The battlefront starts with so-called "joint employer" or "joint liability" standards, which the National Labor Relations Board (NLRB) is
expected to officially
impose soon.
This would essentially require franchisee employees to be counted as employees of the franchisor parent corporation by holding the franchisor liable for the actions of its individual franchisees. It also would make it easier for unions to organize at the parent company level, rather than via individual franchise outlets. Progressives have been pushing for years to impose joint employer standards onto the franchise model, and the Biden administration is echoing the Obama administration in following through (after a brief hiatus during Donald Trump's presidency).
The NLRB's rules on joint employers tend to flip-flop every four to eight years depending on who controls the White House, so it's little surprise that the Biden administration is poised to reopen this debate. The Federal Trade Commission (FTC) is also currently
contemplating getting involved in the debate.
But beyond administrative dictates that can be tweaked by phone and pen, Democratic lawmakers have also tucked joint employer standards into the notorious Protecting the Right to Organize (PRO) Act floating around Capitol Hill, which includes a laundry list of legislative priorities for organized labor.
Left-leaning policy makers are not stopping at the federal level, either, as states like California are also considering joint liability bills. Last year, when California passed its controversial FAST Recovery Act, which not only raised minimum wages for restaurant workers to $22 an hour but also created a 10-member Fast Food Council to oversee and regulate the entire industry, the legislation also included new joint liability rules.
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According to the
International Franchise Association, the Obama-era version of the joint employer standard cost franchises over $33 billion annually and resulted in 376,000 lost job opportunities. Perhaps most alarmingly, it led to an over
90 percent increase in litigation against franchises.
The corporate legal structure of fast food is not the only aspect of the industry facing threats. The iconic drive-thru window itself is under assault, as cities and municipalities across the country are contemplating—or have already passed—drive-thru bans. Pushed under the guise of "smart urban planning" and walkable communities, proponents argue that drive-thrus create traffic congestion and discourage walking.
But once again, these bans mostly serve to hurt businesses and workers. On average, drive-thru sales comprise between
50 percent to 70 percent of sales for fast-food outlets—and unsurprisingly were an even more
vital lifeline during the pandemic. Further, drive-thru windows can be a way to protect worker safety, particularly in late-night settings where keeping employees behind the barrier of a
drive-thru window may create less risk than keeping the dining room open.
The National Owners Association called California’s recently-passed AB 1228 "draconian" and costly to franchisees in a memo distributed to its members.
"The new ‘AB 1228’ legislation has been voted into law and will result in a devastating financial blow to
California McDonald’s franchisees at a projected annual cost of $250,000 per McDonald’s restaurant," the advocacy group representing some 1,000 McDonald’s franchisees said in the memo obtained by FOX Business.
"These costs simply cannot be absorbed by the current business model."
CNBC earlier reported on the NOA memo.
Among the bill's key components:
- It would raise the minimum wage for fast-food workers to $20 per hour.
- It would apply to restaurants with at least 60 locations nationwide, except for restaurants that make and sell their own bread.
- It would also create a 10-person council to govern fast-food chains, set guidelines for wages and make recommendations pertaining to working conditions.
When signing the original version of the legislation,
California Gov. Gavin Newsom said, "California is committed to ensuring that the men and women who have helped build our world-class economy are able to share in the state’s prosperity. Today’s action gives hardworking fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry."