Alexander: NLRB Restores Path to American Dream for Americans Who Own 780,000 Franchise Locations

NASHVILLE, December 15 — Senate labor committee Chairman Lamar Alexander (R-Tenn.) today released the following statement on the decision by the National Labor Relations Board to overturn its Obama administration-era “joint employer” standard:

“The Obama NLRB’s decision changing the joint employer standard was the biggest attack on the opportunity for small businessmen and women to make their way into the middle class that anyone has seen in a long time—threatening to destroy the American Dream for owners of the nation’s 780,000 franchise locations. Our committee worked to confirm two board members this year with the goal of restoring fairness to the board, and today’s decision by the Board in the Hy-Brand Industrial Contractors case is good news for all Americans.”

Today, in a decision on a case involving Hy-Brand Industrial Contractors, the NLRB returned to the “joint employer” standard that since 1984 required that for a business to be considered a joint employer, it must hold direct control over the terms and conditions of a worker’s employment. 

A decision by the Obama Administration NLRB on a separate case in 2015 changed the standard so that it took just indirect control over the employees’ terms and conditions of employment, or even unexercised potential to control working conditions to be a joint employer. That 2015 standard particularly hurt franchises. Companies could find it much more practical to own all their stores and restaurants and day care centers themselves, rather than encourage more franchisee-owned small businesses.

Alexander has fought the board’s joint employer decision since 2015, when he introduced legislation to overrule the decision. He has held hearings on the joint employer decision, and chairs the committee that oversaw confirmation of two new Republican board members and a new Labor Secretary.

Background:

• In August 2015, the National Labor Relations Board (Board) issued its decision in Browning-Ferris Industries (BFI) adopting a new joint employer standard under the National Labor Relations Act (NLRA).
• Under that new standard, merely indirect control or even unexercised potential to control working conditions could make a franchisee and franchisor, or contractor and subcontractor, joint employers.
• In November, the House passed the bipartisan Save Local Business Act to clarify what it means to be a “joint employer” under the NLRA and the Fair Labor Standards Act. Chairman Alexander urged the Senate to promptly pass such legislation.
• Today’s decision by the Board returned to precedent well established for decades.

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