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National Restaurant Association - NLRB shift puts restaurants everywhere at risk

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NLRB shift puts restaurants everywhere at risk

The National Labor Relations Board’s abrupt change in direction on its “joint-employer” standard is a serious threat to the growth potential for restaurants and other businesses across the country. Decisions by the board in two recent cases—one involving a major restaurant brand—mean that restaurants could be held responsible for labor practices  of the companies they do business with, such as vendors, contractors and staffing firms. And franchisors can be held responsible by the NLRB for labor practices of their franchisees, even though franchisees make the labor-related decisions.

Here’s why it matters: Increased liability could make large companies reluctant to contract with smaller businesses. It could also could lead restaurant and other franchisors to assume a direct role in labor decisions like hiring, firing, scheduling and promoting--all of which have historically been the responsibility of franchisees. That puts the independence that has drawn hundreds of thousands of employers to purchase franchises, and the millions of jobs they’ve created, in jeopardy. In addition, large companies may be reluctant to contract with smaller businesses.

A solution from Congress: Bills have just been introduced in the House and Senate that would shift the joint-employer standard back to the one the NLRB followed for the three decades before it changed direction. The Protecting Local Business Opportunity Act, introduced by Sens. Lamar Alexander (R-Tenn.) and Johnny Isakson (R-Ga.) and Rep. John Kline (R-Minn.), would allow companies to be considered joint employers only if both exercise “actual, direct and immediate” control over “essential terms and conditions of employment,” as opposed to the vague “indirect control” standard the NLRB now favors.

“The ongoing attempts by the NLRB to change the joint-employer standard are bad for workers, employers, franchises, and the economy,” wrote Angelo Amador, National Restaurant Association senior vice president and regulatory counsel, in letters of support for the bills. The NLRB’s new joint-employer definition, he wrote, makes “employers potentially liable for employees they do not employ—jeopardizing business partnerships in all industries.”

 “The NLRB’s new joint employer standard would make big businesses bigger and the middle class smaller by discouraging companies from franchising and contracting work to small businesses,” Roe and Alexander said in a statement. “The board’s effort to redefine the idea of what it means to be an employer will wreak havoc on families and small businesses across the country.”

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