Published on : Thursday, July 31, 2014
July 29-International Franchise Association President & CEO Steve Caldeira, CFE, released the below statement today expressing disappointment in the decision by the NLRB Division of Advice recommending franchisors and franchisees can be designated as joint-employers.
“The NLRB’s Division of Advice recommendation that franchisors and their franchisees be designated as joint-employers is both wrong and unjustified. This legal opinion would upend years of federal and state legal precedent and threaten the sanctity of hundreds of thousands of contracts between franchisees and franchisors, a bedrock principle of the rule of law.
“Millions of jobs and the livelihoods of hundreds of thousands of independent franchise small businesses are now at risk due to the radical and unprecedented nature of this decision. Ruling that franchises are joint-employers will be a devastating blow to franchise businesses and the franchise model. Franchise job growth and new business formation have outpaced non-franchise growth for the last five years but will undoubtedly come to a screeching halt if this decision is affirmed by the NLRB’s New York Regional Office.
“Franchisees and their employees do not work for franchisors. The franchise owners who have built more than 770,000 businesses and employ millions of people control their own businesses. Franchisees have their own employer identification number with the Internal Revenue Service and file their own taxes. Franchisees establish day-to-day operations, employment practices and policies for their own businesses. Franchisees decide who to hire and fire, and also set wage rates, benefits and employees’ work schedules.
“If franchisors are joint employers with their franchisees, these thousands of small business owners would lose control of the operations and equity they worked so hard to build. The jobs of millions of workers would be placed in jeopardy and the value of the businesses that employ them would be deflated.
“By proposing this seismic change, a supposedly independent federal agency is yielding to intense outside pressure from labor unions led by the Service Employees International Union (SEIU), which is seeking to unionize franchise chains and undermine the proven, time-tested franchise business model.
“This recommendation is a drastic and overreaching solution. Ample federal, state and local remedies are available – and are regularly used to enforce current law, including more limited NLRB action, state attorneys, general action and private rights of action – to deal with labor violations of various kinds. Destroying the fundamental tenets of the franchise model would eviscerate the most successful business model in existence.
“As our economy continues to steadily, but slowly recover, and employers increasingly look for ways to hire more workers, the NLRB would be wise to ignore this flawed opinion.”