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The National Labor Relations Board (NLRB) earlier this year issued a ruling that upended decades of labor law, essentially determining that indirect control or even potential control over employment terms could be enough for a company to be deemed a “joint employer” of certain employees. This new joint employer test will have lasting and detrimental ramifications for many companies, particularly small business franchisees, several of whom have since spoken out against the ruling.
While the Chamber and other business leaders have made their position on the ruling clear, the messages coming from the NLRB and the White House have been anything but.
In a recent interview with Politico, NLRB General Counsel Dick Griffin stated unequivocally that “there's no interest or attempt in any way, shape or form to target the franchise industry” with the NLRB’s joint employer ruling. That is, while the harmful effects tofranchise businesses may be a byproduct of the ruling, the decision wasn’t meant to single out the operations of franchisors and franchisees.
Over at the White House, they’re telling a different version of the story.
During a press briefing earlier this week, White House Press Secretary Josh Earnest suggested that the primary purpose of the new standard is to promote unionization in the franchise industry. Asked about bipartisan momentum building in Congress to block the ruling, Earnest declared that any efforts to strike down the joint employer ruling represented an attempt to “make it harder for workers at a fast food company to organize collectively.”
So to recap, as far as the NLRB is concerned, the joint employer standard wasn’t aimed at and really shouldn’t concern the franchise industry. On the other hand, to hear the White House tell it, the new standard is a critically important tool that was designed to help fast food workers and employees of other franchisees form labor unions, and blocking it would severely limit workers’ rights.
The Obama administration can’t have it both ways on this decision: Either the ruling was targeting franchises or it wasn’t. Either it will hurt franchises or it won’t. Either way, the impact of the board’s joint employer decision is coming into focus as more franchisees speak out against the ruling.
“This joint employee-employer thing, if that goes through, that’s a hand grenade in the middle of the franchising business model,” Bill Bass, a franchisee with Two Men and a Truck, told the National Review after the ruling was issued. “It would completely change everything about the franchising model, to the point where we probably wouldn’t be in franchising.”
The other thing that’s becoming clear? The White House and the NLRB have starkly different understandings of the implications and importance of this dramatic new standard, which sends mixed messages and only adds to the confusion and uncertainty facing American businesses.