Broadening Joint-Employer Standard Threatens Small Business Growth

If the National Labor Relations Board (NLRB) abandons a 30-year-old legal test for classifying multiple businesses as joint employers, franchisors and franchisees across the United States will have to renegotiate or reconsider business relationships, BNA reported.

The comments were made by several speakers at a recent U.S. Chamber of Commerce event where the Chamber unveiled a report examining the implications of changing the joint-employer standard.

Speaking at the event, Andrew Puzder, chief executive officer of restaurant franchiser CKE Holdings, said if the NLRB treats franchisors as joint employers with their franchisees, local and national businesses will have to reconsider agreements on royalties, profits and franchise terms, BNA reported. NLRB action has the “potential to destroy the franchise business model,” he said.

The report, “Opportunity at Risk: A New Joint-Employer Standard and the Threat to Small Business,” details how the NLRB’s potential broadening of its joint-employer standard poses a threat to small business growth.

In July 2014, NATSO developed a document detailing the NLRB’s ruling as well as general guidelines to help petroleum marketers avoid joint-employer status in their dealer/franchise agreements.  

NLRB’s general counsel ruled July 29, 2014, that McDonald’s is the joint employer of its franchisees’ employees.

The NLRB has since issued nearly two dozen labor complaints naming McDonald’s Corp. as a joint employer of the workers at its franchisees’ locations making the company liable for labor and wage violations by its franchise operators.

Business groups, including the Coalition for a Democratic Workplace (CDW), of which NATSO is a member, have criticized the NRLB for agency over-reach and for trampling on businesses to help organized labor reclaim market share.

To request a copy of NATSO's guidelines, contact Tiffany Wlazlowski Neuman at 703-739-8578.

Tiffany Wlazlowski Neuman's photo

Tiffany Wlazlowski Neuman

Tiffany Wlazlowski Neuman develops and executes communications strategies to advance NATSO’s public relations and advocacy goals. Tiffany also develops and oversees partnerships related to the NATSO Foundation’s public outreach initiatives. Tiffany lives in the D.C. metro area with her husband and their two sons.More
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