Lawmakers Push Back Against NLRB Joint Employer Ruling

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The franchise industry is taking the joint employer fight to Congress.

On Wednesday, Republican leaders of the House and Senate labor committees introduced legislation to undo the recent National Labor Relation's Board ruling that expanded the definition of a joint employer. Instead of classifying franchisors as employers even if they only influence employees indirectly, the bill would force the return to a definition in which companies can only considered employers if they have "direct and immediate" control over workers.

"The NLRB’s new joint employer standard would make big businesses bigger and the middle class smaller by discouraging companies from franchising and contracting work to small businesses," Sen. Lamar Alexander (R-Tenn.) and Rep. John Kline (R-Minn.) said of the legislation in a statement. "Our commonsense proposal would restore policies in place long before the NLRB’s radical decision, the very same policies that served workers, employers, and consumers well for decades."

Related: Will This Decision Force Franchises to Reconsider Their Business Models?

The NLRB's decision in late August to adopt a broad definition of joint employer has faced immense backlash from the franchise community. While labor advocates have celebrated the new standard, as it allows for employees of large franchises to unionize to more broadly address issues such as minimum wage, franchisors have fiercely opposed the change.

“Through our ongoing and focused advocacy, legislative and regulatory efforts along with the Coalition to Save Local Businesses, IFA has been leading the charge against the recent NLRB ruling and the threat it poses to the franchise business model and economic growth," International Franchise Association president Steve Caldeira said in a statement.

The Congressional battle will continue later this month with the Franchise Action Network Annual Meeting, hosted by the IFA. Thousands of franchisees are anticipated to arrive in Washington, D.C., from Sept. 29 to 30 to speak with members of Congress on issues that impact the franchising industry. Expect the joint employer standard to be front and center.

Related: How the NLRB's Employment Ruling Could Hurt Jobs, Business Growth