Business turns to states to get around ridiculous Obama rules for franchises
Frustrated by Obama administration shifts in labor law and workplace policy, business groups and conservative activists are taking a page from their liberal counterparts and using state-level activism, enlisting friendly legislatures to undo a federal pro-union regulation that targeted big franchise businesses such as McDonald's.The Obama Labor Department attempted to overturn establish law on franchise relationships in an area where the franchiser has no control over who is hired and what they are paid. It was a power grab that would destroy the profitability of the business and likely lead to fewer people being hired for entry level jobs.
South Dakota Gov. Dennis Daugaard last week made the Mount Rushmore state the 10th in the last two years to adopt a law that explicitly says that large franchisers are not legally responsible for workplace violations by their franchisees. "Notwithstanding any other provisions of law or any voluntary agreement between the United States Department of Labor and a franchiser, a franchisee or an employee of a franchisee is not considered an employee of the franchiser," the South Dakota law says.
"The franchiser assumes no liability for the franchisee or the employees the franchisee hires," said State Rep. Lana Greenfield, R-Doland, one of the law's sponsors.
Nine other states have passed similar measures: Texas, Oklahoma, Utah, Michigan, Wisconsin, Indiana, Tennessee, Georgia and Louisiana. Additional legislative efforts are being mounted in eight other states, including Virginia, Mississippi and New Hampshire. Business lobbyists hope to get at least a few more states on board.
The laws target a change in the "joint employer" regulation by the National Labor Relations Board, the main federal labor law enforcement agency.
Prior to the Obama administration, a business had to have "direct control" over another business' employees before it became legally liable for them, a standard known as the "joint employer" doctrine. That excluded most franchisers since most franchisees are independent businesses that, in effect, rent out the corporate brand.