Franchise Owners Fight Joint Employer Across the U.S.
By Michael Layman and Nicholas Johns
In American history, no U.S. president who served a full term has left office without presiding over at least one year that met or exceeded 3.0 percent real gross domestic product (real GDP) growth. With one year left in President Obama’s tenure as Commander-in-Chief during which the U.S. has experienced a 1.55 percent annualized average of RGDP growth, he may become the first.
If President Obama’s enduring economic legacy is historically slow growth, one of the causes of this symptom may be overregulation. In his first six years of office, the Obama Administration issued nearly double the amount of major rules as the Bush Administration. According to the Competitive Enterprise Institute, the Administration has already issued more than 24,000 regulations, which equals over a dozen new regulations each business day. Many of these new regulations are hundreds of pages long. These regulations cost the economy tens of billions of dollars each year, and many only achieve questionable, ideological goals.
Franchise owners know one of the most ideological and threatening regulations is the U.S. National Labor Relations Board’s August 2015 creation of a new “joint employer” standard. Expanded joint employment liability threatens to make franchisors responsible for franchisee employment decisions they have nothing to do with. While joint employer is an attempt to drive a wedge between franchisor-franchisee relationships, IFA is galvanizing business and political leaders across the country to reverse the NLRB’s overreach.
While joint employer is a relatively new policy issue, IFA and its members have worked overtime to educate lawmakers in Washington, D.C. and state capitals around the country about the profound, long-term impact of joint employer on franchising. These efforts have yielded significant dividends to make the regulatory landscape more secure for franchise businesses.
In response to the NLRB's joint employer activism, over the past year IFA has recruited hundreds of small business owners and dozens of organizations to form the Coalition to Save Local Businesses. The mission of the CSLB is to reinstate the traditional joint employer standard that has allowed franchising to flourish for decades. We facilitate meetings, roundtables, letter-writing opportunities and other grassroots between small business owners and their elected leaders. In 2015 alone, CSLB made over 25,000 contacts to Congress! Thanks to such vigorous engagement from franchise small business advocates, CSLB nearly secured a provision to nullify NLRB’s joint employer ruling in the congressional spending package approved in December 2015. But in the end, our common-sense joint employer provision fell victim to the oft-contentious politics in Washington and was not included in the final bill. More importantly, the White House opposed our joint employer provision and privately threatened a veto of the entire omnibus bill over it.
Our effort is renewed in 2016. We are pressing congressional leaders again this year to enact a reversal of the NLRB’s joint employer decision. To help achieve that federal goal, the CSLB is also pushing state legislatures to enact laws that make clear that franchising is dependent on franchisees being responsible for employees in a franchise system. Our team, led by the IFA’s Dean Heyl and Jeff Hanscom, is making remarkable progress in several states. As of this writing in mid-February, here is a state legislative update where elected leaders have been pushing back against joint employer:
Tennessee – Law enacted
Texas – Law enacted
Louisiana – Law enacted
Michigan – Law enacted
Wisconsin – Bills (SB 422 & AB 578) have passed their houses of origin and are awaiting final passage to Gov. Scott Walker’s desk.
Indiana – HB 1218 passed both the House and a Senate committee unanimously, and is now awaiting consideration by the full Senate.
Virginia – HB 18 passed the House and is awaiting Senate action.
Georgia – SB 277 passed the Senate Insurance & Labor Committee and will be considered by the full Senate.
Utah – HB 116 passed the House and was referred to the Senate Business & Labor Committee.
Colorado – HB 1154 was introduced and was referred to local government committee.
While the state legislation listed above does not supersede the National Labor Relations Act and thus fully protect franchising, these efforts allow CSLB and our allies to push congressional delegations to enact a more meaningful federal reversal of joint employer. Our message to Congress is: “Many state legislatures are protecting franchise small businesses. Now it’s your turn.”
We know how serious this fight against joint employer is. Working on your behalf, the CSLB will continue to push legislators in these states and around the country to protect franchising from such overreaching regulation.
Michael Layman is vice president of regulatory affairs for IFA and executive director of the Coalition to Save Local Businesses. Nicholas Johns is coordinator, government relations and public policy at IFA. Find them at fransocial.franchise.org.