If you’ve been paying attention, you know the National Labor Relations Board’s “joint employer” mandate — and its job-killing consequences for small businesses — has seen a lot of turmoil recently. Now, we’re at it again.
Last December, the NLRB’s Hy-Brand ruling overturned an anti-business Obama mandate that would have put franchisers — such as McDonalds, Pizza Hut, and Subway — on the hook for essentially everything that happens at their independently-owned franchise locations. That seemed to settle the matter for good. But then, the Hy-Brand ruling was vacated last month because of one NLRB member’s alleged conflict of interest. And so, because of a technicality, we may be reverting back to the Obama-era joint employer standard. That makes it all the more important for Congress to act.
Created in 2015, the joint employer mandate was intended to allow employees to pursue claims against, or collectively bargain with, large corporations, instead of dealing with each individual franchise business. The mandate was actually created as an organizing tool for labor unions, which could now target franchisees to recruit new members and raise more dues. This joint employer mandate was the invention of former NLRB labor lawyers with pro-union sentiments.
This mandate poses a real threat to franchisees like me. I own a franchise in Richmond called LeafSpring School at the Boulders, an early childhood education center. Owning a franchise has allowed me to operate a business without the high risk of starting a new business concept.
However, if large corporations become liable for the decisions of their franchisees, service providers, and other contractors, franchised small businesses will be in jeopardy. If joint-employer had existed before I became a franchisee, I’m almost certain that my parent company would have maintained corporate ownership and never franchised the location. This would have hurt small business owners devoted to their local communities — and threatened the people they serve.
Research from the American Action Forum concludes that, if fully implemented, joint-employer would result in roughly 1.7 million fewer jobs. Why jeopardize the careers of franchise employees to help union officials?
Franchises form the backbone of America’s economy. Imagine a world without Ace Hardware, Ben and Jerry’s, or even 7-11. Not only are these household names integral to American culture, they also allow Americans who may not have large savings to become entrepreneurs for a small cost. Investing in a franchise remains one of the most effective ways to start a business, which creates jobs.
The franchise business model has created 770,000 small businesses, supporting 18 million direct and indirect U.S. jobs. And franchises have added more than $2 trillion to our economy.
While the latest ruling sorts itself out in the court of law, a sure-fire way to put the issue to rest is for Congress to pass the Save Local Business Act. This would put the issue into the hands of our elected officials, and take it out of the hands of the appointed NLRB, which answers to no one. This legislation would clarify what a “joint employer” constitutes under federal labor law and roll back the NLRB’s joint employer mandate for good. The bill has already passed the House, but the Senate has yet to take it up. I urge lawmakers to pass it immediately — and protect franchises nationwide.
