Recent National Labor Relations Board Actions Could Jeopardize Local Businesses across the Country
WASHINGTON – In direct response to significant regulatory overreach by the National Labor Relations Board (NLRB), a group of local business owners and industry leaders launched a comprehensive lobbying, public affairs, media relations and grassroots campaign to preserve the existing joint employer standard. The Coalition to Save Local Businesses (CSLB) seeks to inform Members of Congress of the potentially devastating impact that redefining this standard would have on their businesses and the overall U.S. economy. The coalition will ask Members of Congress to support legislation that would codify the decades-long and widely-accepted definition of what constitutes a joint employer.
“To me, this is not a Republican or Democratic issue. This is an issue about hard working people retaining their ability to own, operate, and manage their own local business. If the NLRB decides to change the definition of who is the employer, it will certainly impact the way I do business, and could have very negative consequences,” said coalition co-chair Matthew Patinkin, a franchisee-owner of local Auntie Anne’s Pretzel’s, Red Mango Frozen Yogurt, and Jamba Juice stores.
At issue is the NLRB’s effort to expand the definition of joint employer, even though the current standard has long been recognized by the courts, businesses, IRS, SBA and even the NLRB itself. Currently, to be deemed a joint employer, two or more companies must exercise significant operational and supervisory control over an employee. However, despite decades of common law and practice, the NLRB is considering expanding that interpretation and applying a broader “economic realities” test.
Should the NLRB broaden the joint employer definition, it would expand franchisor responsibilities and make them more liable for franchisees’ actions. Ultimately, this would lead to consolidation among the franchisors and force local franchisee business owners to lose autonomy over their stores – or worse, it would force them out of business.
“Should the NLRB expand the definition of joint employer, at best my role would change to be akin to a location manager – at worst, I’d be forced to shut down altogether. This would have a negative impact not only on my family, but also my employees, my customers, and the broader economic community,” said coalition co-chair John Sims, the owner and operator of Rainbow Station at the Boulders in Richmond, VA.
In addition to the negative impact on the franchise sector, the NLRB’s actions on the joint employer issue would have wide-ranging implications on other businesses throughout the country as well. The NLRB is currently considering the Browning-Ferris case, which could permanently alter the employer-employee relationship for thousands of companies that rely on contractors and sub-contractors for specialized support. As large companies react to this, many small business owners would lose their investments, workers would lose their jobs and communities would lose vital sources of economic activity.
The Coalition to Save Local Businesses is led by more than a dozen co-chairs from all over the country and is supported by a growing number of local business owners, concerned citizens and trade associations and their members. To learn more about the coalition visit the website, www.SaveLocalBusinesses.com.
Below are comments from representatives of associations that are joining the Coalition to Save Local Businesses:
Katherine Lugar, President & CEO, American Hotel & Lodging Association
“The hotel industry remains a bright spot in today’s economy, and provides incredible opportunities for those who own and operate their own businesses to achieve the American dream. If the NLRB is successful at expanding the definition of joint employer, then these opportunities will be put in jeopardy, and many of these small business owners will lose their ability to make decisions about what is best for the men and women they work with every day. The National Labor Relations Board must encourage and empower businesses, not stifle them.”
Pratik Patel, Chairman, Asian American Hotel Owners Association
“As a culture, Asian Americans have a rich tradition of entrepreneurship, self-improvement, and family values. Thousands of Asian immigrants and their families have found owning and operating hotels to be their pathway to the American Dream. However, the National Labor Relations Board’s action could undermine all of the hard work our members have put into making their hotels successful. We strongly oppose any action that would diminish the relationship between hoteliers and their employees by wresting control of our members’ privately-owned small businesses.”
Gary A. LaBranche, President & CEO, Association for Corporate Growth
“The decades-long definition of joint employer has spurred job creation and helped grow both careers and businesses. An abrupt change mandated by regulatory action would harm businesses and their employees the nation over. Economic growth is a bipartisan concern, and policymakers should do all they can to ensure our nation’s economy continues to expand and create career and small business ownership opportunities. To codify the long-standing definition of joint employer would restore the much-needed certainty and confidence that American businesses, both large and small, desperately need to unleash their job creating potential.”
