Beyond NLRB: Wider Impacts of Joint Employer: Legislative action must be taken to ensure the commonsense definition of joint employer is passed into law.

Author:Layman, Michael

Since 2015, franchises have languished under murky joint employer regulations that have interfered with their business practices. To non-labor regulation experts and those outside the franchise community, the 2015 National Labor Relations Board decision regarding Browning-Ferris Industries of California created additional liability on franchisors and undermined the structure of franchise businesses across the nation. The August 2015 ruling in Browning-Ferris impacted all sectors of the franchising industry, from fast-casual restaurants to the service industry, as well as the ability of prospective franchisees to procure loans through the U.S. Small Business Administration. Recently, NLRB came under new leadership, restored the previous definition of joint employer and brought clarity back to the franchise business community. However, legislative action must be taken to ensure the commonsense definition of joint employer is passed into law. While the issue of joint employer begins at NLRB, it extends into issues including SBA loans, cybersecurity, the Financial Accounting Standards Board, and discriminatory minimum wage legislation.

In December 2017, under the new leadership of Peter Robb, NLRB restored the joint-employer definition to the previous definition requiring direct and immediate control. In a 3-2 vote, NLRB reestablished that a person may only be considered a joint employer of an employee if they directly and immediately exercise significant control over the essential terms and conditions of employment. This includes hiring, firing, day-to-day oversight, supervision, scheduling and essential tasks. H.R. 3441, the Save Local Business Act, a bill that would codify this definition, has been passed by the U.S. House of Representatives and now awaits consideration in the Senate.


A government agency focused on strengthening the U.S. economy through the growth of small business, SBA provides loans to prospective small-business owners. On Jan. 1, 2017, SBA revised the rules for franchisors, requiring them to sign an SBA-issued standard agreement for every franchisee joining their system. However, in November 2017, the decision was reversed and now franchisors must certify the agreement with the franchisee. If that is confirmed, the agreement will be automatically renewed, saving both time and money for franchisors across the country.


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