IFA Files Comments Supporting Department of Labor Joint Employer Rule
IFA advocates for joint employer rule, claiming it safeguards franchised businesses.
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The IFA has submitted comments in support of the Department of Labor's proposed joint employer rule, emphasizing its importance for clarity in the franchise business model. The rule aims to reduce litigation risks, benefiting over 800,000 franchise locations across the U.S. by providing stability and support for franchisee operations.
Why It Matters
This proposed rule has significant implications for franchisees, as it may reduce litigation risks associated with joint employment claims, allowing franchisees to operate with greater confidence in their business relationships.
The International Franchise Association (IFA) has formally submitted comments to the U.S. Department of Labor (DOL) in support of its proposed joint employer rule, a critical regulation under the Fair Labor Standards Act. The IFA, representing thousands of franchise brands and more than 800,000 franchise locations, believes the rule will provide much-needed clarity and predictability for the franchise business model. The proposed rule reaffirms that the nature of the franchising relationship alone does not constitute joint employment, focusing instead on an "economic realities" framework that relies on four key factors: the ability to hire/fire, manage work conditions, determine pay, and maintain employment records.
Matt Haller, President & CEO of IFA, commended Acting Secretary of Labor Keith Sonderling for the balanced nature of the proposed rule, stating, “This rulemaking brings essential stability for business owners, reducing frivolous litigation risks while encouraging the support and resources franchisors provide to help franchisees thrive.” The IFA argues that the reforms will further empower franchisees and strengthen the franchise model as a fundamental aspect of the U.S. economy.
In its comments, the IFA suggests targeted revisions to enhance the rule's effectiveness. These include establishing that simply reserving contractual rights or indirect control does not establish joint employment, clarifying that franchise relationships do not imply economic dependence relevant to joint employment, and providing more examples of permissible franchisor support that do not trigger employer liability. Additionally, they seek an affirmation that ownership or leasing property should not create presumption of control over employment terms.
The IFA's push for these clarifications signals a proactive approach to mitigate legal risks for franchise operators amidst evolving labor regulations. The timeline for potential implementation of the rule remains uncertain, and its effects will depend on how the DOL responds to these comments while considering broader stakeholder feedback. Whether the proposed rule can deliver its promised benefits to franchisees and businesses hinges on the DOL's final decisions in this regulatory process.
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