A group of congressional members sent letters to the National Labor Relations Board opposing a proposed joint-employer standard change.
In September, the NLRB announced that it was proposing to change the standard, replacing the one set in April 2020 with a rule closer to that of the one established in 2015. Under the proposed rule, two or more employers would be considered joint employers if they codetermine matters governing employees’ terms and conditions of employment.
These terms and conditions can include wages, benefits and other compensation, as well as scheduling. It can also include hiring, discharging, discipline, workplace health and safety.
In the existing standard set in 2020, the NLRB made it so the status only applied in situations where the franchisor had direct control over a franchisee’s employees.
The proposed standard has been met with opposition by the International Franchise Association, which also was against the 2015 change. In a press release, the IFA stated that the 2015 standard cost franchise businesses $33.3 billion per year and resulted in a 93 percent increase in lawsuits.
“It’s become a fundamental issue for the structure of the franchise business model,” said Michael Layman, IFA senior VP of government relations and public affairs. “This issue was manufactured artificially in 2014 in response to labor unions’ efforts to undue franchise business models for their own ease of collective bargaining. What this standard will do is make franchisors liable for even when they don’t exert any control.”
IFA Senior VP of Government Relations and Public Affairs Michael Layman
Last week, members of Congress submitted two letters to the NLRB, which closes its comment period on the matter on Dec. 21. One letter was signed exclusively by U.S. Senate members.
“As members of Congress, we have sought to protect the franchise model through legislation due to the opportunity franchises provided workers and entrepreneurs,” the letter states. “We fear the proposed rule would do the opposite, leading to an increase in litigation and, therefore, putting the franchise model at risk. Businesses should not be liable for entities they do not control.”
Signing the letter were U.S. Sens. Mike Braun, R-IN, Susan Collins, R-ME, Angus King, I-ME, James Lankford, R-OK, Joe Manchin, D-WV and Kyrsten Sinema, I-AZ. An additional letter was sent to the NLRB with signatures from both chambers.
The second letter, signed by 43 senators and 24 members from the House of Representatives, stated that, “franchises in particular would be negatively impacted should the rule go into effect. By moving forward with this misguided proposed rule, the board would overwhelmingly hurt entrepreneurs who are utilizing the franchise model to own their own business.”
In announcing the proposed standard, NLRB Chairman Lauren McFerran said the goal is to make the definition of joint employment consistent with controlling law.
“In an economy where employment relationships are increasingly complex, the board must ensure that its legal rules for deciding which employers should engage in collective bargaining serve the goals of the National Labor Relations Act,” said McFerran in a release.
In a story by Marketplace, National Employment Law Project General Counsel Cathy Ruckelshaus said, “companies decide that they want to outsource some of their labor-intensive pieces, but they still maintain control over some of the terms and conditions of employment. That’s where we’re going to see more than one employer around the table. I think what the NLRB is trying to accomplish is ease the path to unionization, and to get to the bargaining table the employer that really controls the purse strings.”
The comment period on the proposal ends December 21.