Labor Update: New Overtime Legislative Strategy; Joint Employer Update with Subway Restaurants

NATSO and its allies in the labor community have begun advocating for legislation that, rather than repealing the DOL's new overtime rule would phase in the new salary threshold incrementally. NATSO will continue urging policymakers to repeal the new law, but the chances of President Obama signing such legislation are slim.  The lobbying efforts in favor of such legislation, however, helped prompt Democrats to introduce the modified bill.

“The Overtime Reform and Enhancement Act” introduced by Rep. Schrader would allow the threshold to rise to $35,984 this December. The remaining salary threshold increase would be phased in over the next three years. This approach could win bipartisan support and provide the basis for a compromise resolution.   

Importantly, the legislation indicates a willingness to work with the business community. H.R. 5813 addresses concerns expressed by NATSO and other business organizations that have called the final rule “too much, too soon.” The business community has warned legislators that such a dramatic increase with a short compliance period will harm the very workers the rule was intended to help by forcing business owners to cut back pay and benefits, as well as employee’s hours.

Rep. Schrader's bill follows another legislative proposal (S. 2707, H.R. 4773) that NATSO and many other groups continue to support titled the “Protecting Workplace Advancement and Opportunity Act,” introduced in March by Sen. Tim Scott (R-S.C.) and Rep. Tim Walberg (R-Mich). The measure would pause implementation of the regulations and require the Labor Department to complete a comprehensive analysis of the impact the changes would have on small businesses and lower-wage regions of the country. It also would block automatic increases to the wage threshold.  The odds, however, are long that this proposal will pass the Senate and be signed by the President.

Read NATSO's summary and compliance guide on the Overtime Rule can be accessed here.

On the Joint Employer front, a recent Department of Labor agreement with Subway restaurants may present joint employer implications, and at the very least illustrates the uncertainty surrounding this area of law.  

Under a recent agreement between Subway and the National Labor Relations Board, the Department of Labor will prepare videos and written materials for Subway to share with its franchisees, as well as assist Subway in distributing exploring ways to use technology to "support franchisee compliance, such as building alerts into the payroll and scheduling platform that Subway offers as a service to its franchisees.
Some labor policy obervers think this last criterion may present joint employer implications. Specifically, the agreement's reference to Subway's "payroll scheduling platform" arguably implies that Subway maintains the requisite control over its franchisees to be considered a joint employer, which would make Subway jointly liable for any labor violations committed by its franchisees. It could also make Subway more susceptible to unionization.
As NATSO has previously reported, the NLRB decided that a company could be considered a “joint employer” if it possesses the right to control various terms and conditions of employment, regardless of whether that company actually exercises such control.

Importantly, NATSO members that are Subway franchisees should recognize that the franchise agreements already give Subway the right to terminate a franchisee relationship in the event of a labor law violation. This provision could undercut the argument that Subway is a joint employer with its franchisees, and eliminate the threat of Subway altering its relationship with its franchisees on account of a joint employer threat. 


Shannon Meade's photo

Shannon Meade

Shannon Meade implements NATSO's legislative and political agenda in Washington, D.C. She also directs NATSO's political engagement efforts.
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