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CARSTAR: NLRB ruling on joint employers won’t affect local auto body franchises

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Business Practices | Legal

A National Labor Relations Board ruling lamented by a national franchise organization really won’t be an issue for CARSTAR and its network of owner-operated stores, the chain said Wednesday.

The NLRB in a 3-2 ruling Aug. 27 determined that both a contractor and the actual California business using the contractor’s staffers should be treated as joint employers for the purposes of union organizing.

“In finding that (Browning Ferris Industries of California) was a joint employer with Leadpoint, the Board relied on indirect and direct control that BFI possessed over essential terms and conditions of employment of the employees supplied by Leadpoint as well as BFI’s reserved authority to control such terms and conditions,” the NLRB wrote in a news release.

The International Franchise Association attacked the decision in a news release which said the decision could make brands with “indirect control” or possibly “potential, unexercised control” over a locally owned franchise a joint employer, even though the local owner still retains full control over hiring, hours, wages, conditions and taxes.

“The NLRB today satisfied the politically-motivated requests of organized labor and manufactured a new joint employer standard that small businesses have long been bracing for,” IFA CEO Steve Caldeira said in a statement. “… The ruling jeopardizes small employers in numerous sectors and the future viability of the franchise model of doing business, which has been a hallmark of economic growth and small business ownership opportunities for thousands of aspiring entrepreneurs.”

The NLRB dissent also argues the ruling “fundamentally alters the law” for franchises, and national media reports have also featured analysis that the ruling could, if allowed to stand, possibly force national chains to deal with unions organized at a local, independently owned franchise.

However, the majority NLRB ruling stated that the decision was limited to the circumstances of that particular case alone and mocked the “long and hyperbolic dissent” stating it had broader implications.

CARSTAR seemed to agree.

”As North America’s largest franchisor in the collision repair industry, we have been following this issue closely,” CARSTAR said in a statement Wednesday. “It is our belief that, like other major franchisees, this ruling and the redefined standard does not apply to our corporate franchise structure or our franchisees’ business model.  CARSTAR does not control any aspects of the employment relationship of its franchisees and their employees.  Based on this, we feel that there is no reason for our franchisees to be concerned at this time.”

More information:


International Franchise Association, Aug. 27, 2015