Dear Leader’s Plans to Bring 1000’s of Small Businesses to Their Knees
by Betty Butter • 22 September, 2014 • Culture, Politics • 0 Comments
seiu lunch ladyDear Leader, Comrade Barack, and his union cronies are working hard to force 1000’s of small businesses, specifically those who own and operate franchises like Subway and McDonalds, and Little Ceasar’s, to their knees by forcing them to hike wages to a level that may well put them out of business.
Pressured by the SEIU, the progressive, enlightened city of Seattle, whose citizens voted for Obama in large numbers, has already caved to union demands with a mandatory wage hike to be paid by small business owners of franchises like Subway and McDonalds in the Seattle area.
From IBD:
Obama, Unions, Trial Bar Take Aim At Franchise Model
By STEPHEN MOORE
If the Obama Administration has its way, Ronald McDonald may soon have to wipe that grin off his face as he stands beneath the Golden Arches. One of the most successful models for expanding small-business ownership in America is under full-scale attack from unions and the White House.
The political strategy is to fundamentally change the legal relationship between locally owned stores like McDonald’s (NYSE:MCD), Popeyes (NASDAQ:PLKI), Taco Bell (NYSE:YUM) and their multibillion-dollar parent companies.
No longer would franchisees be legally classified as independent contractors to the parent company. The left wants the employees of each of the hundreds of thousands of independently owned franchise restaurants, hotels, retail stores and others to be considered jointly employed by both the independent franchisee and parent.
This change would overturn a 30-year legal precedent for how the National Labor Relations Board (NLRB) deals with franchisees.
As of now, entrepreneurs can purchase and run their own stores. Likewise, the parent company is sheltered from legal risks associated with the actions on the part of the independent franchisees. Furthermore, regulations such as ObamaCare that apply to large businesses do not affect smaller franchise operations.
With this change, parent companies with deep pockets could also be targets for shakedowns and lawsuits any time that there’s a grievance with a locally operated store.
Legal experts worry that the franchising model could become extinct. The stakes are huge because by the end of this year, the more than 770,000 of these independently owned franchise stores nationwide are expected to employ more than 8 million workers.
More than 31,000 automotive businesses, more than 155,000 fast-food restaurants and nearly 90,000 real estate businesses are part of this model.
The first serious assault against franchising came in June, when the city of Seattle, at the urging of the Service Employees International Union, enacted a $15-an-hour minimum-wage law applying to businesses with more than 500 employees.
The catch here is that the law applies to franchise businesses if the parent company and all its stores employ more than 500 workers. So a local Wendy’s (NASDAQ:WEN) restaurant with only 20 or 30 employees is considered a big business.
Snip:
Meanwhile, the industry is fighting back in court with a request for an injunction against the Seattle law.
Paul D. Clements, a former U.S. solicitor general now representing the industry in this lawsuit, stated: “Seattle’s new minimum-wage law unconstitutionally discriminates against franchisees by categorizing them as big businesses even when they are small and independently owned.” He calls the law “an unfair attack on small business owners who happen to be franchisees.”
Businesses claim that Seattle’s law violates the Constitution’s interstate commerce clause because it imposes higher costs on stores in Seattle that have out-of-state parent companies. The giant worry is that Seattle’s law could become a standard in other cities. It’s also challenging the NLRB ruling on joint ownership.
“The NLRB appears willing to ignore decades of settled law in order to expand franchisor liability,” complains American Tort Reform Association spokesman Darren McKinney. These changes, he says, create another opportunity “for the parasitic plaintiffs’ bar to pick deep corporate pockets of brand-name companies.”
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