When Missouri Senator Eric Schmitt voted to repeal an attempted expansion of joint employer, he helped deliver a monumental win for our state’s franchising community. Our state’s 15,000 franchise businesses were grateful, and the nearly 165,000 jobs those businesses support were safer.
The vote at stake was a repeal of the Biden Administration’s National Labor Relations Board (NLRB) joint employer rule. Dictating the relationship between big businesses and local franchises, Biden’s NLRB last October replaced the workable joint employer policy from the previous Trump standard adopted in March 2020 with a standard that takes away the independence of local franchised businesses.
Under the previous standard, an entity could only be considered a joint employer by exercising “direct and immediate control” over workers’ employment – a franchise owner has control over their own employees, not the corporation whose brand they have licensed to operate under. This is the appropriate balance. Under the Biden rule, however, any entity with “indirect control” would be deemed a joint employer – meaning power is consolidated between corporations, their franchisees, and their employees.
The ramifications of expanded joint employers are immense and harmful, especially for the franchise community. By making big corporations responsible for the employees of local businesses, everyone loses, but no one more than the individual employees and the small business owners who employ them. Workers face a confusing new reporting structure with bosses in faraway offices in big cities. Small business owners surrender autonomy to new overlords who consolidate corporate power. Facing new liability threats, franchisors either get more involved in running their branches or pull back altogether.
In co-sponsoring the repeal of the Biden joint employer standard, West Virginia Senator Joe Manchin called small businesses the, “heart and soul of our communities.” He’s right. It was a similar sentiment expressed by Schmitt on the campaign trail in 2022 when he vowed to, “eliminate unnecessary regulations, and push back on overreaching government mandates.”
Unfortunately, Senator Schmitt was the only Missouri senator to vote for this legislation – as his Senate colleague, Josh Hawley, chose a different path, opting to be the only member of his party in either chamber to support the Biden joint employer policy. Hawley’s decision left the franchise community scratching their head and searching for answers.
Even without Hawley’s support, the repeal of joint employer passed the Senate and headed to the desk of President Joe Biden. That’s the good news.
However, there is still a lot of uncertainty in the small business community with a veto threat and the future of the rule tied up in the courts.
Ultimately, the small business community knows they cannot count on support from their elected officials on every single issue. Good people can have differing points of view. But above all else, we crave certainty and stability from government so we can plan our affairs accordingly.
And ultimately, workers pay the price for expanded joint employer with fewer opportunities and multiple new bosses. In fact, during the last expanded joint employer era under President Obama, hundreds of thousands of jobs were terminated. Franchises lost $33.3 billion per year.
The small business community appreciates Senator Schmitt and the other members of our congressional delegation who voted to repeal joint employer. Thanks to their efforts, we are all breathing easier at night.
Co-founder of Keyser Enterprises and operates multi-franchise operations throughout the Midwest with his brother.
