House Democrats to NLRB: Provide Clarity on NLRB’s Freshii Memo, Joint Employer Issue


Coalition to Save Local Businesses Executive Director Michael Layman released the statement below in response to House Democrats’ letter to the National Labor Relations Board (NLRB) requesting clarification on a 2015 Advice Memorandum regarding the joint employer issue:

“The Coalition to Save Local Businesses applauds Democratic efforts to seek clarity on the NLRB Division of Advice’s 2015 memorandum pertaining to a Freshii franchise business in Chicago as it relates to the expanded new joint employer standard,” said CSLB Executive Director Michael Layman. “Coalition members have long believed that the often-cited Freshii memo is an outdated document that does not carry the force of law. While proponents of the unlimited joint employer liability are quick to cite the Freshii memo in an effort to lessen the serious concerns of local businesses, the bottom line is that Freshii became outdated when the Board issued its expanded joint employment test in the Browning-Ferris Industries (BFI) decision. As such, local businesses cannot confidently rely on the Freshii memo as a legal guide to help them navigate the unlimited joint employer standard.

“These House Democrats are asking the right questions about the NLRB’s Freshii memo, and our members appreciate them for seeking certainty for small business owners,” Layman said.

In a 2015 case, restaurant franchisor, Freshii Development LLC, and one of its franchise development agents were not found to be joint employers – neither under the “old” standard nor “new” – with Freshii Nutritionality Inc., a franchised business operating a store in Chicago. However, three months after the Freshii Memo was released, the NLRB expanded the joint employer standard in issuing its BFI decision. Nevertheless, proponents continue to reference the Freshii Memo to defend the Board’s revised joint employer standard.

During a February 2017 hearing of the U.S. House Subcommittee on Health, Employment, Labor, and Pensions, a partner from Cohen, Weiss and Simon, LLP, cited Freshii to help combat what she described as small business “hysteria” related to joint employer:

The General Counsel’s treatment of another franchisor, Freshii, is illustrative of the individual analysis that will be applied in each case. The General Counsel determined that Freshii did not exert sufficient control over the terms and conditions of employment of its franchisees’ employees to be a joint employer, even if applying a broader standard such as the one adopted in Browning-Ferris.

The Freshii memo was also referenced by proponents during House and Senate hearings in 2015 and 2016.

But locally owned businesses are not comforted by unpredictable, individual analyses based on an extremely broad joint employer doctrine. They deserve as much clarity and certainty as possible so they can continue to create jobs and serve their communities.

The congressional letter asks the NLRB to provide clarity to small businesses by expanding on the following issues regarding the Freshii Advice Memorandum:

  1. May the April 28th memorandum be used as a blueprint for all franchise systems notwithstanding the joint employer standard established in late August 2015, and
  2. How much flexibility will franchisors have to implement, articulate, and enforce brand standards before they are deemed to cross the line into the forbidden areas of “indirect”, “unexercised” or “potential” control for joint employer purposes?

The letter sent to the NLRB was led by Rep. Scott Peters (CA-52) and signed by Reps. Ami Bera (CA-07), Lou Correa (CA-46), Jim Costa (CA-16), Henry Cuellar (TX-28), Vicente Gonzalez (TX-15), Josh Gottheimer (NJ-05), Dan Lipinski (IL-03), Collin Peterson (MN-07), Jacky Rosen (NV-03), Bobby Rush (IL-01), Kurt Schrader (OR-05), and Kyrsten Sinema (AZ-09).

To read the full letter, click here.

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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. To learn more about the coalition visit the website, www.SaveLocalBusinesses.com.