Misty Chally, Executive Director, Coalition of Franchisee Associations
“Owning and operating a franchise business takes hard work, sweat equity, and financial risk, but it also provides entrepreneurs with a sense of independence coupled with the opportunity to build wealth for themselves and their families. Now, the National Labor Relations Board wants to strip franchisees of the authority and autonomy that has made the franchise business model such a success, and in doing so thwart growth in the franchise business sector, costing U.S. jobs and dampening economic activity in communities across the country.”
Betsy Laird, Senior Vice President of Global Public Policy, International Council of Shopping Centers
“Shopping center owners strive to give consumers an efficient, enjoyable and even memorable experience when they visit their properties. There are many elements that go into making a successful retail center – – from the retail tenants, to the appearance and maintenance of the property, to restaurant and entertainment options. Should the NLRB prevail in expanding the definition of what it means to be a joint employer, it is possible that our shopping center owners, service providers and retailers may lose their ability to operate as independent entities and that current or future contractual relationships may be jeopardized.”
Steve Caldeira, President & CEO, International Franchise Association
“The recent and pending actions redefining the long-standing and widely-accepted definition of what constitutes a joint employer by the NLRB clearly represents an existential threat to the franchise business model. The pending recommendation by the NLRB’s General Counsel would upend the 780,000 locally-owned franchise businesses across the U.S. and in turn jeopardize the 8.9 million jobs they directly support. As more franchisees learned about the NLRB actions to undermine their local businesses, the more they sought an opportunity to express their disagreement with the NLRB and engage with their elected representatives. The Coalition to Save Local Businesses provides them with that platform and we’re proud to be part of it.”
Alfredo Ortiz, President & CEO, Job Creators Network
“Job Creators Network is proud to partner with the International Franchise Association and other organizations to support maintaining the existing definition of joint employer. In the end this is about big government getting bigger and small business getting smaller. Unfortunately, unelected bureaucrats at the National Labor Relations Board want to change the rules, hurting franchised businesses–and especially minority and women entrepreneurs.”
Rob Green, Executive Director, National Council of Chain Restaurants
“Chain restaurants are a diverse and competitive array of businesses, both small and large, in every community in our country. The NLRB’s unilateral action attempting to change the rules of the road for all businesses in the United States by changing the established policy defining the relationship between various employers is outrageous and should not be allowed to stand.”
Stephen Keen, Manager, Legislative Affairs, National Federation of Independent Businesses (NFIB)
“Should the NLRB expand the current definition of joint employer, it would put at risk literally millions of small businesses across the country – businesses that are the backbone of our nation’s economy and a significant component in helping to lead our economic recovery. It’s critically important that lawmakers and regulators understand the potentially dire consequences the NLRB’s actions could have on small business owners and their employees from coast to coast. Congress and the president must codify the current definition of joint employer in order to protect small businesses – and the jobs they support.”
Scott DeFife, Executive Vice President of Policy and Government Affairs, National Restaurant Association
“Altering the joint employer definition would have sweeping consequences on thousands of restaurateurs and their employees across the country. We are committed to working with Members of Congress on both sides of the aisle to inform them about our members’ profound concern with the direction the NLRB is taking and support Congressional efforts to codify the current joint employer definition.”
Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council (SBEC)
“Small, independently-owned businesses across the country have flourished because they are able to provide quality services at competitive prices thanks to local owners and managers who understand their community market and the needs of their customers. Should the NLRB expand the definition of joint employer, they would strip local business owners of their independence to effectively manage their operations. This action will create a disincentive for entrepreneurial Americans to consider franchise business ownership. And those entrepreneurs building and perfecting innovative businesses with the goal of franchising will be harmed if the model is undermined. America needs more successful entrepreneurs, but the NLRB’s potential action will erect new barriers, which means fewer jobs and diminished economy activity.”
The Coalition to Save Local Businesses represents thousands of local businesses and millions of American jobs through its membership and partner organizations. The coalition’s goal is to inform Members of Congress and others about the negative consequences decisions by the National Labor Relations Board to expand the definition of who can be held as a joint employer would have on local businesses and their employees across the country. The coalition is asking Congress to support legislation that would make permanent the long-standing and widely accepted definition of joint employer.