Politico Pro: Joint employer standard cost businesses billions

By Ian Kullgren

A study by a prominent business group said that an Obama-era NLRB ruling that broadened the legal definition of joint employment has cost businesses more than $33 billion a year.

The report by the International Franchise Association, set to be released today, also said that the 2015 Browning Ferris decision nearly doubled the number of lawsuits against franchisers and reduced employment by 376,000.

The report is appearing as IFA and other business groups press to overturn Browning Ferris through a proposed rule by the National Labor Relations Board. The proposed regulation would replace Browning Ferris, which made it easier to hold businesses liable for labor violations committed by their franchisees and contractors, with one more favorable to business.

IFA based its report on interviews with more than 75 franchise brand executives and franchise owners, according to a summary provided to POLITICO in advance of its release. The group enlisted Ronald Bird, a senior economist and regulatory analyst for the U.S. Chamber of Commerce, to help with research.

Ninety-two percent of respondents said that Browning Ferris reduced the support that franchisers provide franchisees due to increased legal costs and fear of litigation.

Businesses, on average, suffered an annual loss of $142,000 attributable to Browning Ferris, the report said. The report didn’t state how much of these reported losses came from franchisees and how much from franchisers like McDonald’s Corp. The findings, IFA said, reflected “the loss of productivity that has resulted from the fear and uncertainty that has ensued from [Browning Ferris].”

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