In October 2023, the National Labor Relations Board (NLRB) issued a new standard for addressing joint employer status, and the impact on the franchise sector will be significant.  Under the new standard, an employer may be considered a “joint employer” with (an)other organization(s) if there is a shared employment relationship between the organizations and the employee where the organizations codetermine the terms and conditions of employment.  For franchisors and franchisees alike, this presents a unique question about whether certain employees might be considered “shared” under the terms and conditions of employment as defined by the NLRB

  • Wages, benefits, and other compensation; 
  • hours of work and scheduling; 
  • the assignment of duties to be performed; 
  • the supervision of the performance of duties; 
  • work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline; 
  • the tenure of employment, including hiring and discharge; and 
  • working conditions related to the safety and health of employees.

This new standard codifies a broad expansion of the previous definition of joint employers enacted in 2020.  Importantly, there are no carve-outs or exceptions that would potentially exempt franchisors and franchisees provided by the NLRB in the new standard.  You can imagine a simple scenario in a franchisor-franchisee relationship where the franchisor requires of the franchisee certain benefits, hours of operation, and working conditions (perhaps as rudimentary as uniforms) as a part of being a franchise.  Under the new standard, what were previously considered simple requirements establishing uniformity across franchises could now make the franchisor a joint employer.  


So why is the new standard significant?  

Preliminarily, it is important to note that the new standard does not require that an employer actually exerts control over the employee(s).  The mere fact that the organization has the authority to exert control qualifies it as a joint employer.  This is in direct contradiction to the 2020 standard, which explicitly required “substantial direct and immediate control” over the terms and conditions of employment in order to countenance a finding of “joint employer” status.  

More importantly, the ramifications of being a joint employer are simple.  If an organization is determined to be a “joint employer” of an employee, the organization is required to collectively bargain with the employee(s) over the terms and conditions of employment.  This could result in multiple employers being present at the collective bargaining table, resulting in a far more difficult and convoluted negotiation.

Additionally, joint employers will be responsible, and potentially liable, for unfair labor practices as well as any other workplace violations that fall under the purview of the NLRB.  


Could the new standard have an impact on class actions and mass arbitrations?

Potentially, yes.  The new standard seems to dictate that the number of technical “employers” could increase exponentially.  At the highest level, this means there will be more employers to potentially pursue in litigation.  Organizations who previously thought they were insulated by franchise agreements with indemnity clauses could find themselves liable for failures to collectively bargain, unfair labor practices, and additional workplace violations across an expansive employee base.

Whereas the standard has usually been that workplace liability traditionally sat with the actual employer and not the downstream third parties, the new standard may double or triple the organizations who may potentially be liable.  Depending on whether there is an enforceable arbitration agreement and class action waiver, this could result in larger, or additional, class actions and mass arbitrations.      


What can be done?

First, it will become imperative to use contracts to specifically spell out who controls all aspects of the terms and conditions of employment.  The clearer the lines, the better.  Any failure to delineate what entity is responsible for the terms and conditions of employment set forth by the NLRB will result in potential liability.  While this may be difficult given the realities of the contractual relationship, organizations will need to think critically about what they can and can’t do if they wish to avoid being a joint employer and will need to spell out those conclusions in their contracts.    

Additionally, arbitration and indemnity clauses may become even more key to agreements between franchisors and franchisees.   

Where there is disagreement about who dictates the terms and conditions of employment, these issues can be effectively arbitrated or mediated before there is a lawsuit regarding liability.  More specifically defined arbitration agreements with the actual employees would help as well creating a faster, more efficient environment for the resolution of potential claims.

Moreover, clearly delineated indemnity clauses would also help define who bears the brunt of the costs and expenses in the event there is a filed dispute potentially alleviating the potential financial burden to the franchisor.        


When will the new standard be implemented?

Originally, the goal was to implement the new standard by December 26, 2023.  As expected, however, there have been a number of legal challenges, and accordingly, the NLRB has pushed out the new implementation date to February 26, 2024.  Whether this becomes the actual implementation date or there needs to be additional extensions remains to be seen.  Regardless, organizations need to be preparing for the eventual implementation as the change to the joint employment standard promises to significantly alter how business is done.      



Collin Williams is an attorney, founder, and chairman of New Era ADR, a digital platform revolutionizing alternative dispute resolution. The inspiration for New Era came from the first 11 years of Collin’s practice, which was spent as a litigator at Greenberg Traurig, LLP and Butler Snow, LLP, where he litigated hundreds of cases, many of which he took entirely through trial or arbitration/mediation. Collin may be reached at or visit