A proposed rule change could imperil the future of franchise businesses in America. The Democrat-controlled National Labor Relations Board (NLRB) issued a Notice of Proposed Rule Making (NPRM) to expand the definition of a “joint-employer” under the Fair Labor Standards Act. If implemented, this rule change would make it harder for corporations to partner with individuals who desire to operate a franchise.
The NPRM says the new rule “would revise the standard for determining whether two employers, as defined in section 2(2) of the National Labor Relations Act (NLRA or Act), are joint employers of particular employees within the meaning of section 2(3) of the Act.”
Bloomberg Law claims the definition expansion would “loosen” standards established by the previous administration by establishing a joint employment relationship to “include indirect and unexercised control over the terms and conditions of a job.” In essence, franchisors would be on the hook for employment-related decisions made by individual franchisees.
Companies like McDonald’s, Marriott International, and 7-Eleven Inc, if enacted, would be joint employers in the eyes of the NLRB if they “co-determine essential terms and conditions of employment,” such as scheduling, wages, and benefits.”
Feedback from the business community has been strongly against the NLRB’s actions. The International Franchise Association (IFA) strongly rebuked the proposed rule change as an attack on independent operators who comprise...
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