Clarion Food Consulting Group Cautions of Risks for On-Site Food Service Contractors

The clients of food service and other on-site service providers are now considered ‘joint employers’ with their contractors and equally responsible for the contractor’s employees as though they issued their paychecks directly,” warns Tom Mac Dermott, president of the food service and hospitality services consultancy Clarion Group.

Kingston, NH, July 17, 2016 --( “Since the National Labor Relations Board ruled last year that the host company must participate in an on-site contractor’s union relations, other government agencies have adopted the same position, including the Department of Labor and OSHA,” he said and added, “Based on an attorney’s advice, we had warned our clients last year, after the NLRB ruling, to expect other agencies to adopt the NLRB’s position.”

A new risk for companies whose food services are contractor-operated is created by the Department of Labor regulation that increases the minimum salary a person can be paid to be considered exempt from overtime pay to $47,476. If the contractor fails to comply with the new rule, the host organization is considered equally liable.

“Our review of contractors’ payrolls on our clients’ behalf found many contractor employees that were classified as salaried, like assistant managers, office managers and sous chefs didn’t either earn the new minimum salary or whose jobs wouldn’t be classified as exempt at any pay rate – or both,” Mac Dermott said. “In a state or federal labor department audit, both the contractor and the host organization would be held equally liable for back pay and penalties.”

The DOL intends to enforce the rule. “We’re identifying the contracting stream or supply chain,” David Weil, Administrator of the Wage and Hour Division, said “so those at the top of the chain will evaluate the compliance practices of those below.”

The DOL says the joint employer liability extends to all labor-related incidents, including wage, harassment, discrimination and other employee-employer disputes. Some states, including New York are adopting this position. New York is suing Domino’s over alleged wage thefts by some of its franchisees.

"Our advice to clients,” Mac Dermott said, “is the reverse of our former recommendation. Now, it’s important to closely monitor and control the labor relations of you food service contractor and other on-site providers. The money, time and grief you save will be your own.”

Clarion group consultants include labor relations and their potential impact on clients in or operational and financial evaluations of corporate and campus dining services.

About Clarion Group

Clarion Group is a consulting firm that advises companies, professional firms, colleges and universities, independent schools and institutions in the management, operation and improvement of their in-house employee/student food services, catering, conference, lodging and related hospitality services throughout the U.S. and Canada.

For information, contact:
Tom Mac Dermott, FCSI, President
Clarion Group
PO Box 158, Kingston, NH 03848-0158
603/642-8011 or
Clarion Group
Tom Mac Dermott