While Congress is Away, NLRB Still Plays, Upending Joint Employer Standard for Franchise Businesses
FOR IMMEDIATE RELEASE
WHILE CONGRESS IS AWAY, NLRB STILL PLAYS, UPENDING JOINT EMPLOYER STANDARD FOR FRANCHISE BUSINESS OWNERS
WASHINGTON, D.C., Aug. 27, 2015 – The International Franchise Association criticized a decision by the National Labor Relations Board (NLRB) today that declared Browning-Ferris Industries to be a joint employer with Leadpoint, a staffing services company. IFA said the decision ignores nearly 50 years of bipartisan policy and decades of court and regulatory rulings and will ultimately harm our national economy.
“While Congress is away, the NLRB clearly still plays. 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. In doing so, the Board ignored decades of judicial precedent and bipartisan policy agreement dating back to the Johnson Administration to invent new labor law. The Browning-Ferris decision is proof that the NLRB may target parties to any business contract in pursuit of their ideological agenda of promoting unions above all else. 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 ruling also threatens millions of jobs that franchises create across the country,” IFA President & CEO Steve Caldeira, CFE, said.
“The Board’s tortured analysis will undoubtedly be met with skepticism and will be rejected by local franchise owners, legislators and, ultimately, the courts,” Caldeira said. “IFA and its allies are asking Congress to intervene to halt these out-of-control, unelected Washington bureaucrats to preserve the established joint employer standard relied upon by America’s 780,000 franchise businesses and the 8.5 million jobs they directly create.”
According to long established practice and law, local franchise owners control their own hiring practices, working conditions, wages, and hours of operations and file their own taxes. None of these decisions are controlled by the brand company. Each local franchise business owner operates a separate company independent of the brand company. Therefore, it is clear that franchise employees are completely independent of the brand company.
However, under today’s ruling the NLRB would consider a whole multitude of factors – completely unrelated to employees’ condition of employment – as indicative of joint employment. Prior to today, to be deemed a joint employer, two or more companies must have exercised direct operational and supervisory control over an employee. Under this new interpretation, the NLRB is expanding that and applying a broader “economic realities” test to include “indirect control” or even “potential, unexercised control”. These changes to the joint employer standard could impose new collective bargaining obligations and allow unions the ability to strike or picket a large entity compared to the location where there is a dispute. The new standard would also increase the likelihood of union “campaigns” against national businesses, while forcing small businesses to become engaged in protracted, unnecessary and costly legal battles.
IFA has been working with the Coalition to Save Local Businesses (CSLB) to inform Members of Congress about the devastating economic impact of redefining the current joint employer standard would have on franchised businesses and the overall U.S. economy. As part of its involvement with the coalition, IFA will ask Members of Congress to support legislation that would codify the decades-long and widely-accepted definition of what constitutes a joint employer.
“Today’s NLRB decision is a seismic shift in the Board’s employer definition and, without any Congressional or court action could significantly alter the face of American business as we know it,” Caldeira said. “If allowed to go into effect, the impact of this new joint-employer rule would be sweeping and widespread, create havoc for the franchise industry and, ultimately, would inflict serious damage to our nation’s economy.”
About the International Franchise Association
Celebrating 55 years of excellence, education and advocacy, the International Franchise Association is the world's oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising and the more than 780,000 franchise establishments that support nearly 8.9 million direct jobs, $890 billion of economic output for the U.S. economy and 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law, technology and business development.
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