In July of 2014, the National Labor Relations Board (NLRB) deemed McDonald’s USA LLC to be a joint employer in complaints by employees against franchisees. This ruling, known as Browning-Ferris Industries Inc., reverses a 30-year-old legal standard and threatens the viability of the entire franchisor-franchisee business model that fosters job growth and business expansion.
For decades, small businesses had to exercise direct and supervisory control over employees to be deemed joint employers. This allowed for a prosperous relationship between franchisees and franchisors, one in which franchisees had the autonomy to make the day-to-day business decisions, including hiring, firing, compensation, benefits, hours, disciplinary procedures and supervision, etc. Now, due to increased liability under the new joint employer relationship, small-business owners risk losing these responsibilities, making them de facto employees of franchisors.
AAHOA strongly opposes the expanded definition of joint employer and has advocated for legislation at the state and federal level that gives small-business owners necessary flexibility and independence.
AAHOA supports the Trademark License Protection Act, legislation that would clarify the Lanham Act of 1946 to uncouple the implementation of brand standards and the designation of joint employer status. In short, a franchisee and franchisor would not be designated joint employers because of the franchisee's use of brand trademarks on signage, uniforms, or other standards mandated by the franchisor.
AAHOA supported the Save Local Business Opportunity Act (HR 3441) in the 115th Congress. This legislation would have created a statutory definition for the joint employer standard and restored independence for franchisees and small-business owners. A statutory definition would also prevent future administrations from arbitrarily changing the rules without first seeking congressional approval. The bill passed the House in 2017 with bipartisan support, but the Senate failed to take action.
At the state level, AAHOA worked directly with legislators to codify the historical joint employer standard into state law. In Georgia, AAHOA worked with Sen. John Albers (R-GA) to pass the Protecting Georgia Small Businesses Act (SB 277), which stated that neither a franchisee nor a franchisee's employee would be deemed an employee of the franchisor.
The bill passed and went into effect in 2017.
Building on this success, the AAHOA Government Affairs team will continue to advocate for the replication of this bill in other states across the country.