Small Business Owners Support Legislation to Roll Back Labor Decision that Threatens to “Steal the American Dream from Owners of the Nation’s 780,000 Franchise Businesses and Millions of Contractors”

WASHINGTON, D.C., September 22 – Small business owners and business groups are urging Congress to pass legislation introduced earlier this month by senior Republican lawmakers to roll back the National Labor Relations Board’s (NLRB) “joint employer” decision, which the chairmen of the House and Senate labor committees say “threatens to steal the American dream from owners of the nation’s 780,000 franchise businesses and millions of contractors.”

The Protecting Local Business Opportunity Act, introduced earlier this month by Senate labor committee Chairman Lamar Alexander (R-Tenn.) and House Committee on Education and the Workforce Chairman John Kline (R-Minn.), would roll back the recent NLRB “joint employer” ruling and reaffirm that an employer must have “actual, direct and immediate” control over an employee to be considered a joint employer – the same standard that was in place decades before the NLRB’s Browning Ferris Industries decision last month.

Alexander and Kline said, “The NLRB’s new joint employer standard would make big businesses bigger and the middle class smaller by discouraging companies from franchising and contracting work to small businesses. Our commonsense proposal would restore policies in place long before the NLRB’s radical decision – the very same policies that served workers, employers, and consumers well for decades.”

Groups representing small business owners and job creators across the country are voicing their support:

International Franchise Association: “Franchising is a pillar of the free enterprise system and creates opportunities for small business ownership and employment on nearly every Main Street in America, but the NLRB has overreached and put the future of franchising in jeopardy with the stroke of a pen. We applaud Chairman Alexander and Rep. Kline for their collective efforts to overturn this ruling so that we can restore certainty to franchising so that our members can continue to create new businesses and much-needed jobs, which franchising does at a faster rate than other businesses.”

U.S. Chamber of Commerce: "The NLRB's recent decision in Browning-Ferris has broad implications as it upends decades of settled law defining what it means to be an employer under the National Labor Relations Act. The decision will reduce employer flexibility and competition at a time when the economy continues to experience anemic economic growth. The 'Protecting Local Business Opportunity Act' will help curb the NLRB's meddling in the legitimate business decisions of our nation's entrepreneurs. We applaud Senator Alexander and Representative Kline for their leadership on this important issue, and urge all members of Congress to support their legislation and correct the NLRB's misguided ruling."

National Federation of Independent Business: “Today, millions of small subcontractors and franchisees are worried that they could effectively lose their business to the new joint employer standards. The NLRB changed a standard that had worked well for decades. These new bills in the House and Senate would roll back that decision and ensure that the previous standard would continue to provide stability for small businesses.”

National Retail Federation: “This important legislation would restore much needed certainty in business-to-business relationships by reinstating the NLRB’s longstanding test for joint employer status… This long held standard has enabled small businesses to flourish under franchise agreements and contracts to provide their services and products to a variety of companies – opportunities that will vanish for many under the new standard. It has also ensured that larger companies, which can have contracts with countless franchisees, vendors, or contractors, are protected from unnecessary involvement in labor negotiations or disputes in workplaces they do not control.”

National Restaurant Association: “The National Labor Relations Board’s abrupt change in direction on its ‘joint-employer’ standard is a serious threat to the growth potential for restaurants and other businesses across the country … A solution from Congress: Bills have just been introduced in the House and Senate that would shift the joint-employer standard back to the one the NLRB followed for the three decades before it changed direction. The Protecting Local Business Opportunity Act, introduced by Sens. Lamar Alexander (R-Tenn.) and Johnny Isakson (R-Ga.) and Rep. John Kline (R-Minn.), would allow companies to be considered joint employers only if both exercise “actual, direct and immediate” control over “essential terms and conditions of employment,” as opposed to the vague “indirect control” standard the NLRB now favors.”

American Hotel and Lodging Association: “Preserving the ability for so many small business owners in the hotel sector to achieve the American dream is what ought to be guiding principles for our elected officials. AH&LA applauds Chairman Alexander and Chairman Kline for their leadership in protecting small businesses by introducing today’s legislation that restores the long-standing and successful definition of joint employer. This legislation is incredibly important given the dangerous precedent set by the NLRB in the Browning-Ferris decision, where virtually any economic or contractual relationship could lead to joint employer liability. The Board overstepped its legal authority. This decision strips small business of its autonomy, and will undoubtedly undermine the American Dream for so many.”

National Association of Home Builders: “NAHB believes the Browning-Ferris decision will be damaging to the marketplace and housing affordability. The potential control standard adopted by the NLRB will lead to centralization of the industry and contribute to higher housing prices. NAHB strongly supports the Protecting Local Business Opportunity Act, which will restore the traditional definition of joint employment and ensure a level playing field for all small businesses. NAHB encourages Congress to consider this legislation without delay.”

Associated Builders and Contractors: “Thank you for introducing the Protection Local Business Opportunity Act, which will help restore the “joint employer” standard that has been in place for over 30 years and bring stability back into the economy for contractors and subcontractors across the country… The board’s decision will disrupt hundreds of thousands of business operations throughout the country and threaten the ability of hardworking Americans to achieve the American dream of own their own business. Thank you again for introducing this much-needed legislation and we urge Congress to quickly pass it.

Coalition to Save Local Businesses: “Following the NLRB’s Browning-Ferris decision, local business owners need champions in Congress to defend them and their livelihoods. Today Chairman Alexander and Chairman Kline have stepped up in a big way for small businesses by introducing the Protecting Local Business Opportunity Act.”

Competitive Enterprise Institute: “With the introduction of a bill to restore the traditional joint-employer standard, Congress has the chance to return stability and flexibility to thousands of business relationships and employment arrangements across the country.”

Click here for the legislation.

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