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IFA and Thousands of Franchisees Push Back on Proposed Joint Employer Standard

Comments submitted to the NLRB say the rule change would ‘wreak havoc on the franchise business model.’

By Victoria CampisiStaff Writer
Updated 12:12PM 12/08/22

On December 7, the International Franchise Association (IFA) submitted comments to the National Labor Relations Board (NLRB) in response to the proposed joint employer standard. 

The proposed rule by the NLRB would treat companies as so-called “joint employers,” meaning that the NLRB could hold a business, such as McDonald’s, liable if a franchisee fires workers who try to unionize, despite only having indirect control over the workers. 

The new proposal would rescind a rule adopted during the Trump administration era that required the parent company to only be held liable for such labor law violations if it exerted direct control over the franchisee’s employees, such as their pay and schedules. 

The IFA wrote that if the changes are adopted, they would “wreak havoc on the franchise business model, its millions of employees and the consuming public.” Over 3,000 franchisees joined IFA in warning that this rule could have “devastating consequences for their businesses, aspiring entrepreneurs and the entire franchise sector.”

“With this proposal, a conflict-riddled NLRB has told thousands of American small business owners: you’re canceled,” said Michael Layman, senior vice president of government relations and public affairs for the IFA. “This is an extremist proposal that makes nearly every business relationship in America a joint employer. Small businesses have suffered under a bad joint employer standard before, but this proposal is worse.”

The comments from the IFA argue that the proposed rule resurrects and expands the 2015 Browning-Ferris standard adopted during the Obama administration, which IFA estimates cost franchise businesses $33.3 billion per year, resulted in 376,000 lost job opportunities and led to 93% more lawsuits.

“The proposed rule will needlessly upend the franchise business model and close the door to opportunity for hundreds of thousands of Americans, especially women, people of color, veterans and first-time business owners,” the organization wrote. “IFA urges the NLRB to immediately withdraw this rule, so an unelected Board in Washington doesn’t wipe out the American Dream for hundreds of thousands of franchise owners and those yet to come.”

Read the full comments here

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