Fool Me Twice, Shame on Me: Franchise Critic David Weil Nominated to Return to the Department of Labor

June 28th, 2021

Franchise businesses have faced an historically burdensome year-and-a-half during the COVID pandemic. Over 30,000 franchise businesses closed their doors for good during 2020, and many more are still trying to recoup their pre-pandemic market demand and revenue.

One of the headwinds blowing toward franchising during the economic recovery is increased regulatory risk. Perhaps there is no better personification of this uncertainty facing franchise businesses than Dr. David Weil, the Brandeis University professor who President Biden recently nominated to lead the Department of Labor’s (DOL) Wage & Hour Division, a critical office responsible for enforcement of all federal minimum wage, overtime and family leave laws. It appears a U.S. Senate committee will consider Weil’s nomination to lead the agency in July, and IFA will be strongly opposing his confirmation.

With everything going on in the world, why should anyone in franchising care about a potential agency subhead like Weil? Its because there’s perhaps no regulator that has a more biased view of franchising than Weil, and few regulators would be in a better position to be disruptive to franchising than Weil. Plus, Weil is a seasoned regulator who previously held the same role at DOL from April 2014-January 2017. If confirmed as head of the Wage and Hour Division, Weil would again be in position to practically enact FLSA aspects of the joint employment and independent contractor provisions of the PRO Act without action by Congress. He will also be afforded a second chance to enact a “white collar” overtime exemption regulation he originally finalized in 2016, before it was struck down in federal court.

Weil is the foremost proponent of the “fissured workplace” theory, which alleges that outsourcing, independent contracting, and franchising are directly responsible for lower wages and inadequate health and safety standards for workers.

But you don’t have to take my word for Weil’s biases of his once- and potentially future regulated community. Here are quotes from Weil himself about franchise businesses from his 2014 book The Fissured Workplace:

FRANCHISING MEANS LOW PAY AND BENEFITS – “Jobs shifted away to be done by separate employers pay low wages, provide limited or often no health care, pension, or other benefits; and offer tenuous job security.”

FRANCHISING MEANS POOR COMPLIANCE – “Franchisees may be more willing to violate consumer, workplace, or environmental regulations.”

FRANCHISING MEANS ECONOMIC EXPLOITATION – “Franchisors benefit at the expense of franchisees.”

THEREFORE, MORE JOINT EMPLOYER REGULATION IS NEEDED – “Workplace statutes and legal interpretations of them usually hold the franchisor harmless for the actions of franchisees when it comes to employees.”

THEREFORE, MORE MISCLASSIFICATION REGULATION IS NEEDED – “Franchisees are, in reality, employees of their brand.”

Upon reading these unbalanced stances from a prospective franchise regulator, franchise business owners may feel pretty exasperated. That’s because we know franchising contributes so much, and doesn’t deserve these criticisms. In reality, franchisees are independent owners who buy and own the units they operate. They live and work in their home areas, recruit and train local residents to join their teams, and purchase a significant amount of their supplies from their communities.

Not only were Weil’s pre-Department of Labor quotes full of controversy, but so was his DOL service. The 2016 DOL Overtime rule that he authored was blocked by the U.S. District Court for Eastern District of Texas in November 2016 (a final judgment invalidated the rule entered in August 2017). Moreover, both of his administrative interpretations of “independent contractor” classification and the “joint employment” standard under the FLSA were thrown out by future Secretary of Labor Alex Acosta in 2017. Based on Weil’s continued writings and advocacy, it should be clear that he would work overtime to enact a harmful agenda at the DOL again.

Following a pandemic that harmed so many small businesses, the Senate is faced with the question of whether David Weil’s biased advocacy and unbalanced approach to the regulated community deserves a second stint at the wage and hour agency. One may say about Weil’s nomination: “fool us once, shame on you. But fool us twice, shame on us.” The U.S. Senate should not be fooled by Weil a second time, and it should reject his nomination.