Introduction of ‘Joint Employer’ Legislation Marks Important Step in Efforts to Preserve Locally-Owned Franchise Businesses

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Bipartisan legislation provides needed clarity and certainty to America’s 730,000 franchise businesses

IFA has been at the very forefront of the broad effort to encourage Congress to provide clarity to franchise and other local businesses. We are grateful to see the successful culmination of their efforts today."

The International Franchise Association today applauded Chairwoman Virginia Foxx (R-NC) and Reps. Bradley Byrne (R-AL), Tim Walberg (R-MI), Henry Cuellar (D-TX), and Lou Correa (D-CA), for introducing the “Save Local Business Act.” This bipartisan legislation provides needed clarity and certainty to America’s 730,000 franchise businesses regarding the unlimited joint employer scheme in the National Labor Relations Act and the Fair Labor Standards Act, the most costly and burdensome regulations impacting the franchise business model.

“This is the most important legislation for franchising in a generation. The franchise model has worked well for generations to put thousands of American families into business for themselves, but not by themselves, provide job opportunities to countless hardworking Americans, and contribute tremendous economic benefits to local economies,” said IFA President & CEO Robert Cresanti. “We applaud Chairwoman Foxx and Reps. Byrne, Walberg, Cuellar, and Correa, for recognizing the uncertainty created by the expanded joint employer scheme, and for understanding the need for Congressional action. The traditional joint employer test existed under bipartisan support for decades, free from the partisan struggles that plague our nation today, and it is appropriate that Congress establish a bright line test for employers and employees in this evolving area of law.”

On August 27, 2015, the National Labor Relations Board (NLRB) adopted an expanded “joint employer” standard in its Browning-Ferris Industries (BFI) ruling. For more than 50 years, the traditional “direct and immediate” control standard worked well to provide employers with clarity about their legal obligations. But in the aftermath of BFI, a joint employer is now anyone who exercises indirect, potential, or unexercised reserved control, resulting in uncertainty and an unpredictable liability standard for local businesses. Furthermore, local businesses have seen expanded joint employment liability under several other statutes, including the Fair Labor Standards Act (FLSA).

The Save Local Business Act would update the National Labor Relations Act (NLRA) and FLSA to provide clarity for local businesses on what it means to be a joint employer. Under this legislation, an employer may be considered a joint employer of a worker only if it “directly, actually, and immediately” exercises significant control over the primary elements of employment, such as hiring, firing, determining pay, or supervising employees on a routine basis. This commonsense solution addresses the uncertainty and unreasonable costs associated with the expanded joint employer standard, which have had a harmful impact on local businesses throughout the country.

“The impact of the expanded joint employer standard has been the subject of extensive debate in the House and Senate throughout the last two years,” Cresanti added. “Through our members’ ongoing engagement and advocacy on this issue, along with the Coalition to Save Local Businesses, IFA has been at the very forefront of the broad effort to encourage Congress to provide clarity to franchise and other local businesses. We are grateful to see the successful culmination of their efforts today, and we encourage Congress to act swiftly to pass and enact this critical piece of legislation.”

Since 2015, local business owners have engaged their elected representatives in an effort to raise awareness of the myriad problems associated with joint employer, and the confusion it is causing for businesses of all sizes:

  • 24 CSLB witnesses have testified before Congress telling their small business stories and explaining how joint employer is hurting their businesses and employees.
  • 100+ in-district meetings have been held with Members of Congress and their local business communities to discuss joint employer.
  • 65,000+ letters have been sent to Congress expressing confusion and asking for clarity in the aftermath of the expanded joint employer rule.

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About the International Franchise Association
Celebrating 56 years of excellence, education and advocacy, the International Franchise Association is the world's oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising and the more than 733,000 franchise establishments that support nearly 7.6 million direct jobs, $674.3 billion of economic output for the U.S. economy and 2.5 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law, technology and business development.

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Jenna Weisbord
International Franchise Association
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