Small Businesses Battle NLRB

AP Photo/Eugene Hoshiko
AP Photo/Eugene Hoshiko

Far from the daily headlines, Obama’s National Labor Relations Board is moving toward a fundamental rewrite of decades-old law that governs certain business relationships. The controversial change, spearheaded, apparently, by NLRB general counsel Robert Griffin, would block the path thousands of small businesses and entrepreneurs have taken to build their American dreams.

Almost a million small businesses in America have built thriving enterprises by partnering with well-known national brands. That McDonalds or Subway in the town square probably isn’t owned by the corporation, but an individual businessperson living in the community. Hilton Hotels, Avis, Great Clips, Sylvan Learning Centers. All are examples of a host of brands that thrive in a business relationship called franchising.

In a franchise model, an entrepreneur enters into a partnership with a corporation to provide marketing and brand support in exchange for a licensing fee. It is a longstanding, proven path to economic success for thousands of businessmen and their millions of employees.

The NLRB, through a preliminary ruling from Griffin, would upend this relationship by classifying the parent corporations as “joint-employers” of the franchisee’s employees. Although the franchise owner makes all decisions with respect to the day-to-day management of the business, the national corporation would be liable for these decisions if the NLRB ruling is adopted. In an important way, these independent businesses would essentially become subsidiaries of the parent corporation.

The ruling would be a boon to trial lawyers, who could bring employment disputes against the deep-pocketed corporations. It would also help labor unions who have long sought to organize employees of these individual businesses. Left in the lurch would be thousands of aspiring small businessmen whose franchising opportunities would rapidly shrink. The legal risk of entering into a franchise relationship would be daunting for a corporation.

A coalition of small businesses and business leaders is fighting back against the NLRB ruling, however. Job Creators Network, which promotes policies to strengthen economic growth, has launched a “Defend Main Street” campaign to protest the ruling. The campaign has moved beyond conventional advertising, and is even organizing public protests at NLRB offices.

This last tactic, in particular, is proving very effective in highlighting the negative economic consequences of the proposed NLRB action. Earlier this week Mother Jones, a far left periodical, tried to attack Job Creators Network over its relationship with a PR firm. The Mother Jones expose was built on the possibility that a PR firm had built the website for its Defend Main Street campaign.

Shocking, I know.

Despite the very weak scandal tea brewed by Mother Jones, its article was important. Mother Jones is the tip of a progressive spear that tries to discredit opponents of progressive policies. Of course, the periodical receives backing from George Soros. Its hit-pieces are designed to provide a negative frame for mainstream media coverage of an issue.

The simple fact that Mother Jones loudly trumpeted such a non-scandal is a clear sign that the Job Creators Network’s campaign against the NLRB rule change is gaining traction. Its “scoop” that the Network has some kind of relationship with a PR firm that almost no one has heard of is about as defensible as the proposed NLRB rule change.

Across the Obama Administration, hundreds of proposed regulatory changes are winding their way through an alphabet-soup of bureaucracies. Each of these will affect the economy is some way, even if not as sweeping as the NLRB proposal. The Job Creators Network campaign shows it is possible to fight back against these regulatory actions. Its a good lesson as the clock winds down on the Obama presidency.