Montana business leaders are expressing concern about the proposed federal rule

HELENA – A federal agency has proposed a new rule that would expand which businesses must participate in certain labor negotiations. Supporters say it will fix a loophole and protect workers’ rights, but some Montana business leaders are concerned about the impact it could have.

The National Labor Relations Board is preparing to implement a new “joint employer rule.” It says that companies that can exercise control over someone’s terms and conditions of employment — such as wages, scheduling, hiring and working conditions — must participate in collective bargaining for that employee, even if the control is indirect and even if not actually exercised.

Lauren McFerran, the chairman of the NLRB, said in a statement included in their press release announcing the rule that it would be “a practical approach to ensure that entities that effectively exercise control over critical conditions of employment of workers comply with their obligations to bargaining under the NLRA. “

The new rule is due to take effect on February 26.

Under the current rule established under the Trump administration, a business is a joint employer only if it has “substantial direct and immediate control” over the terms and conditions of employment.

Jason Small, executive secretary of the Montana AFL-CIO, said one specific reason for the change was to ensure that companies that have contracts with their workers cannot circumvent them by treating workers differently if they are hired by a subcontractor.

“Basically, all this rule says is that if a company has the power to make changes in the workplace, it should be at the negotiating table,” he said.

Small said that ultimately, he doubts the rule change will have much of an impact in Montana.

But on Friday, some business representatives held a press conference where they said the new rule could have unintended consequences that would have a “chilling effect” on them. They asked Montana’s congressional delegation to oppose the rule.

“The impact on the business community is very deep and it’s very broad and statewide,” said Todd O’Hare, president and CEO of the Montana Chamber of Commerce.

They said their biggest concerns are with franchises — businesses, such as chain restaurants, that are part of a larger brand but have independent local owners for each location.

“A lot of the franchises that we think of as big business aren’t big business, they just bought into the business model,” said Brad Griffin, president of the Montana Retail Association and the Montana Restaurant Association. “They are small business owners here in Montana who employ hundreds and thousands of employees and create a huge economic footprint.”

Mike Layman, senior vice president of government relations and public affairs for the International Franchise Association, said Montana has more than 3,000 franchise businesses employing more than 32,000 people. He said they are concerned that these firms could be dragged into labor cases over things they had nothing to do with, and that they could face higher operating and legal costs.

Mike Ferretti is chairman and CEO of Great Harvest, which almost independently owns bakeries and cafes across the country but is headquartered in Dillon, Montana. He says that when a similar joint employer standard was in place during the Obama administration, his company spent heavily to make sure it stayed in compliance. He expects they’ll have to do it again if the rule comes back.

“We went through it with our franchise attorney every month, making sure we didn’t do anything that would cause an obvious impact on us,” he said.

Ferretti said Great Harvest does not have pure “command and control” of its franchises, and that he specifically avoids advising franchisees on things like pricing to make sure they don’t trigger the joint employer rule.

Those who called Friday want Montana members of Congress to support resolutions that would formally approve the new joint employer rule. If the House and Senate support the resolutions, they could stop the rule from taking effect — although President Joe Biden could veto the resolutions and allow the rule to continue unless at least two-thirds of both chambers disagree.

Republican Sen. Steve Daines co-sponsored the Senate resolution disapproving the rule.

“The Biden administration’s new rule threatens to undermine the franchise model that helps Montanans of all backgrounds start businesses, create jobs and live the American dream,” he said in a statement to MTN. “This tough regulation is just one of Biden’s list of anti-small business rules that are killing jobs and making it harder for employers to keep their doors open, and I will fight it every step of the way.”

A spokesman for Democratic Sen. Jon Tester told MTN that he “continues to have conversations with Montanans about how the joint employer rule may affect small businesses and labor practices.”

An article from Bloomberg Law says the House is likely to vote on its resolution on the joint employer rule this week. There is no word yet on when the Senate will vote on the resolution.

An NLRB fact sheet on the proposed rule said that not all franchisors and franchisees would be considered joint employers and that they would consider each case on a case-by-case basis based on their authority over terms and conditions of employment.

“The bottom line is that while the final rule establishes a single standard for a joint employer, the Board will still need to conduct a case-by-case fact-specific analysis to determine whether two or more employers meet the standard,” the fact sheet said. .

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