Small franchises will suffer under joint employer standards

Tuesday, January 26, 2016
 | 
Chris Woodward (OneNewsNow.com)

Chick-fil-A restauranteCriticism continues over the Department of Labor’s joint employer standards, which could be traumatizing for small businesses and franchises.  

The Department of Labor says times have changed, and many companies are contracting now with things like janitorial services and staffing agencies.

As a result, the Department of Labor is now going to hold more large companies and employers responsible for what it calls violations under the Fair Labor Standards Act, meaning large companies and employers will be held partly responsible if complaints are filed over wages and workplace conditions.

Fred Wszolek, spokesman for the Workforce Fairness Institute, says this upends the economic relationship of millions of businesses.

"It applies to subcontractors, like a janitorial company, but they're also going to apply a lot of these standards to franchises," Wszolek says. "When you say franchise, most people's minds go to a McDonald's or Burger King, but it's also every little Molly Maid franchise out there cleaning offices and homes. It's a Mailbox store that you ship packages out of in the local strip mall.”

In a previous report, Trey Kovacs, labor policy analyst at the Competitive Enterprise Institute, said this is a way to force companies to hire employees directly, and then unions could come in to try to organize workers.

Wszolek says that whatever the motivation, there is no justification for federal involvement.  

"It could be, but of course, the Department of Labor has no business interfering in that relationship," Wszolek tells OneNewsNow. "If it made sense to outsource janitorial services, as opposed to hiring it yourself, then they should do that.”

Wszolek predicts that by the end of the Obama administration, someone will propose that the joint employer standard be applied to ObamaCare. 

"Then every little small business in America that's part of a franchise is going to have to provide ObamaCare insurance to their employees," Wszolek says. "That's going to be like dropping a hydrogen bomb on the small business community of this country."

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Analyst foresees tension between businesses and DOL

worried business manThe Department of Labor may have issued new joint-employer standards, but one labor policy analyst doesn't expect to see companies going down without a fight.