The Senate Committee on Health, Education, Labor, & Pensions (HELP) held a timely and informative hearing on February 5th entitled, "Who's the Boss? The 'Joint Employer' Standard and Business Ownership." It provided a great opportunity to raise awareness on the ramifications of recent actions by the National Labor Relations Board (NLRB) on Capitol Hill.
Witnesses included Marshall Babson, Counsel at Seyfarth Shaw and former NLRB member; appearing on behalf of International Franchise Association (IFA) franchise owners Gerald Moore, of The Little Gym in Mt. Pleasant, South Carolina and John Sims, of Rainbow Station in Richmond, Virginia; and Paul Secunda, professor of law at Marquette University Law School.
Committee Chairman Sen. Lamar Alexander (R-TN) kicked off the hearing noting that altering the definition of joint employer could “destroy” small business as we know it. An NLRB decision in the Browning v. Ferris Industries case is imminent. If the NLRB decided that companies can be held liable for the labor practices of franchisees and other contracted parties, thousands of entrepreneurs could lose what they’ve worked so hard for.
The witness testimonies gave a voice to small business owners who will potentially be affected by the NLRB’s decision and explained what many members of Congress or the public in general might not understand about how the franchise business model works. Babson emphasized that franchise owners are “independent businessmen” and Moore amplified that point during his testimony talking about the day-to-day decisions he makes as a small businessman. The Little Gym, a company that provides a brand and standards but “does not play any role in these types of decisions,” Moore explained. The everyday operations of hiring, firing, setting hours, wages, and other responsibilities are in fact in the hands of franchisees. He explained that if the involvement of parent companies (franchisors) is to increase, he would lose his autonomy to run the business that he and his family have built a life around.
When Sims delivered his testimony, he made it a point to highlight the value that small businesses add to the economy. “They provide entrepreneurial opportunities for people looking to better themselves, create jobs and grow local economies,” he said.
He also reflected on the personal loss to current and would-be entrepreneurs if the franchise model was no longer practical as a result of an expanded joint employer definition. “The success or failure of my business is, essentially, all on me — and that is what I love about it. It would be a real shame to take these types of opportunities away from people like me,” he said.
Last week’s hearing definitely revealed the varying opinions on joint employer, but one thing is clear- people are paying attention and asking questions about the legitimacy of the board’s actions. The hearing has garnered attention from the media as well, and perhaps helped to start a national conversation around the country about the future of small business in America.
For franchisees like Moore and Sims, they fear for their businesses and the future of the economy. Small businesses are symbolic of the “American dream” for so many Americans, and entrepreneurs are genuinely concerned about the threat of an expanded definition of joint employer.
