The restaurant and hotel industries aren’t waiting for the National Labor Relations Board to rule on a controversial complaint against McDonald’s that could vastly expand legal liability for franchisor companies — they are already expecting the worst, and are lobbying members of Congress to roll back the board’s pending decision.
Several local business franchise owners met privately with House Minority Whip Steny Hoyer, D-Md., Friday at the Hilton Garden Inn in Waldorf, Md., in order to make the case that any ruling by the board against McDonald’s should be rolled back. The NLRB is the main federal labor law enforcement agency.
Hoyer, the number two ranking Democrat in the House, expressed skepticism during the meeting that the board’s ruling could be as disruptive as the local business owners feared, but didn’t dismiss their concerns either. Many took comfort when he said the NLRB did not have the final word on the matter.
“The NLRB cannot do anything that Congress cannot overturn,” Hoyer said.
The event was hosted by the Coalition to Save Local Business, which is affiliated with the International Franchise Association. Support from Democrats like Hoyer will be key to any effort to overturn the board’s action. The coalition is focusing on setting up similar meetings with other lawmakers.
Jagruti Panwala, director of the eastern division of the Asian American Hotel Owners Association, said afterwards she was “certainly optimistic” that they could persuade enough lawmakers their way. She argued they have a strong case and sympathetic people to present it.
According to Panwala, it’s just a matter of getting lawmakers’ attention focused, as many do not understand the potential impact of the NLRB rule. “That’s understandable,” she said. “They’ve got a lot on their plate.”
The issue arose last year when the board approved a complaint against the McDonald’s Corp., about unfair labor practices, which was pressed by union-affiliated groups. The complaint alleged the corporation was a “joint employer” with its local franchises regardless of the fact that an estimated 80 percent of them are privately-owned and legally separate businesses. An official ruling by board, whose majority was appointed by President Obama, could be announced any day now.
The complaint sent shockwaves through the business community, since it could vastly expand legal liability for franchisor corporations, making them responsible for employment matters at their franchises. Currently, most contracts leave that up to the franchise owner.
Labor groups want the joint employer standard broadened since it would make organizing the fast food industry and other franchise chains easier. Instead of organizing them one business at a time, union leaders could target the corporate parent and do it all at once.
Many franchisee owners fear that should the NLRB rule against McDonald’s, most corporations would either insist on more control in order to limit liability or simply sever their contracts as soon as they can, costing the franchisees the support of the corporate brand. One McDonald’s owner at the Friday meeting briefly choked up saying that he didn’t know if he would be able to support his little league team in the future.
Ken Ricketts, manager and owner of a Comfort Suites in Maryland, said he wouldn’t want to have to deal with orders from the corporate headquarters. “More than likely, I would sever the relationship myself,” he told the Washington Examiner.
Hoyer did not sound entirely convinced during Friday’s meeting though. “Have the franchisors discussed with you how they would change their relationship with you?” he asked at one point. The business owners said no but that was because no one knows exactly what the board’s ruling will be.
He also expressed skepticism that the franchise owners were as free to operate now as they claimed. “You cannot sell the kind of french fries you want to sell. You have to sell the kind of french fries [the corporation] wants you to sell,” he told a McDonald’s franchise owner.
Hoyer also digressed into other, unrelated topics. He brought up controversies involving the business practices of the ride-sharing service Uber several times, and concluded the talk with a lengthy complaint about budget sequestration, occasionally forcing the hosts to try to steer the discussion back to the NLRB.
He nevertheless made a point of saying that once the board decision is out, Congress will take a serious look at it.
“As long as he continues to listen to other franchise owners, I think it’ll be okay,” Ricketts said afterwards.
