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Jerry Reese

Franchisors ask Congress to clarify NLRB definitions

House considers joint-employer effects

Small businesses and franchisors are asking Congress to clarify joint-employer standards in the wake of National Labor Relations Board rulings in the past two years, witnesses told the House Committee on Education and the Workforce on Wednesday.

Representatives of franchise businesses, including New Orleans, La.-based restaurant group Dat Dog, said the NLRB rulings, especially as they have been applied to franchisors like McDonald’s Corp., have led to confusion, especially among small businesses.

Jerry Reese, director of franchise development for Dat Dog, based in New Orleans, La., testified that small businesses are “truly confused and impeded by the inconsistent and expanding” joint-employer standard. 

Speaking on behalf of the Coalition to Save Local Businesses, Reese called on Congress to clarify the standard so that businesses like Dat Dog, which will open its fifth restaurant this summer in Lafayette, La., will have clear-cut rules to follow. Dat Dog has just begun franchising. It was founded in 2011.

“I’m certain Congress has the tools at its disposal to resolve this small-business problem and provide us some certainty for the future,” Reese said.

Rep. Virginia Foxx (R-N.C.), chair of the House workforce panel, said the committee is considering renewed legislation to clarify the joint-employer standard.

 “This committee has previously advanced legislation to protect small businesses and employees by restoring the common sense definition of what it means to be an employer,” Foxx said in Wednesday’s hearing. “With the new Congress and new administration, we have the opportunity to get the job done.”

Last year, the Protecting Local Business Opportunity Act ( H.R. 3459, S. 2015) was considered, but it failed to reach the Senate floor for a vote. 

The five-member NLRB ruled 3-to-2 in August 2015 that a franchisor could be considered a joint employer and held liable for the hiring practices of its franchise operators.

The case involved Houston-based waste management firm Browning-Ferris Industries, or BFI, and a union that attempted to organize subcontracted workers at one of the firm’s recycling facilities. In the case, NLRB general counsel Richard Griffin argued in a brief that the 30-year-old standard for defining joint-employer status between a franchisor and franchisee, or contractor and subcontractor, should be scrapped in favor of a broader definition. 

In calling Wednesday’s House committee hearing, Foxx said “the Obama administration and partisan NLRB bureaucrats seemed determined to make it harder for small businesses and their employees to succeed, and the job-killing joint employer scheme is a prime example.” 

Several industry groups weighed in Wednesday in support of the House hearing.

Workforce Fairness Institute spokesperson Heather Greenaway issued a statement that said: “Our hope is following today’s hearing, the committee will move forward with legislation to sideline the new joint employer standard so that employees and employers can get back to moving our nation’s economy forward.”       

Cicely Simpson, the National Restaurant Association, said: “Joint employment liability is affecting businesses all across the country, including restaurants.  Congressional action is vital to resolving the damage caused by the NLRB over the past eight years.  We are pleased that Congress is taking this issue seriously, and we look forward to legislation being introduced.”

On Thursday, a U.S. Senate committee will open hearings on President Donald Trump’s two new NLRB nominations.

If confirmed, the two nominees would give Republicans a majority of seats on the board — which is an independent agency but whose members are nominated by the president. The board investigates labor complaints and regulates the ability for workers to form unions. It has a major impact on employer-employee relations.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless

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