Click here to register for the free IFA webinar “Joint Employer: Are Franchise Companies Clear?” April 23 at 2:00 pm EST.
Last week, the United States Senate approved the SJ Res. Congressional Review Act. 49, refuting National Labor Relations Board (NLRB) extension of the joint employer rule. The International Franchise Association (IFA) has strongly opposed enlargement since its introduction last 12 months.
The Senate’s actions follow the House’s, which passed bill in January. It is now waiting for President Biden’s signature.
Extending the rules would “crush” the franchise
Some form of the Joint Employer Regulations have existed for years, but in 2023 the NLRB expanded them in a way that directly affected the franchise industry. The expanded rule would crush franchising by broadening the definition of joint employment, potentially making franchisors liable for staff they do in a roundabout way employ or manage.
For example, under an expanded version of this rule, two corporations—say, McDonald’s and a McDonald’s franchisee—could more easily be considered “joint employers” employing the same employees. This makes McDonald’s legally liable for any labor violations committed by one of its franchisees, though McDonald’s didn’t employ or manage that worker itself.
Legal motion is a ‘landmark victory’
In addition to the legislative push, IFA, the U.S. Chamber of Commerce and several other industry organizations filed a lawsuit difficult the legality of expanded regulations in the Eastern District of Texas last 12 months. In March, a federal judge ruled in favor of the IFA hit on the expanded rule, which IFA president and CEO Matt Haller called “a landmark victory for the franchise“
While these actions mean the expanded rule will not come into effect, several key questions remain unanswered.
Webinar: Two key questions remain
Both the court’s decision and legislative approval are significant triumphs for the franchising industry. However, uncertainty remains for franchise businesses about the implications of these changes. Looking ahead, two key questions remain:
- Will the NLRB appeal the court’s decision and what should businesses expect if it does?
- Will President Biden sign or veto the repeal of the expanded provision, and what happens if he vetoes it?
IFA will delve into these questions and more in an upcoming webinar “Joint Employer: Are Franchise Companies Clear?April 23 at 2:00 pm EST. The webinar will feature Michael Layman, IFA’s senior vp of government affairs, and employment and labor relations attorneys Jim Paretti and Alex MacDonald of the Littler Mendelson law firm. This webinar will help franchise industry professionals gain a deeper understanding of court decisions, recent legislative actions and what to anticipate in the future.