A new coalition representing small business said it would lobby Congress to rein in the National Labor Relations Board. The group, calling itself the Coalition to Save Local Businesses, said the board’s recent moves to change the legal definition of “joint employer” in a case against McDonald’s Corp. could have severe negative consequences for small businesses across the country if left unchecked by Congress.
Currently, most franchises are privately-owned businesses that essentially rent out the parent corporation’s brand name. They are therefore considered legally separate entities. In the McDonalds case, the NLRB said it would use a broader “economic realities” test that could erase the prior definition if it became a legal precedent. The NLRB is currently considering a separate case, Browning-Ferris, that could broaden the definition of joint employer even further.
Matthew Patinkin, a co-chair of the coalition and owner of Auntie Em’s Pretzels and Jamba Juice franchises, said the potential legal liability of being a joint employer would cause the parent corporations to closely dictate how its franchises are run, stripping the local owners of autonomy and therefore removing the reason why entrepreneurs went into business in the first place.
“Many of us have risked our life savings, putting in years of sweat-equity to make our businesses a success but if we’re not able to control our businesses, we’re not going to invest our time and money,” Patinkin said.
John Sims, a coalition member and owner of a Rainbow Station franchise in Richmond, agreed, saying the corporations would have little choice but to take over should the standard in the McDonald’s case become the norm. “My role would be akin to being a location manager.”
The coalition includes the U.S. Chamber of Commerce, the National Restaurant Association, the National Retail Federation, the Coalition of Franchisee Associations, the International Council of Shopping Centers, the International Franchise Association, the National Council of Chain Restaurants, and the National Federation of Independent Business. The group said it would aggressively lobby members of Congress to counter the board’s move. A spokesman declined to give a figure for how much the coalition was spending on the effort.
The NLRB is the federal entity that enforces labor law regulations. It officially charged McDonald’s Corp. in December with violations of labor rights at its franchise restaurants, arguing it had operational control over the stores and was therefore a joint employer despite the corporation’s claim that most of its franchises are privately-owned businesses.
Currently, to be deemed a joint employer, two or more companies must engage in significant, operational and supervisory control over an employee.
The board’s action — it had signaled as far back as July that it would take this route — startled through the business community.
Labor politics are a big factor in the NLRB’s decision. McDonald’s is charged with retaliation against employees for joining in protests organized by the Service Employees International Union. Making the franchiser corporations joint employers would make labor organizing efforts easier by allowing labor groups to target one entity instead of thousands of individual businesses.
The NLRB currently has a Democrat-appointed majority. General Counsel Richard Griffin, who initiated the charges against McDonald’s, is a former top lawyer with the International Union of Operating Engineers.
Senators clashed at a hearing a last week on the NLRB, with Republicans condemning the joint employer decision and Democrats praising it.
