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What changes can be expected for the franchise or hospitality industry with the new administration at the federal government?

February 2017

First, in late November, just in time for Thanksgiving, a Texas federal judge on Tuesday entered a nationwide injunction blocking the U.S. Department of Labor from implementing a controversial rule that would have expanded overtime protections, saying the rule improperly created a de facto salary test for determining which workers fall under the Fair Labor Standards Act’s so-called “white collar” exemption.  In short, the new overtime rules are enjoined from taking effect! 

Second, President-elect Trump’s choice to head the Department of Labor is Andrew F. Puzder, CEO of the franchise brand Hardee’s and Carl’s Jr.  He is a board member of the International Franchise Association and has been an outspoken critic of the current administration’s DOL, which included positions on minimum wage increases and the overtime rules just enjoined by the Federal Court in Texas.  While the previous administration’s stated goal was to increase the minimum wage to $15/hour, a DOL headed by Secretary Puzder will probably not pursue such an aggressive increase.  In an appearance on Fox Business in May, he said that he was “not opposed to raising the minimum wage rationally; I’m opposed to raising it to the point where lower-skilled workers, working-class Americans, young people, minorities, are losing the jobs they need to get on the ladder of success.”  Although there may still be change in minimum wage laws and overtime qualification regulations, it is fair to expect that a DOL under a Secretary Puzder will be much more tempered. 

On the National Labor Relations Board front, it is fair to think that Trump appointees will be less strident in their positions that franchisee employees are really employees of the franchisor.  However, that will take some time.  All of the previous administration’s appointees to the NLRB will continue to serve their respective terms.  It is only if a NLRB board member resigns or that member’s term expires will the Trump administration have the opportunity to replace him or her.  The NLRB consists of 5 members, each of whom serve staggered terms of 5 years such that 1 board member’s term expires each year.  Further, to the extent that a Secretary Puzder would have influence over decisions of the NLRB or its policy direction, Puzder has been outspoken on his contempt toward the NLRB’s new joint employer analysis that began the joint employer uproar several years ago. 

In short, it is fair to say that many of the recent fears of the franchise and hospitality industries specifically, and business in general (minimum wage, new overtime rules, joint employer), may see some relief from federal government aggressive intervention with the new Trump administration. 

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