Written by Gordon Webster, Jr.
Be sure to read the Aug. 18 print edition of The Business Journal — especially the opinion page, which highlights an important issue that could impact thousands of business owners and employees in the Valley.
Ali Nekumanesh, who works with the family behind the highly successful Deli Delicious franchise, wrote an oped about the Save Local Business Act (HR 3441), which is meant to clarify a ridiculous rule change from the National Labor Relations Board (NLRB) that essentially makes franchisors liable for the employees of their franchise operators.
Franchising is big in the Valley. As Nekumanesh puts it, it’s one of the few accessible paths to the American Dream that remain. There are also many franchisor operations based in the Valley — a lot of them restaurant concepts that proved so popular that other entrepreneurs wanted to get in on the action.
The NLRB rule change makes it so that franchisors are liable for employees they have “indirect” or “potential” control over. As Nekumanesh points out, not even his lawyer was able to gain clarity from the Obama-era rule change.
The practical effect of this rule change will be to stunt growth in the franchise industry, making it much more expensive and perilous for franchisors to conduct business.
The Save Local Business Act is a bipartisan effort to clarify this so-called joint employer definition. It’s a measure that California’s congressional delegation should get behind.