NFIB Urges Committee to Support Franchise Protections

Date: December 02, 2015

Small Business Group Urges Committee to Support Franchise Protections

December 1, 2015 (Lansing) – The state’s leading small
business organization, the National Federation of Independent Business
(NFIB), testified today along with Jon Sorber and Michael Stafford from Two Men And A Truck and Tom Little from ServiceMaster of Kalamazoo in support of legislation that would clarify the relationship between
franchisor and franchisee employees. The legislation is necessary because of a
recent ruling by the NLRB (National Labor Relations Board) that changed current
law in the relationship between employers, franchise arrangements and independent
contractors.

The legislation before the House Commerce Committee included
two bills already passed by the Senate, Senate Bill 492 sponsored by Senator
Jack Brandenburg (R-8) and 493 sponsored by John Proos (R-21) along with four
related House Bills: 5070 sponsored by Rep. Eric Leutheuser (R-58), 5071
sponsored by Rep. Pat Somerville (R-23), 5072 sponsored by Rep. Nancy Jenkins
(R-57) and 5073 sponsored by Rep. Daniela Garcia (R-90). The bills would amend
the state’s Franchise Act, Workers Disability Act, MIOHA, Unemployment
Insurance and Wage and Hour laws to clarify that franchisors and franchisees
are treated as separate businesses under Michigan law.

“This legislation is necessary because of a recent ruling by
the federal NLRB (National Labor Relations Board) that expanded the definition
of a ‘joint employer’ to make a franchisor responsible for a franchisee’s
employees even in areas where they do not exercise direct control over
employees of the franchisee,” said NFIB State Director Charlie Owens. “The
bottom line is that the NLRB actions were encouraged by the Obama
administration in order to make it easier for big labor unions to strike and
organize franchise business employees and small independent businesses.”

On August 27, 2015 the National Labor Relations Board (NLRB)
issued a ruling concerning franchise arrangements. The agency issued a radical
reconstruction of the “joint employer rule” which has been settled law for
decades. In its ruling the NLRB expanded the definition to include both indirect,
direct, and even potential, unexercised control over employees in a joint
employer determination. Previous to this ruling, franchisors and franchisees
were considered to be separate businesses and were joint employers only when
they shared direct control over the terms and conditions of employment for the
same employees.

“The Michigan Legislature is taking action to be sure that,
in matters of state law, the ruling by the NLRB will not affect the traditional
and correct interpretation of the employer and employee relationship that has
governed franchise law in our state for decades,” said Owens.

Federal legislation has also been introduced in Congress to
nullify the actions of the NLRB. The “Protecting Local Business Opportunity
Act” HR 3459 is sponsored by U.S. Representative John Kline from Minnesota.
Michigan Congressmen John Moolenaar, Tim Walberg, Bill Huizenga and Mike Bishop
are all co-sponsors of the bill. In the U.S. Senate an identical bill, S.2015,
is sponsored by Senator Lamar Alexander from Tennessee.

Related Content: Small Business News | Labor | Michigan

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