Recently, I was contacted by a former employee of a gas station that was part of a huge multi-national conglomerate oil company. The employee had been denied an accommodation based on her disability, denied medical leave, and treated terribly by the owner of the franchise. The employee reached out to the HR department of the oil company, which did nothing to remedy her situation. She was fired shortly thereafter in retaliation for going to HR.
So, who is the employer? Is the employer the individual which operated the franchise? Or is the oil company on the hook?
The answer appears to be: It depends.
If the franchisor (in this case the oil company) exerts sufficient control over the operations of the franchisee, the franchisor can be held liable as a “joint employer.” Recently, the NLRB, which acts as a prosecutor in holding companies liable for labor law violations, found that McDonalds could be liable for race harassment and discrimination at one of its franchise locations in Virginia.
The NLRB determined, based on an exhaustive investigation, that McDonalds was a joint employer because it manages essential parts of the franchise operations by requiring franchisees to adhere to multiple policies, practices and procedures, through oversight of the operations, and by use of technology.
Expect employers to mount a vigorous attack on this decision. The financial implications for franchisors are enormous, as they would face significant legal costs and exposure. Franchisors have already threatened to limit the number of new franchises they authorize because of the NLRB decision.
Time will tell whether the Court in the case I’m handling will find the oil company was a joint employer. I look forward to litigating this issue in holding the franchisor accountable and winning.