August 20th, 2015
Hoyer meets with local small business leaders
Roundtable discusses impact of ‘joint employer’ expansion
Local and regional business leaders met with U.S. Rep. Steny Hoyer on Friday to share their concerns that possible franchise changes could cost them control of their businesses.
Hoyer (D-Md., 5th) met with members of the Coalition to Save Local Businesses for a roundtable discussion at the Waldorf Hilton Garden Inn to share their perspective on a proposal by the National Labor Relations Board to expand the definition of “joint employer.”
A decision is expected in the case of California waste management company Browning-Ferris Industries, which is expected to expand the definition of “joint employer” to include the franchisers and those companies that contract with others for labor or services.
Rolf Lundberg, outside counsel for Choice Hotels, said a natural consequence of the change is that franchisers would exert more control over franchises to reduce their liability, stripping more power away from small business franchise owners.
“At the end of the day, it would turn the owners of these businesses into co-managers of the business, and they would no longer be the boss, the founder, the community leader, the owner. They would simply be part of the corporate structure that would evolve due to the changed rule and the shifting of liability toward the franchiser,” Lundberg said.
Sonny Patel, owner of Waldorf-based Crossroads Hospitality, which operates 15 hotels, including three in Waldorf, said the proposed changes would impact the way he is able to hire and promote local employees.
“I won’t be able to grow my business the way I’ve been able to grow over the past 20 years because it’s going to take away some of my control, and give it to my franchiser,” Patel said. “I don’t want some company in California to have control over my business.”
Erica Farage, senior director for political affairs and grassroots advocacy with the International Franchise Association, said the potential change could affect more than just franchises.
“Anyone who uses subcontractors could really be impacted by this,” Farage said.
Hoyer noted that franchisers already exert control over quality and style of product.
“The franchiser wants uniformity,” Hoyer said. “That is a compromise you make in owning a franchise.”
Hoyer said concerns about liability and employee treatment are complicated by businesses such as San Francisco-based Uber Technologies Inc., which hires drivers as independent contractors to provide taxi services.
“It’s an international brand, so people feel confidence that there is somebody overlooking and giving standards to and checking on who the driver is,” Hoyer said. “But when everyone is an independent contractor, it really changes the landscape, because 30 or 40 years ago, almost everybody worked for an independently owned business.”
Hoyer said the roundtable was very helpful in raising concerns of local small businesses.
“These are very important discussions,” Hoyer said. “Small businesses are critically important because they have traditionally been the generators of innovation and the generators of a lot of new jobs.”
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