On August 27th, the National Labor Relations Board reached a decision that can greatly change the franchise business model. The decision ruled that companies will now be held responsible for labor violations committed by their contractors. The ruling was made after evaluating whether Browning-Ferris Industries (BFI) was a joint employer with Leadpoint Business Services, the contractor that supplied cleaning and housekeeping services to BFI.
What does this mean for franchise businesses?
If you are a large franchisor (think McDonalds, Subway), you can now be held liable for all the hiring and firing decisions made by any of your franchise locations. This decision will likely be challenged, and we’ll keep you updated as new changes are made.
Learn more about the ruling here.