Franchise Lobby Eager for a Voice in Trump’s Cabinet

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By Ben Penn

“Making America great again” may have a special resonance for the franchising industry with one of its most powerful and outspoken members poised to join Donald Trump’s Cabinet.

Labor Secretary-designate Andrew Puzder is a fast-food executive and former board member of the International Franchise Association, which advocates on behalf of the industry. Puzder is focused on his confirmation hearing—now set for Feb. 2 (see related story)—despite recent delays in the scheduling, IFA President Robert Cresanti told Bloomberg BNA Jan. 17.

“All I know is I've connected with him and he's resolute and I don't sense any waver,” Cresanti said of a recent news report that Puzder is mulling a withdrawal. “I don't think there's anything to this other than maybe wishful thinking.”

Puzder is the chief executive officer of CKE Restaurants Inc., which owns the Hardee’s and Carl’s Jr. franchise brands. The IFA welcomes the prospect of having a business leader who understands its unique priorities in charge of the Labor Department.

Cresanti said he wouldn’t automatically endorse any franchise owner to run the DOL, but in the case of Puzder, he’s excited. “Andy is incredibly bright and he’s incredibly thoughtful.”

The Obama administration did open its doors and listen to the IFA, but the cordial conversations never led to any action, Cresanti said. The new administration gives the IFA a better chance at receiving “some reaction to our concerns, instead of letting them lie fallow,” Cresanti said. “I think that will be a big change,” he said.

Joint Employment Called ‘Knife at Our Throat.'

Topping the list of IFA priorities is undoing the National Labor Relations Board’s recently expanded interpretation of when businesses are considered joint employers, liable for unfair labor practices by franchisees, independent contractors, staffing firms or other affiliated firms.

Joint employment “is the existential issue for franchising and it is the knife at our throat,” said Cresanti, speaking later to franchising representatives assembled in Northern Virginia. The argument, which Cresanti said is shared by Puzder, is that when corporate responsibility is attached to small business operations, the independent-minded prospective franchisees walk away, impeding job creation in the process.

The group is leading the charge to convince Congress to pass a bill blocking the NLRB’s standard, but it is also concerned about other government enforcement agencies, such as the DOL, adopting their own broader joint employer stance. The department’s Wage and Hour Division and Occupational Safety and Health Administration have been increasingly seeking to identify joint employer relationships when investigating work sites for wage and safety violations.

That’s where Puzder could step in.

“Andy is only going to be tangentially involved in” the administration’s potential return to a more narrow joint employer definition, Cresanti said in an interview. Trump will have a chance to appoint two new NLRB members this year, but even then, the board would have to wait for a related case to reach its docket before it could adopt a new standard.

Yet Puzder, on day one, could issue new directives to WHD and OSHA field offices informing investigators to abandon future targeting of joint employment relationships. He could also withdraw a WHD administrator’s interpretation published in 2016 stating that the Fair Labor Standards Act defines joint employment as being “as broad as possible.”

Cresanti cautioned that Puzder would likely take a more measured approach.

“My sense is that he would listen and take in information before he goes further,” the IFA president said. “I think that he’ll listen to the explanations of why somebody who doesn’t directly hire, fire or control the activities of the workers should be responsible as their employer, and he’ll begin to think about what are the downstream ramifications of declaring everyone who has an economic interest in a person’s work as being their employer. And hopefully that will lead to some clarification.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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