by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Franchise businesses received a significant boost from the Trump administration on Friday as labor regulators began to unravel one of the Obama administration’s most controversial employment policies.
The National Labor Relations Board is considering a proposal to reinstate the long-standing interpretation of the joint-employer standard, which maintains that parent or umbrella companies are not liable for labor violations committed solely by franchisees or subcontractors. The Obama administration had scrapped the traditional standard in an effort to hold parent companies accountable even if they played no direct role in the workplace violation, giving labor unions a foot in the door for bargaining with national companies like McDonald’s rather than with locally owned franchisees.
“Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship,” the agency said in an announcement. “The National Labor Relations Act’s intent is best supported by a joint-employer doctrine that does not draw third parties, who have not played an active role in deciding wages, benefits, or other essential terms and conditions of employment, into a collective-bargaining relationship for another employer’s employees.”
The agency’s three Republican board members, all of whom are Trump appointees, supported the new proposal, while the board’s lone Democrat dissented.