UPDATE: On Thursday, December 14, the National Labor Relations Board (NLRB) reversed its August 2015 Browning-Ferris Industries decision which fundamentally changed and expanded the “joint employer standard.” The joint employer standard defines who ultimately is liable for employees. The Obama-era’s NLRB, through it’s August 2015 BFI decision, made a company much more likely to be held responsible for the employment conditions in a separate business. This unlimited joint employer liability posed an existential threat to the franchise business model as it made the relationship between franchisors and franchisees unclear and unreliable. The recent decision to reverse the joint employer standard is welcome news for franchising, but in order to ensure lasting relief from this regulatory threat, Congress must enact H.R. 3441, the Save Local Business Act.
On November 7, the U.S. House of Representatives passed the Save Local Business Act, H.R. 3441 legislation that fixes the flawed NLRB standard of “joint employer” in the National Labor Relations Act (NLRA) and Fair Labor Standards Act (FLSA).
The August 2015 joint employer standard created by the National Labor Relations Board (NLRB) and its corresponding harm to thousands of local businesses will not go away until Congress enacts a permanent legislative solution.
It is vital to communicate with your elected officials about the dangerous impact joint employer will continue to have on small businesses until a legislative solution is reached.
The Save Local Business Act now awaits consideration in the Senate. Stay tuned for what you can do to ensure your Senator votes to fix the flawed NLRB definition of joint employer.
Please click here to learn how the new “joint employer” standard threatens businesses everywhere.
Please click here to view a quick video about how the joint employer standard has changed and what it means for small businesses across America.
UPDATE: On August 31, House Small Business Committee Chairman Steve Chabot (R-OH) and Rep. Henry Cuellar (D-TX) introduced H.R. 6695, the Trademark Licensing Protection Act of 2018, which clarifies that licensing trademarks, and controlling or exercising those trademarks, do not create an employment relationship.
The Lanham Act requires that licensors (franchisors) police the use of their intellectual property licensed to third parties, since the trademark’s value is that it is consistent and uniform to the consuming public. Absent control over the nature of the products and services, the brand loses quality, which jeopardizes its purpose. However, employment law penalizes franchisors for establishing control mechanisms to protect their marks. There is great uncertainty under some federal employment laws about what amount of control will trigger a finding that the franchisor is a “joint employer” over its franchisees. Franchisors and franchisees risk being deemed joint employers if the franchisors take actions needed to protect the brand.
TAKE ACTION: The Trademark Licensing Protection Act resolves the discrepancy between employment and trademark law regarding controls put in place by licensors and franchisors. Tell your legislators you support this legislation. Take action by texting “TRADEMARK” or clicking here.
UPDATE: On September 14, the National Labor Relations Board (NLRB) issued its proposed rule on the joint employer standard. This is a major step toward resolving the top policy issue for franchise businesses.
Under the proposed rule, an employer may be found to be a joint employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control. This is a significant action and a very important achievement stemming from our advocacy efforts to address the top concern of the franchise community for the past several years.
The final rule will provide clear lines for the determination of joint-employer status and a recognition that brand controls and other support provided as part of the franchise business model do not constitute factors that can be used to find joint employment between franchisors and franchisees.
TAKE ACTION: The NLRB has announced a 60-day public comment period, when the public can weigh in to support the rule and push for its enactment. IFA has created an online portal to facilitate this process. You can text “RULEMAKING” to 52886 or click here to send in comments.