GOP: Labor board finding would ‘destroy’ small businesses

The National Labor Relations Board’s controversial new standard for franchises would “destroy” small businesses, the top Republican senator on labor issues said Thursday.

NLRB General Counsel Richard Griffin determined last year that McDonald’s should be considered a “joint employer,” along with the franchise owners that operate thousands of stores around the country.

Under the finding, the chain and others like it could be responsible for the labor violations of their franchisees and could be forced to come to the table in collective bargaining situations. 

Critics argue the determination would encourage restaurants and other corporations to assert more control over the management of their franchises.

The impact would be felt most directly by franchise operators who could find themselves with less control over the management of their stores, and in some cases, out of business altogether, business groups say.

During the first Senate hearing to examine the joint employer standard, Labor Committee Chairman Lamar Alexander (R-Tenn.) said it would “destroy a small business opportunity for more than 700,000 Americans.”

“These franchise companies will find it much more practical to own all their stores and restaurants and day care centers themselves,” Alexander said. “There will be many more company-owned outposts, rather than franchisee-owned small businesses.”

But the NLRB argues the joint employer standard will prevent corporations from gaming the system. 

Democrats accused these corporations of “turning a blind eye to the poor labor conditions” at their franchise operations.

“And yet, the parent company can put all the liability for poor working conditions and low wages squarely on the shoulders of its franchise owners,” Sen. Patty Murray (D-Wash.) said at the hearing.