Recently we discussed the headwinds that remain for the franchise community as a result of policy changes coming from Washington and the various state capitols. What should franchisors consider as they swim in this sea of dangerous uncertainty? Unsurprisingly, there is no clear path; decision-making in the fog of the unknown is risky. That said,
Franchise Industry Calamity Averted, For Now
In recent blogs, we identified serious threats to the franchise industry – the Protect the Right to Organize (“PRO”) Act, joint employer standards, state ABC laws, and the new Biden Administration guard at the Department of Labor and the National Labor Relations Board (which looks suspiciously like the old Obama Administration guard.
Franchising Threat No. 4: The Deus Ex Machina (A Biden Executive Order)
While the Protect the Right to Organize (PRO) Act was passed by the House of Representatives, it has not been made part of the Biden administration’s infrastructure efforts thus far and does not appear have sufficient support to overcome a certain filibuster in the Senate. Therefore, passage of the Act in its present form is
Franchising Threat No. 3: Other State Legislation and Policies
The California version of the ABC test is arguably the most hostile to franchising. Nonetheless, the risk is not confined to California.
This is because the ABC employee classification test, with variations, has been adopted in a majority of states including, in addition to California: Alaska, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana,
Franchising Threat No. 2: Joint Employment is BACK!
The second troublesome threat is the joint employment standard. The Obama Adminstration DOL caused angst in the franchise industry in January 2016, when it adopted a joint employment standard that focused on “whether the employee is dependent on the potential joint employer who, via an arrangement with the intermediary employer, is benefitting from the work.”
Franchising Threat No. 1: The PRO Act
The PRO Act would do serious, and perhaps mortal, damage to the franchise industry. It would make sweeping changes to the National Labor Relations Act (NLRA), the Labor Management Relations Act (LMRA), and the Labor Management and Disclosure Act (LMDA). Most pertinent to franchising, the PRO Act would adopt the California ABC standard for determining
Legal Threats to the Franchise Industry: Is this the Apocalypse? (Part 1)
Omens of the Apocalypse for the franchise industry are everywhere:
- The pending Protect the Right to Organize (PRO) Act;
- The return of David Weill, author of Fissured Employment and chief architect of the Obama era joint employment standard, to the Department of Labor as Wage and Hour Administrator;
- Withdrawal of the control-based joint employment standard
WHIPLASH! A stunningly fast reversal of labor policies
It was predictable – even inevitable – that the Biden administration would reverse much of Trump’s labor oeuvre. But no one could have predicted how quickly! In a little more than a month, the administration has:
- Installed Department of Labor leadership widely viewed as labor-friendly
- Abruptly replaced the NLRB’s Chief Counsel
- Euthanized Trump’s joint employment
A COVID Bonus for Trademark Owners: Presumptive Injunctive Relief and Sweeping Away Old Marks
Buried deep in the roughly 5,500 pages of the most recent COVID relief legislation are two unexpected gifts for trademark owners. One of those gifts, the Trademark Modernization Act:
(a) Essentially overrules eBay v. MercExchange and creates a rebuttable presumption of irreparable harm on a finding of trademark infringement, including in instances of cybersquatting;
Unintended Consequences? The Employment Battle Threatens Franchising
The one-two punch of state and federal employment standards activity poses an existential threat to franchising; many commentators, including this one, have acknowledged that fact. But why? Did the California legislature or the Obama Department of Labor intend to deliver a knock-out punch to a very popular business structure that creates tens of thousands of