Summary

The deceptively-dubbed “Workplace Democracy Act” is a danger to hundreds of thousands of small business owners and individual entrepreneurs.

In catering to the interests of union bosses who want to unionize the employees of franchises, temporary agencies, as well as third-party contractors, the “Workplace Democracy Act” codifies the 2015 changes to the National Labor Relations Board’s interpretation of so-called “joint employers” by stating:

“An employer shall be considered a joint employer of employees of another employer for purposes of this Act, if such employer possesses, reserves, or exercises enough direct or indirect control over such employees’ essential terms and conditions of employment to permit meaningful collective bargaining between the employer and such employees. (WDA, p. 7)”

The intent of this provision in the WDA is to make franchisors responsible for the employment practices of their franchisees, as well as to make companies who use subcontractors responsible for the employment practices of their subcontractors.

Background


The effort to make franchisors “joint employers” with their franchisees originates, in part, from the Service Employee International Union’s campaign to unionize the fast-food industry.

Rather than unionize the industry store by store, in 2015, the SEIU and its allies in the National Labor Relations Board rewrote the rules on how two separate employers could be viewed as “joint employers.”

As described here:

For over 30 years, the National Labor Relations Board (NLRB) held that two companies would only be considered “joint employers”—equally responsible for certain labor and employment matters—if they shared or codetermined those matters governing the essential terms and conditions of employment, and actually exercised the right to control.

However, in 2015, the Board renounced this joint-employer test in the controversial Browning-Ferris decision, eliminating the requirement that the employer actually exercise control. Instead, the NLRB decided that businesses need only retain the contractual right to control to be considered a joint employer—even if it has never exercised it. Further, the Board held that indirect control (e.g., control through an intermediary) would be sufficient to find joint employment.

“If joint employer was like this 25 years ago, there’s no way I would have become a franchisee,” Matthew Patinkin told Julius Niyonsaba, a legislative aid to Illinois Sen. Richard Durbin, in 2017.

Although the National Labor Relations Board has been working to return the joint employer standard to pre-2015 standards, enactment of the so-called “Workplace Democracy Act” would enshrine the 2015 changes.

Outcome

The “joint employer” standard as it is being newly defined poses an “existential threat” to the franchise industry, Robert Cresanti, executive vice president of government relations and public policy at the International Franchise Association (IFA) has previously stated,

In referring to the effort of unions and their allies to redefine what constitutes “joint employers,” Cresanti stated that if thier efforts are successful, “franchising goes away and ceases to exist in any semblance of the form in which we know it today. It’s not hyperbole.”


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