Letter and efforts in the state legislatures add bipartisan push to clarify evolving joint employer standard.
By Suzanne Beall and Jeff Hanscom
A common theme in Washington this year is partisan gridlock. Some political analysts believe the country continues to be in a state of constant electoral debate, even with 18 months before the next election. IFA staff are frequently confronted with the challenge of finding bipartisan energy to advance legislative solutions important to the franchise community, particularly on the evolving joint employer standard.
The month of May presented a significant turning point at the federal level. On May 8, 13 House Democrats sent a letter to the National Labor Relations Board asking for clarification on a 2015 Advice Memorandum regarding the joint employer issue.
The Congressional letter asks NLRB to provide clarity to small businesses by expanding on the following issues regarding the Freshii Advice Memorandum:
1. May the April 28th memorandum be used as a blueprint for all franchise systems notwithstanding the joint employer standard established in August 2015, and
2. How much flexibility will franchisors have to implement, articulate, and enforce brand standards before they are deemed to cross the line into the forbidden areas of “indirect”, “unexercised” or “potential” control for joint employer purposes?
2. How much flexibility will franchisors have to implement, articulate, and enforce brand standards before they are deemed to cross the line into the forbidden areas of “indirect”, “unexercised” or “potential” control for joint employer purposes?
IFA has long believed that the often-cited Freshii memo is an outdated document that does not carry the force of law. While proponents of the unlimited joint employer liability are quick to cite the Freshii memo in an effort to lessen the serious concerns of local businesses, the bottom line is that the memo became outdated when NLRB issued its expanded joint employment test in the Browning-Ferris Industries decision in August 2015. As such, local businesses cannot confidently rely on the Freshii memo as a legal guide to help them navigate the unlimited joint employer standard.
IFA applauds the House Democrats for asking the right questions about NLRB’s Freshii memo and is appreciative to them for seeking certainty for small business owners.
The letter was led by Rep. Scott Peters (CA-52) and co-signed by Reps. Ami Bera (CA-07), Lou Correa (CA-46), Jim Costa (CA-16), Henry Cuellar (TX-28), Vicente Gonzalez (TX-15), Josh Gottheimer (NJ-05), Dan Lipinski (IL-03), Collin Peterson (MN-07), Jacky Rosen (NV-03), Bobby Rush (IL-01), Kurt Schrader (OR-05), and Kyrsten Sinema (AZ-09).
Continuing the bipartisan theme of May, North Carolina Governor Roy Cooper (D) became the first Democratic governor to sign proactive joint employer legislation clarifying the relationship between franchisors and franchisees. Gov. Cooper joined 15 of his colleagues across the country by signing the bill into law May 5. With 16 states having now examined the expanded joint employer standard put forward by the NLRB and decided to act restoring the pre-Browning Ferris Industries standard, IFA plans to continue aggressively pursuing legislation like what Gov. Cooper signed.
As the 2017 legislative season winds down, the summer will entail cultivating existing relationships across the states and building new ones to solidify champions in legislatures who have yet to take up the issue. It is certainly a realistic possibility that by this time in 2018, a majority of states will have taken action. Either way, the bipartisan theme will undoubtedly continue in Washington and across the states, as policy makers across the spectrum understand the importance of this issue to small business entrepreneurs everywhere.
Suzanne Beall is IFA’s Assistant Vice President of Government Relations & Public Policy for the International Franchise Association. Jeff Hanscom is Senior Director of State Government Relations & Public Policy for the International Franchise Association.