner, the actual employer, is.

It’s a justification invented to serve the necessary outcome, of course, predetermined by the pro-union loyalties of the NLRB under President Obama.

The board has proceeded with a number of unlawful efforts to shore up Big Labor’s crumbling edifice. In an attempt to stop these abuses, the Senate repeatedly rejected President Obama’s nominees to the NLRB in 2012 (one of them was the general counsel who issued this week’s ruling, Richard Griffin). So Obama bypassed the Senate, appointing them in a manner that the Supreme Court ruled unanimously earlier this summer was unconstitutional.

That was a procedural matter, but it underscored the real consequences of having the NLRB packed with union advocates. The federal court system, to which the planned appeal by McDonald’s will go after the NLRB, doesn’t proceed with quite the efficiency of your average fast-food joint, but here’s hoping this foolish ruling will be undone before it can start to hurt workers and small businesses.



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