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Committee Seeks Information from NLRB General Counsel on Joint-Employer Standard

Concerned Small Businesses Once Again in NLRB Crosshairs

WASHINGTON, D.C., September 17, 2014

House Education and the Workforce Committee Chairman John Kline (R-MN) and Health, Employment, Labor, and Pensions Subcommittee Chairman Phil Roe have asked National Labor Relations Board (NLRB) General Counsel Richard Griffin to provide documents and information concerning his effort to rewrite the joint-employer standard under the National Labor Relations Act.

In a letter to Griffin, they wrote:

Your office recently filed an amicus brief indicating the National Labor Relations Board (NLRB) should adopt a broader standard to determine joint-employer status under the National Labor Relations Act (NLRA). A month later, your office authorized complaints against McDonald’s USA, LLC and McDonald’s franchisees as joint-employers … It is our understanding such complaints are unprecedented.

To better understand the reason behind these actions, the committee is requesting the following information by September 30, 2014:

  • A list of all open complaints in which joint-employer status is an issue;
  • Any documents and communications related to closed complaints in which joint-employer status was an issue; and
  • A thorough description of the current joint-employer test the general counsel’s office is applying, particularly its application to franchises.

BACKGROUND: Since 1984, the NLRB has determined joint-employer status by analyzing whether the alleged employers share control over essential terms and conditions of employment, such as hiring, firing, and supervision. In recent months, the NLRB’s general counsel has engaged in an effort to discard this long held standard. At a committee oversight hearing held on September 9, small business owners and labor experts recently testified, this decision threatens to harm family businesses and destroy jobs. News reports highlight the havoc this unprecedented policy will wreak on employers and employees alike:

Business owners, both franchisers and franchisees, told the House Education and the Workforce Committee that the NLRB's move could undermine the franchising model, one of the main ways people get into business for themselves … "Individual entrepreneurs would be deprived of the opportunity to own their own businesses, franchisers would be denied the ability to expand their businesses, and millions of jobs would be lost" [said Catherine Monson, chief executive officer, FASTSIGNS International Inc.]. – Washington Examiner, Business owners: NLRB's McDonald's decision will ruin franchise model 

"I am extremely alarmed by the radical decision of the NLRB's general counsel to attempt to create joint employer status for franchisors” … [Jagruti] Panwala [hotel franchisee] said … This may establish a dangerous precedent that could ultimately eliminate one of the most successful paths of small business ownership in the United States. – Digital Journal, AAHOA Board Member Jagruti Panwala Testifies Before Congress

Catherine Monson, the CEO of signage and banner company FastSigns International Inc. — which operates on a franchise model — said the general counsel's position marks a “drastic change” from how the board's joint employer status has been interpreted since 1984…“It will completely change, and I think, destroy the franchise model.– Law 360, NLRB Joint Employer Stance Risky For Franchises, Reps. Told

A recent effort by the National Labor Relations Board's general counsel to “expand” joint employer liability under federal labor law could change the way franchise businesses operate, witnesses said …“In recent months, it's become clear the Obama National Labor Relations Board is determined to rewrite a franchise model that has served workers, employers, and consumers well for decades,” chairman Phil Roe (R-Tenn.) said. – Bloomberg BNA, House Panel Considers Impact on Franchises Of Broadening NLRA Joint Employer Liability

The NLRB is going off the rails again. They have decided to destroy business franchise/franchisee agreements by allowing the corporations that spin out thousands of small businesses using their name, business model and products to be sued over the alleged actions of a few of the small, independent business….This strikes at the heart of the independence of almost 1 million locally owned franchise businesses. – The Hill, Op-Ed, by Rick Manning, NLRB Goes Rogue Against Small Business

To read the members' letter, click here

To learn more about the September 9 oversight hearing, click here.

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