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NLRB deals another blow to small business

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President Obama’s National Labor Relations Board recently announced that due to complaints against a McDonald’s franchise, it will expand its definition of employer to make one company an employer of another company’s employees.

The impact of the NLRB’s alarming decision to find “joint employment” expands far beyond just the franchising world. Those two words — “joint employer” — would effectively alter the relationship between businesses at every level of the supply chain.

For now, the NLRB seems most focused on attacking franchises – since July 2014, more than three dozen unfair labor practice charges have been filed against franchises including McDonald’s, Taco Bell, Subway, Burger King, Panera Bread, and Jack in the Box. 

As many people know, franchisees and franchisors operate as separate businesses. Franchisees (independent small-business owners) pay for the use of the franchisor’s marketing and branding. So when you visit a McDonald’s, Ace Hardware, 7-11, or most franchised business establishments, you are actually supporting an independent small business. 

The franchisee, not the corporate office, has direct responsibility to hire and fire, set wages and schedules, and pay taxes. But if this decision is upheld, it will greatly alter the franchise relationship. The cost of doing business as a franchisee will increase as the franchisor shifts the additional liability associated with joint employment.

And make no mistake, the NRLB’s attack on franchises is just the first step in expanding the reach of the Board’s authority through an expanded joint-employer rule. 

In April, the NLRB invited amicus briefs on whether Browning-Ferris should be considered a joint employer with Leadpoint, a staffing company. Next, the NLRB will likely pursue joint employment in building, manufacturing, janitorial, and transportation industries. If successful, the NLRB’s campaign to re-label local small businesses as joint employers will serve as a great union membership grab for tens of millions of small business employees.

The Board’s effort to redefine “employer” is but another assault on entrepreneurs, breaking down decades of legal precedent to help big labor replenish its fading union membership rolls. Once again, the NLRB has put the interests of big labor before that of small businesses and their employees.

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