In policy change, Labor rescinds guidelines on franchise owners, workers

The expansion of American franchise operations has long fueled job growth, with employment in the businesses increasing 3.4 percent since 2012, compared to two percent elsewhere.

From the model's success sprung a debate, which intensified during the Obama administration - who is responsible for all these workers?

Labor Secretary Alexander Acosta gave the business community a clear signal this week, rescinding Obama-era guidelines that suggested corporations be held more accountable for franchise workers who don their uniforms.

For decades, franchisers relied on the opposite - that franchisees, who essentially operate as small businesses owners, are solely liable for the people they hire. The non-binding Obama-era guidance that inched away from that convention has now vanished from the Labor Department's website, providing some relief to pro-business circles and irking some worker's rights groups.

The removal of the guidance doesn't change the law. But it signals a stark reversal from the previous administration's efforts to 'expand the application of the laws it enforced to the maximum extent possible,” said Alexander Passantino, a Washington, D.C., employment lawyer.

'A lawyer - or a court - can no longer point to the interpretations and say, ‘This is what the DOL believes,'” he wrote in an email.

The Labor Department also emphasized in a statement Wednesday that employees who feel they are being treated unfairly can still seek legal recourse.

'Removal of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department's long-standing regulations and case law,” the statement read. 'The department will continue to fully and fairly enforce all laws within its jurisdiction.”

In the United States, workings are increasingly entering into employment relationships with one than one party. Hotel, restaurant and gym franchises employ roughly 7.6 million people.