Biden Admin Endangers Franchise Model

Writing at Inc., Suzanne Lucas discusses a regulatory change that threatens to end the practice of running business franchises and to greatly increase the improper, government-backed power of labor unions. This change relates to how one determines who is or is not an employee.

Lucas rehashes recent history, in which McDonald's won a protracted fight with the National Labor Relations Board (NLRB) so it could continue offering franchises to small business owners profitably -- that is, without having to count every single person a franchisee hired as a corporate employee.

Lucas notes that the NLRB is trying to "yank that back" and she helpfully shows just how far-reaching such a change can be with the following hypothetical example:

Image by Commercial Cleaning Maryland, via Wikimedia Commons, license.

Sharing or co-determining is a much lower standard than direct and immediate control. And this is bad for the franchise model and quite possibly the cleaning company you hire to come in after hours. Do you want to be a joint employer with the cleaning company because you set rules around what they can and cannot do and insist on a certain minimum wage for the employees?

Lucas also does a good job of explaining why this is a major threat to the franchise model. Then, she cites a couple of business law experts who agree that this is a way to force companies to deal with labor unions:

[Pete List] says that the proposed NLRB joint employer standard is another tool, along with things such as the PRO Act, which limits contractors and increases union power, toward government control over businesses.

...

Kurt G. Larkin ... [said] this could lead to the NLRB forcing companies to collectively bargain "with a union that doesn't represent the company's own employees, lose the protections against union picketing of neutral employers, and share in liability for labor and employment violations committed by another business."

It is bad enough that a businessman has to account for third-party meddling thanks to government regulation. It is much worse to see how capricious and unpredictable such interference can be, especially when the stakes are the hard work and livelihoods of so many people.

-- CAV