White House official raises hopes of a permanent joint employer fix

Hopes of permanently shielding restaurant franchisors from accountability for franchisees’ labor practices were buoyed yesterday by a sign the White House may be willing to aid in the effort.

A key executive branch official told a business group that he feared a failure to protect franchisors from an expanded definition of joint employer would bring the “end of the franchising business as we know it.”

The comment from Mick Mulvaney, director of the Office of Management and Budget and a former Salsarita’s Fresh Cantina franchisee, was followed by an indication he might press his view on fellow White House policymakers.

“I’ll put my OMB hat on for a second and say we’ll look into that,” Mulvaney told a gathering convened by the U.S. Chamber of Commerce, as reported by Politicopro.com and the International Franchise Association.

Mulvaney spoke three days after the National Labor Relations Board again raised the prospect of franchisors being regarded as joint employers of franchisees’ staffs. That change in defining the franchisor-franchisee relationship is seen as a dire threat to franchisees, because plaintiffs alleging labor-rule violations by a local operator could also sue or seek legal redress from the deeper-pocketed brand owner. Franchisees would also lose some of their independence, a negative development that Mulvaney noted in his comments during the Chamber presentation.

A narrower and more franchisor-friendly definition of joint employer had been effectively affirmed by the NLRB in a ruling on a case in mid-December. But on Monday, the board nullified that ruling, saying one of the board members who heard the matter should have recused himself because of a conflict of interest. The action reinstated an earlier, broader definition of joint employer that spread responsibility for franchisees’ actions to the franchisor.

Industry advocates have been pushing for legislation to permanently establish the narrower definition. Many expressed hopes after the NLRB’s about-face on Monday that the reinstated danger might spur action on the so-called Save Local Business Act in the Senate. The bill has already been approved by the House of Representatives.

Having the White House’s stated support for the bill would greatly increase chances of passage in the Senate, where Republicans enjoy a narrow majority.

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