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Are you Going to Become a Joint Employer?

On August 27th the U.S. National Labor Relations Board (NLRB) general counsel announced their decision to change the legal standard used to determine what it means to be a joint employer. The standard before the ruling indicated that a parent company would only be considered a joint employer if they exercised “’direct and immediate’ control over employment matters” (Daniel Wiessner, Reuters). With the new ruling, we see that even general oversight from the parent company is now grounds for a joint employer status to be issued. This includes requirements for employee work performance at the franchise location, or implementation of a standard scheduling system for employees that is mandated by the parent company (For the full ruling take a look at the Board Decision).

This has far-reaching implications for not only the franchise business model that is used heavily by the fast food and retail industries, but it also applies to any industry that takes advantage of the services staffing agencies and contractors provide. The hotels and locations that utilize these services will now become liable for the employees provided by the agencies.

This change will also allow many franchise employees to unionize while giving them the right to bargain directly with the parent company instead of being restricted to the specific franchise location. This is great news for workers who are fighting for higher wages and better working conditions. On the flip side of the coin, it is also a potential headache for the parent companies that will become liable for the actions of their contracted employees and vendors. A reduction in the number of franchise locations being utilized by corporations may occur as they become more inclined to simply run the locations themselves or shut them down in an attempt to reduce risk. This may seem like a better option than licensing to a franchisee whose missteps could ultimately fall back onto the parent company.

So what does this mean for you in the hospitality industry? If a hotel uses a staffing agency to provide staff, the hotel is now liable for the staffing agencies employees as well. If the agency fails to pay its workers overtime or fails to pay wage taxes, they would now be jointly liable with the staffing agency. This is why using a reputable and trustworthy agency is going to become more important than ever.

If you are looking for a staffing agency that is always in compliance with state and federal laws that you know you can trust, contact Xclusive Staffing to see how we can best serve your needs.

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