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Why IFA Says the Proposed Independent Contractor Rule Could Spell Trouble for Franchisees
Although the International Franchise Association believes the proposed rule preserves the independence of franchisees, the organization says it is ‘overly broad’ and must do more.
The International Franchise Association (IFA) issued comments on December 14 cautioning the Department of Labor (DOL) on what it says is an “overly broad” proposed independent contractor rule.
In the comments, which came as a response to the Proposed Standard for Determining Employee or Independent Contractor Classification Under the Fair Labor Standards Act, IFA highlighted “the importance of a standard that maintains the independence of franchise owners” and urged the DOL to further clarify that the proposal will not interfere with the franchise business model.
The proposed rule would “help employers and workers determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act,” per the DOL. The department says the framework would “provide guidance on classifying workers and seeks to combat employee misclassification.”
IFA noted that the proposed rule preserves the independence of franchisees but says it must do more.
“The independence of franchise owners is essential to the way franchising works, and IFA urges DOL to provide clarity in the standard to protect the integrity of the franchise business model,” said Michael Layman, senior vice president of government relations and public affairs. “Franchising provides incredible opportunities for women, veterans and People of Color to pursue the American Dream. While IFA is appreciative that the proposal recognizes that the ABC test does not apply to the Fair Labor Standards Act (FLSA), franchised business owners deserve more clarity that this rule will not upend their livelihoods.”
The comments also say that “The standard for determining employee or independent contractor classification under the FLSA is of direct and immediate concern to the franchise community, insofar as an overly broad standard threatens to fundamentally upend the successful franchise business model, particularly in the case of owner-operated franchises.”
IFA has strongly opposed efforts to enact independent contractor tests that it says rob franchise owners of their investments by “effectively demoting them to employees of their brand.”
Read the full comments here.
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