By Sarah Davasher-Wisdom
We need clarity to improve Kentucky’s current business climate. Legal rulings have made the issue of interpreting joint responsibility for an employee by corporate franchisors and local franchisees confusing. Congress has an opportunity to fix the National Labor Relations Board (NLRB) rule in its upcoming lame duck session and thus improve the economy.
The rule, which defines the legal relationship between franchisors (the corporate brand) and franchisees (think your local Papa John’s or KFC) that are considered jointly responsible for the same employee, is critically important to the world-renowned franchise businesses headquartered in our state.
The current interpretation of this rule is an overly-broad definition that has undermined decades of conventional legal wisdom and risked jeopardizing the relationships between franchisors and franchisees. It exposes franchisors to a greater legal burden. The fight around that definition has been going on for years, saddling businesses affected by the ruling with uncertainty and negatively impacting their bottom lines, and in-turn, our economy.
Thankfully, the most recently proposed NLRB rule change is a common-sense update that corrects the mistakes of previous court rulings and provides clarity to franchise businesses. The proposed rule states that a joint employer “must possess and actually exercise substantial direct and immediate control over the employees’ essential terms and conditions of employment in a manner that is not limited and routine.” This is an important step in the right direction.
Nevertheless, a legislative fix at the federal level is essential to restoring stability to the franchise industry. Here in Kentucky, Greater Louisville Inc. (GLI) was at the forefront of passing SB 151, a bill that codified the more appropriate definition of a franchisor-franchisee relationship. Now it’s time for Congress to stand up and do the same.
The Save Local Business Act and the Trademark Licensing Protection Act are two pieces of legislation currently pending that would accomplish that goal. However, GLI supports any legislative fix to joint employer at the federal level, since this issue is simply far too important to allow it to fall by the wayside. It is crucial that Congress makes this a top priority during the lame duck session. Time is running out.
Also critical to this fight is ensuring the composition of the NLRB is best suited to reflect the needs and concerns of the business community. While GLI does not advocate for or against any potential NLRB nominees or current NLRB members, the NLRB wields great influence over many issues that have far-reaching implications both in Kentucky and across America. Our leaders must keep this at the top of their minds as they consider nominees for these powerful posts. We need pro-business decision makers at the NLRB who will prove to Americans that we are still committed to creating jobs and growing the economy.
Let’s not jeopardize the recent economic gains. Business is booming in our country, and the franchise industry deserves to reap the full benefits of this environment. The time is now to fix joint employer.
Sarah Davasher-Wisdom is chief operating officer of Greater Louisville Inc.