NLRB gifts franchise businesses with important ruling in Browning-Ferris, but more work to be done

In August 2015, the National Labor Relations Board (NLRB) declared Browning-Ferris Industries, a California-based recycling company, to be a “joint employer” with Leadpoint, a staffing services company. The ruling caused needless confusion and uncertainty for America’s 733,000 franchise businesses and 7.6 million employees by ignoring 30 previous years of legal precedent and retroactively adopting a far broader definition of “joint employer” than had ever been contemplated.

However, yesterday the labor board took a step in the right direction for small business owners everywhere when they ruled to revert to the joint employer standard that was in place prior to the 2015 decision in Browning-Ferris Industries.The reversal is a significant step in creating certainty for franchisors and franchisees in the near term and highlights the need for long-term certainty in this area.

Matt Haller, IFA’s SVP for Government Relations and Public Affairs, lauded the decision by the board, yet continued calls for Congress to pass the Save Local Business Act, which is the only way the franchise sector can remain the job creating and economic opportunity generating powerhouse that it has always been. In an interview with Marketplace Haller stated, “Yesterday’s ruling helps clarify where responsibility lies: direct and immediate control.”

The Save Local Business Act, voted by House members last month, would create a bright line joint employer test in both the NLRA and FLSA. The IFA along with the Coalition to Save Local Businesses is dedicated to creating increased economic opportunities and informing members of Congress about the adverse effects of the joint employer standards.