Introduction of ‘Joint Employer’ Legislation Marks Important Step in Efforts to Preserve Locally-Owned Franchise Businesses

IFA has been at the very forefront of the broad effort to encourage Congress to provide clarity to franchise and other local businesses. We are grateful to see the successful culmination of their efforts today.”

The International Franchise Association today applauded Chairwoman Virginia Foxx (R-NC) and Reps. Bradley Byrne (R-AL), Tim Walberg (R-MI), Henry Cuellar (D-TX), and Lou Correa (D-CA), for introducing the “Save Local Business Act.” This bipartisan legislation provides needed clarity and certainty to America’s 730,000 franchise businesses regarding the unlimited joint employer scheme in the National Labor Relations Act and the Fair Labor Standards Act, the most costly and burdensome regulations impacting the franchise business model.

“This is the most important legislation for franchising in a generation. The franchise model has worked well for generations to put thousands of American families into business for themselves, but not by themselves, provide job opportunities to countless hardworking Americans, and contribute tremendous economic benefits to local economies,” said IFA President & CEO Robert Cresanti. “We applaud Chairwoman Foxx and Reps. Byrne, Walberg, Cuellar, and Correa, for recognizing the uncertainty created by the expanded joint employer scheme, and for understanding the need for Congressional action. The traditional joint employer test existed under bipartisan support for decades, free from the partisan struggles that plague our nation today, and it is appropriate that Congress establish a bright line test for employers and employees in this evolving area of law.”

On August 27, 2015, the National Labor Relations Board (NLRB) adopted an expanded “joint employer” standard in its Browning-Ferris Industries (BFI) ruling. For more than 50 years, the traditional “direct and immediate” control standard worked well to provide employers with clarity about their legal obligations. But in the aftermath of BFI, a joint employer is now anyone who exercises indirect, potential, or unexercised reserved control, resulting in uncertainty and an unpredictable liability standard for local businesses. Furthermore, local businesses have seen expanded joint employment liability under several other statutes, including the…

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