The International Franchise Association (IFA) and the U.S. Chamber of Commerce have taken legal action to avert the reinstatement of a federal standard widely blasted as a threat to restaurant franchising.
In the Dec. 6 filing, the IFA and the Chamber ask for a federal court’s permission to become a third party in a lawsuit filed by the Service Employees International Union (SEIU) against the National Labor Relations Board (NLRB), the federal unionization watchdog. The suit seeks to overturn the NLRB’s 2020 redefinition of “joint employer,” the designation for a franchisor that can be held responsible for a franchisee’s employment practices.
That definition set a four-question test for determining when a franchisor is a joint employer of a franchisee’s staff. The version was welcomed by the franchise community because of its simplicity, clarity and narrow scope. It was adopted as part of the Trump administration’s effort to reduce businesses’ regulatory burden.
The SEIU sued the NLRB in September to ensure that standard was replaced with a more union-friendly Obama-administration version. The wording greatly expanded the circumstances under which a franchisor can be held accountable for a franchisee’s labor violations.
The union worried that two of the NLRB’s five directors would recuse themselves from deciding on a definition because both had formerly worked for the SEIU. If they were removed from a vote, the three remaining directors—all Republican appointees—might decide to keep the Trump definition.
The motion filed by the IFA and the Chamber asks for a court’s permission to intervene in the SEIU v. NLRB case. In essence, they would become a third party in the matter. With that position, it could press for the recusal of the former SEIU lawyers who now serve as NLRB directors, David Pouty and Gwynne Wilcox.
“Our motion to intervene seeks to defend the common sense joint employer standard that protects local business owners’ livelihoods amid new NLRB members’ clear conflicts of interest,” IFA SVP Michael Layman said in a statement.
The action is the latest development in a long struggle to nail a lasting definition of “joint employer.” The concept has been interpreted differently by judges and federal regulators. The definition has also changed back and forth because of past conflicts of interest involving other NLRB directors.
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