Small Business Group Applauds Senate Passage of Franchise Protections
November 10, 2015 (Lansing) – The state’s leading small
business organization, the National Federation of Independent Business
(NFIB), praised the Michigan Senate today for passing
two bills that would clarify the relationship between franchisor and franchisee
employees. Senate Bills 492 sponsored by Senator Jack Brandenburg (R-8) and 493
sponsored by John Proos (R-21) amend the Franchise Act and the Workers
Disability Act 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 Senate 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. Also, companion House
Bills 4901 sponsored by Representative Joe Graves (R-51) and 4902 sponsored by
Representative Daniela Garcia (R-90) have also been introduced.
Owens said that more bills would be forthcoming as other
state laws are examined to determine if the clarification is necessary.