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Main Street Monday — Can the Franchise Model Survive the NLRB Ruling?

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Main Street Monday — Can the Franchise Model Survive a NLRB Ruling?

Last month’s ruling by the National Labor Relations Board opens the doors that franchisees may become de facto franchisor employees — managers, not small business owners.

The NRLB ruled garbage hauler Browning-Ferris Industries should be considered a “joint” employer” along with a staffing agency that provides employees.

The ruling will allow the employee of a franchisee to claim employment status from the franchisor,

Says the International Franchise Association,

Today’s NLRB decision is a seismic shift in the Board’s employer definition and, without any Congressional or court action could significantly alter the face of American business as we know it.

If allowed to go into effect, the impact of this new joint-employer rule would be sweeping and widespread, create havoc for the franchise industry and, ultimately, would inflict serious damage to our nation’s economy.”
Prior to today, to be deemed a joint employer, two or more companies must have exercised direct operational and supervisory control over an employee. Under this new interpretation, the NLRB is expanding that and applying a broader “economic realities” test to include “indirect control” or even “potential, unexercised control”.

These changes to the joint employer standard could impose new collective bargaining obligations and allow unions the ability to strike or picket a large entity compared to the location where there is a dispute.

The new standard would also increase the likelihood of union “campaigns” against national businesses, while forcing small businesses to become engaged in protracted, unnecessary and costly legal battles.

Adds the Asian American Hotel Owners Association:

By redefining the joint-employer standard, franchisees will have little control over the team they have hired to help run their business.

Franchisors don’t want it. Franchisees don’t want it. Only organized labor benefits from this dangerous scheme.

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