Bye-Bye Franchisee

August 2014
By: Walter J. Liszka, Esq.

The first "nail in the coffin" in doing away with the franchisor/franchisee relationship and jeopardizing a vast number of small business operators in this country (estimated at a little over 85% in the restaurant industry), has been "nailed" by the National Labor Relations Board (NLRB) General Counsel. Robert F. Griffin, Jr., who was sworn in for a four (4) year term as General Counsel of the NLRB on November 4, 2013 and, as an aside, was a NLRB member from January 9, 2012 through August 2, 2013, has issued notifications to various NLRB Regional Offices that they are authorized to proceed with forty-three (43) complaints of Unfair Labor Practices against not only the franchisees of the locus of the dispute but, as well, against McDonald's, USA as a "joint employer." While there were a vast number of complaints filed against McDonald's franchisees and McDonald's since November 2012 (a total of 181 complaints), in his own authoritative way, General Counsel Griffin has authorized not only the issuance of the aforementioned forty-three (43) complaints but continuing investigation of sixty-four (64) other cases by his office to see if complaints should issue in these cases.

It is extremely interesting to note that the General Counsel's action runs parallel to the consideration by the NLRB in a separate and distinct matter (Browning-Ferris) as to whether or not the current standard used by the NLRB (currently legally separate and distinct business entities that in unison exert a significant and direct degree of control over employees and their essential "terms and conditions of employment" are considered as joint employers) should be changed. Under the approach being taken by the General Counsel, he wants to change that standard even though there is in place a very distinct and currently legally enforceable franchise agreement between McDonald's and its franchisees that requires the franchisees to comply with certain requirements dealing with food purchases and preparation of foods to protect the McDonald's brand, but cedes to the individual franchisees all control over hiring, firing, and determining the terms and conditions of employment of their employees.

While the directive of the General Counsel of the NLRB is not law and, in fact, does not have to be followed by the NLRB itself, it is indeed curious that it comes out in parallel to the current pending of the Browning-Ferris case. There may be other very serious issues for employers, be they a franchisor or franchisee, with regard to the actions of the NLRB General Counsel.

As everyone is well aware, there is afoot a ground swell of employee protests against McDonald's and various other fast food entities for an increase in the minimum wage. This effort is being strongly supported by the Service Employees' Union. Companion to this effort to increase the minimum wage through employee protests, the "all omnipotent President Obama" has seen fit to issue another of his numerous Executive Orders increasing the minimum wage for employees of all federal contractors. Are these merely concentric circles that are spinning on their own axis in the night with no connection? If any reader of this article believes that, the author has some real cheap land in Florida because it is under water!

There is no doubt in the mind of the author that should NLRB General Counsel Griffin's approach on joint employer status gain traction, it will quickly be adopted by other federal governmental agencies (EEOC and USDOL Wage and Hour Division) with regard to their investigations of "joint employers." Certainly the next few years of the Obama Administration and his "lap dog" appointees in all government agencies are going to be very interesting.

 
Questions? Contact Walter J. Liszka, Managing Shareholder of Wessels Sherman's Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com .

DOL-Technology Witch Hunt?

July 2012
By: Walter J. Liszka, Esq.

As technology improves and more of the workforce becomes conversant with Smart Phones, iPhones, and Touch Pads, the chance of the ever-expanding litigation dealing with Wage and Hour claims becomes greater. In an article that appeared in our June 2011 entitled "A Bridge to Justice - A Bridge Too Far?" the author discussed the unprecedented collaboration between a Federal Government Agency [Department of Labor (DOL) - Wage and Hour Division] and the American Bar Association (ABA) Standing Committee on Lawyer Referrals and Information Systems. That article detailed the fact that the DOL and the ABA had entered into an approved attorney referral system that would allow the DOL to refer cases that they could not handle to "qualified counsel." It is now becoming quite clear that the DOL - Wage and Hour Division is expanding its ability to interface with both employees and the consuming public.

The DOL recently created a Smart Phone app "Eat, Shop and Sleep" which allegedly allows users to search for places to eat, shop, and sleep, and also to review customer reviews of the entities providing those services. However, this Smart Phone app goes a little bit further in that it provides to its users (consumers) information with regard to DOL enforcement issues (i.e. health issues, safety issues, and labor law violations). It permits the user to report a company name, any health or labor law violations, and furthermore, permits the user to find out if a "company name" indicates previous Fair Labor Standards Act (FLSA) violations.

By hitting the "take action" button that permits a user to report violations to the DOL, the user is also directed to DOL contact information such as the phone numbers and office locations; a link to an online complaint form; a link to online workers' rights; and the Occupational Safety and Health Administration (OSHA) data. Obviously, the DOL thinks its Smart Phone app of "Eat, Shop and Sleep" can lead to the discovery of Wage and Hour issues.

As well, the DOL has also developed a free time sheet app that allows employees a simple way to track their hours worked and wages owed. According to DOL Secretary Hilda Solis, this application will not only "empower workers" to protect their interests but also will be "an invaluable source of information that the Wage and Hour Division can use in investigating employers who have failed to maintain accurate records." This app is compatible with iPhone, iPad, iPod Touch, and is available as a free download at the DOL site. As any employer who has become embroiled in an FLSA litigation matter clearly knows, it is the responsibility of the employer to maintain, keep, track, and provide accurate and complete information with regard to an employee's hours of work and compensation. A failure to keep and provide this type of information is, in and of itself, a violation of the FLSA.

In any FLSA litigation, it is the employee's initial burden to prove that the employer had committed a violation. An employee may satisfy this burden by proving that he/she has performed work for which he/she was not compensated by producing sufficient evidence to show the amount and extent of that work as a matter of reasonable inference. Once the employee has established their initial burden, which, based on case review, is not very difficult, the burden of persuasion shifts to the employer to dispel or disprove the employee's position. Assuming, solely for purposes of discussion, that the employer's records are inaccurate or inadequate, the reasonable inferences of the employee will be accepted. One must wonder if this new DOL time sheet app may bolster an FLSA claim by an employee for a wage claim. Will a court find this type of evidence "more compelling" than records kept in a notebook? As Director Solis stated at the American Society of Safety Engineers Conference in 2009, "make no mistake, the DOL is back in the enforcement business." Certainly, the enhanced use of technology by the DOL is proof of that fact.

Obviously, the technological age provides great advances for dissemination of business information. As suggested in this article, it may also provide the DOL with a chance to further intensify their "enforcement" for FLSA violations.

 

Questions? Contact Walter J. Liszka, Managing Shareholder of Wessels Sherman's Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com