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IFA FILES JOINT EMPLOYER RULE COMMENTS TO THE DEPT. OF LABOR

International Franchise Association Argues in Favor of Proposed Rule; Asks for Additional Clarity
 

(WASHINGTON, JUNE 25) – The International Franchise Association (IFA) today filed comments to the U.S. Department of Labor (DOL) in support of the agency’s proposed rulemaking on the joint employer standard under the Fair Labor Standards Act. 

IFA’s comments argue that the DOL’s proposed rule correctly acknowledges that long-accepted business practices in franchising are not evidence of joint employment. IFA also encouraged the DOL to make clear that a franchise brand may be considered a joint employer of a franchise owner’s employees only if the two businesses share or together determine an employee’s essential terms of employment such as hiring, firing, discipline, and supervision. 

“The Department of Labor has put forward a rule that can add much-needed clarity for franchise businesses,” said IFA Senior Vice President of Government Relations and Public Affairs Matt Haller. “An expanded joint employer standard has cost the economy billions and slowed down hiring and job growth – this rule is a major step toward righting that wrong. IFA and America’s 733,000 franchise businesses applaud the Department of Labor for their efforts on this rule and look forward to its finalization.”

As part of its comments, IFA conducted extensive interviews with franchisors and franchisees to determine the effects of the expanded joint employer standard on a brand’s operation. Franchisors reported that an expanded joint employer standard makes it harder to resolve crises at franchise units that could jeopardize the overall brand, forced them to eliminate or curtail training and support to franchisees, and even made it more challenging to bring new franchisees from underserved areas or disadvantaged backgrounds into their system – hurting job creation and economic growth in areas that need it most. 

For their part, franchisee owners reported that they had less access to advice and training and a loss of collaboration and knowledge-sharing with their brand – which directly undermines a major benefit of the franchise business model. 

In addition, IFA also asked the DOL for clarity on whether 19 hypothetical examples of franchisor-franchisee relations would constitute joint employment. Those examples can be of use to franchise brands and business owners alike as they seek to grow their businesses in compliance with the law. 

IFA previously found that the expanded joint employer standard under a similar rule cost franchise businesses $33.3 billion per year, resulted in 376,000 lost job opportunities, and led to 93% more lawsuits.

LINK: IFA Comments to the DOL
 

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About the International Franchise Association
Celebrating 58 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 733,000 franchise establishments that support nearly 7.6 million direct jobs, $674.3 billion of economic output for the U.S. economy and 2.5 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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