U.S. Senators Defend Franchising at Senate Hearing

By: Garrison Chura

On Thursday, July 15, senators in the Senate Committee on Health, Education, Labor and Pensions (HELP) addressed the nomination of Dr. David Weil to be the Administrator  of the Wage and Hour Division (WHD) at the Department of Labor, along with Gwynne Wilcox and David Pouty to be a Members of the National Labor Relations Board. The joint employer rule and franchise arrangements, as well as worker classification and independent contractors were addressed by Ranking Member Richard Burr (R-NC), Sen. Roger Marshall (R-KS), Sen. Lisa Murkowski (R-AK), and Sen. Tommy Tuberville (R-AL). Sen. Burr pointed out the potential for the committee to receive biased opinions and decisions due to the nominees’ association with the Service Employees International Union (SEIU). Though concerning, and because of the nature of the positions, Mr. Prouty and Ms. Wilcox pledged to abide by all ethics rules regarding recusal when it comes to cases that involve SEIU. 

Sen. Marshall questioned Dr. Weil’s opinion of the franchise business model, noting that the model provides many minorities and women the opportunity to run and operate their own business. Sen. Marshall also expressed concern about the increased legal burden and job loss related to more stringent enforcement and interpretation of joint employer rules. He asked if imposing these costs on small businesses is justified. Weil explained he interprets laws as they apply to specific cases, arguing there are legitimate forms of franchising both with and without joint employment, as well as “problematic” forms. He stated he has been “very cognizant” of how costly his enforcement strategies are in addition to working collaboratively with businesses in his past role at the WHD, citing his negotiation with WHD and Subway that focused on educating franchisees about their obligations under the law. 

Additionally, Sen. Tommy Tuberville (R-AL) voiced the concerns of the International Franchise Association (IFA) and several other organizations that Dr. Weil’s confirmation would pose a direct and immediate threat to the franchise business model. In response, Weil simply promoted the creativity the WHD employed to ensure businesses understood their responsibilities under the law, and he reiterated his belief that most businesses are compliant.

To watch Sen. Burr’s segment, click here.

To watch Sen. Marshall’s segment, click here.

To watch Sen. Tuberville’s segment, click here.

Lastly, addressing Sen. Lisa Murkowski (R-AK), Dr. Weil noted that the only way to implement an ABC-style test for determining whether a worker is an independent contractor is through legislation, not regulation. Dr. Weil explained that a WHD Administrator does not have the authority to independently set other criteria without congressional action when there is no grey area to apply an Economic Realities Test concurrently with WHD legal guidance.