The Obama Administration has a nasty habit of upending decades of established legal precedent, and established law, with nothing more than its own opinion as justification. Take the botched bail-out of GM following the 2008 financial crisis, in which the Administration effectively destroyed two centuries of bankruptcy law when it forced the bond-holders to take a bath, while bailing out the United Autoworkers Union with our tax dollars. Or the President’s own order to the Attorney General not to enforce the Defense of Marriage Act (DOMA), which was duly passed by Congress and signed by then-President Bill Clinton in 1996. This Administration does what it wants, when it wants, the rule of law be damned. This is not the way to run a republic, and if it is allowed to continue it will be the undoing of our democratic process and the freedoms that process provides.
That’s why the latest unilateral legal redefinition by the Administration cannot be allowed to stand. The National Labor Relations Board (NLRB), which the Obama Administration has been used as a pro-union attack dog, is rewriting franchise law in a way that would destroy the McDonald’s business model, and all other franchise systems in this country. NLRB chief legal counsel Richard Griffin, in a legal opinion provided to the NLRB board members, argued that individual franchisees (local owners) of McDonald’s could be classified as “joint-employers” with the parent company, McDonald’s corporate out of Oak Brook, Illinois. Griffin’s reasoning is that the corporate office has “considerable control” over hiring, firing and other employment decisions even at franchisee-operated stores. This opinion is as misguided as it is dangerous.
For anyone familiar with the franchising model, and as a banker I have personally financed numerous McDonald’s franchisees, you know that the local McDonald’s down the street is not run by the corporate headquarters. Local owners make all hiring, firing and employment-related decisions, and directly pay their own employees. In fact, most likely, the name of the Company running your local McDonald’s doesn’t even have the word “McDonald’s” in it. As such, federal courts have long held that the franchisee’s control of franchised stores prevented them as being treated as “joint employers” for purposes of labor law. This has protected national franchise brands like McDonald’s from being force unionized through the corporate entity.
The NLRB wants to change this, and they have begun the process of dismantling all franchises in this country.
If franchisees like local McDonald’s owners can be treated as “joint employers” with the corporate office for McDonalds, then all the labor unions have to do is to use card check to organize the corporate office, and then all local restaurants across South Carolina and every other state will be forced open to the Service Employees International Union (SEIU), among others. This will destroy thousands of local franchise owners across the country, which cannot cope with the massive financial demands a union would bring, and ensure that tens of thousands of jobs are lost by low-skilled and younger workers. This will make an already weak economy weaker, and an already sluggish labor market even more difficult for people looking for work.
To add insult to injury to this disastrous policy direction, it should be pointed-out that it is illegal. The NLRB and the Administration does not have the legal authority to overturn US law and court precedent just because it feels like it.
In the end, I believe the NLRB and the Administration will lose this one in court, but not until they have destroyed thousands of local businesses and business owners in the years it takes for a lawsuit to work through the system. This is why Congress must act and act immediately. All Americans should call upon Congress to save the Golden Arches, and pass legislation that would immediately overturn the NLRB’s attempts to end the franchise model and force unionize America’s favorite fast food chain, and any other franchise model in the nation. Let’s call it the Ronald McDonald Jobs Protection Act of 2014 for all I care, but let’s stop this Administration from killing American small businesses that operate under a franchise label in the name of propping-up the President’s union pals. This is about more than protecting your super-sized French fries; this is about economic freedom and the entrepreneurial dream in America. If the NLRB’s decision is left unchallenged, McDonald’s will be only a symbol of the greater loss: the loss of the free-enterprise system that has made America the economic envy of the world.
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