Democrats frequently purport that the National Labor Relations Board’s (NLRB) change to the definition of joint employment is no big deal. It won’t destroy business to business relationships or jobs, they tell us. This is in spite of numerous job creators who have testified before Congress that because of the rule their business will “cease to be viable operations” and “destroy the ability for many middle class minority individuals…to use franchising to attain the American Dream.”
With the Save Local Business Act (H.R. 3441), a bill to restore the traditional joint employer standard, making headway in Congress, Democrats and allies have started to double-down on disingenuous rhetoric.
Rep. Donald Norcross (D-NJ) at the House Education and Workforce Committee markup of the Save Local Business Act said, “there are 800,000 franchises in the United States and not one has ever been found to be a joint employer.”
At a September hearing that discussed the uncertainty created by the NLRB’s joint employer standard, Democrat witness and plaintiff lawyer Michael Rubin stated, “which is why of the 800,000 franchisees, none have ever been found in a joint employer relationship.”
Rubin’s statement is especially rich because he is currently representing employees who are suing McDonald’s Corporate as a joint employer with franchisees in California. While this particular lawsuit was brought under state law, Rubin is certainly aware that the NLRB’s broad definition of joint employment is meant to put franchises in the agency’s crosshairs. As Rubin explained, the NLRB’s rule is a “two-barreled joint employer shotgun.”
Rep. Norcross and Rubin must be aware that there are a number of pending charges against franchises before the NLRB. A franchise may not have been tagged with the joint employer tag yet. But, without a legislative fix, it is only a matter of time.
Further, large and small businesses, including franchisors and franchisees, do need to worry about the NLRB’s joint employer standard.
Before the NLRB overhauled its joint employer definition, an employer was only responsible for another company’s workplace practices when they directly share control over employment terms like hiring, pay increases, supervision, and scheduling. This makes sense. If a lead employer does not directly tell another employer who to hire or when to schedule employees, how is it fair to hold them liable for a totally separate, independent business that makes those decisions?
But in the Browning-Ferris case, the NLRB changed the definition to include indirect control and unexercised potential control over another workforce. This greatly expands the possibility of any business being found a joint employer for actions of another employer, even when they do not have any control over the issues that lead to the liability.
Numerous franchisors, franchisees, and contractors have spoken out about the negative impacts they will face if Congress does not restore the NLRB’s joint employer standard.
There are plenty of statements coming from business owners like Vinay Patel, Fairbrook Hotels franchisee, who said “Frankly, if these burdensome circumstances existed when I entered the business, I likely would have chosen another avenue for entrepreneurship.”
But, as I previously noted in Investor’s Business Daily, the NLRB General Counsel Richard Griffin made it abundantly clear why they decided to pull the rug out from under employers engaged in business to business relationships:
In a rare moment of clarity on why the NLRB is going after McDonald’s, NLRB General Counsel Griffin recently told an American Bar Association forum that the “sole” reason the agency is aggressively pursuing a case against McDonald's is because of the union-funded “Fight for $15” campaign.
Put bluntly, the NLRB’s new joint employer standard is all about reversing the decades-long decline in union membership.
And the new definition certainly provides unions with tangible benefits. Broadening who is a joint employer allows unions to take actions against a third party that were previously illegal, including protests, boycotts, and pickets. Unions could then use these tools to browbeat employers into so-called neutrality agreements that give union officials greater access to workers, bypass secret-ballot elections, and bar employers from opposing organizing campaigns, in exchange for unions agreeing not to engage in protests or boycotts.
Browbeating employers into neutrality agreements is right out of the Service Employee International Union (SEIU) playbook. And the SEIU is at the forefront of trying to organize fast food restaurants. Since 2014, the union has filed numerous unfair labor practice charges against McDonalds, which, in part, allege the fast food restaurant is a joint employer with its franchisees.
Democrats need to be honest about their opposition to restoring a commonsense joint employer definition. And they need to stop making claims that independent small businesses, like franchisees, have nothing to worry about.
If the joint employer standard is no big deal, then why have so many claims been filed against franchises? Why are so many franchisees speaking out against the unelected bureaucrats at the NLRB, if it won’t impact the franchise model?
Congress needs to fix the joint employer problem leftover from the Obama administration. It is not worth risking over a million jobs and thousands of business relationships to pay back union allies and plaintiff lawyers.