Obama-Era Franchise Rule Undercuts Trump Labor Policies: Conway

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Madison Alder and Jaclyn Diaz

The Trump administration’s attempts to change labor policy have been affected by the uncertainty surrounding franchise employment liability, White House adviser Kellyanne Conway told an industry group today.

“Many of the principals that this administration and President Trump and Vice President Pence have put forward are really undercut” because the definition of joint-employer is unclear, Conway said. “That definition’s vagueness really opens it up to too much subjective interpretation.”

The National Labor Relations Board is working on a proposed rule expected to limit the situations in which one business can be required to bargain with—or be held responsible for unfair labor practices against—a related company’s employees. The Labor Department is said to be working on a similar initiative to restrict “joint employer” liability for wage and hour violations.

The efforts are a response by both agencies to undo joint employment rules imposed during the Obama administration. Critics of joint employment, led by the International Franchise Association, say the Obama-era approach makes businesses responsible for workers who aren’t theirs.

Conway said uncertainty about joint employment has taken attention away from other Trump administration labor initiatives. That includes a rule to expand access to a small business health insurance option known as association health plans, which began rolling out Sept. 1, and Trump’s recently signed executive order on retirement security.

“By changing the definition, you by definition change what it means to be a franchise,” Conway said at an IFA event in Washington

The issue has also become a recent focus in Congress. U.S. House Small Business Committee Chairman Rep. Steve Chabot (R-Ohio) and U.S. Rep. Henry Cuellar (D-Texas) introduced the Trademark Licensing Protection Act Aug. 31 that seeks to clarify differences between employment and trademark law.

The bill, if passed, would clarify franchisers who exert controls to maintain their brand as required by trademark law aren’t to be considered “joint employers” under federal law, meaning they can’t be liable if franchisees violate labor law.

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