New Labor Rules Will Screw Over Your Local McDonalds

In modern America, it’s often in the dusty halls of little-known bureaucratic agencies that some of the most economy-defining events take place. The most recent example is the National Labor Relations Board’s newly issued “joint employer” rule, which debuted last month to relatively little mainstream media attention. The rule is just the latest in the progressive left’s effort to bludgeon the country into a one-size-fits-all economic vision.

The NLRB’s new rule changes the definition of what constitutes a “joint employer,” which may sound like some arcane definitional technicality that only labor lawyers need to worry about. But in reality, it is a revision that will upend the business models of entire American industries. The rule specifies that a joint employer relationship will be found any time two entities share or co-determine the terms and conditions of employment. 

All that’s needed for this finding is for an entity to possess indirect control—even if it does not exercise that control—over workplace issues such as wages, scheduling, or health and safety rules. In layman’s terms: A parent corporation like McDonald’s could be deemed a joint employer with one of its franchisee outlets for something theoretically as small as creating rules for how to keep employees safe when operating the nugget fryer. The NLRB rationale for this change is that the prior Trump era rule allowed parent companies to unfairly avoid negotiating with workers and assuming liability for labor law violations.

The franchise model exists because it helps scale a business drastically beyond what a single centralized company could operate by itself. Deeming parent corporations joint employers would therefore undercut the entire rationale behind the franchise system if employees at thousands of outlets are suddenly deemed employees of the parent. This would make the parent company liable for potential labor law violations at discrete franchise stores, even though the real cause could simply be a poorly run outlet. It also empowers unions by giving them a foothold to collectively bargain directly with the parent corporation rather than having to organize at the individual franchisee level. 

According to the International Franchise Association, an Obama-era iteration of the joint employer rule—which the new rule largely presages a return to—led to a 93 percent increase in litigation and over 376,000 lost jobs. The franchisor-franchisee business model is one of the most important in America. In add