Legislation Will 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”

NLRB’s new “joint employer” standard “would make big businesses bigger and the middle class smaller by discouraging companies from franchising and subcontracting work”  

Washington, D.C., September 9 — Senior Republican lawmakers today introduced legislation to roll back the National Labor Relations Board’s “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 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,” said Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Committee on Health, Education, Labor, and Pensions and Rep. John Kline (R-Minn.), chairman of the House Committee on Education and the Workforce. “The board’s effort to redefine the idea of what it means to be an employer will wreak havoc on families and small businesses across the country. 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.”

“The National Labor Relations Board (NLRB) has bypassed Congress to overturn decades of established law in its joint-employer decision,” said Sen. Johnny Isakson (R-Ga.), chairman of the Senate HELP subcommittee on Employment and Workplace Safety. “Changing the joint-employer standard will impede franchising by taking away the benefits of a small entrepreneur being able to start a small business and grow it using a brand name that was established by a major corporation. If you take away incentives for corporations to franchise, the results will be similar to what we have already seen in so many oversteps by the Obama administration and the NLRB: making the big guys bigger and putting the small guys out of business. Instead, this administration should be focusing on how to create more opportunities for small businesses to grow.”

“We’ve heard numerous stories about how damaging the NLRB’s decision will be for small businesses and entrepreneurs across the country,” said Rep. Phil Roe (R-Tenn.), chairman of the House Subcommittee on Health, Employment, Labor and Pensions.  With an economy still struggling to recover, the last thing we need is more union favoritism that makes it harder for small businesses to survive and more difficult for Americans to find jobs. What we need instead are commonsense solutions that protect working families and job creators. Unlike the NLRB’s misguided decision, this legislation will help, rather than hurt, the men and women working hard to provide for their families and those who aspire to one day have a business of their own.”

For approximately 40 years, federal labor policies held that two separate employers are “joint employers” if both employers have direct and immediate control over employment terms and working conditions, such as being responsible for tasks like hiring and firing, setting work hours, issuing direction to employees, determining compensation and handling day to day record keeping.

Under a new standard adopted last month by the National Labor Relations Board (NLRB) in a case involving Browning Ferris Industries (BFI), a 3-2 partisan majority said that merely “indirect control” or even “unexercised potential” to control working conditions will now make two separate employers joint employers. This new standard will be applied retroactively. 

The new standard means that in many more cases multiple employers will have to jointly negotiate working conditions with unions and share liability for labor law violations. As a result, larger business will exert greater control over the smaller employer who actually owns and operates the business, such as stores, restaurants and day care centers. Additionally, fewer employers will parcel out business to local subcontractors, suppliers or subsidiaries, for fear that they will now be liable for the subcontractor’s employment decisions. Millions of employees will also lose the ability to negotiate things like pay, hours and leave time with their direct supervisor, because those decisions will now be made between the larger employer and the union.

The Protecting Local Business Opportunity Act would roll back the NLRB ruling and reaffirm 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 board’s extreme BFI decision.

In the Senate, in addition to Alexander and Isakson, cosponsors of the Protecting Local Business Opportunity Act include Senate Majority Leader Mitch McConnell (R-Ky.), Kelly Ayotte (R-N.H.), John Barrasso (R-Wyo.), Roy Blunt (R-Mo.), John Boozman (R-Ark.), Richard Burr (R-N.C.),  Bill Cassidy (R-La.), Thad Cochran (R-Miss.), Susan Collins (R-Maine), John Cornyn (R-Texas), Tom Cotton (R-Ark.), Ted Cruz (R-Texas), Steve Daines (R-Mont.), Mike Enzi (R-Wyo.), Jeff Flake (R-Ariz.), Cory Gardner (R-Colo.), Orrin Hatch (R-Utah), James Inhofe (R-Okla.), Ron Johnson (R-Wis.), Mark Kirk (R-Ill.), James Lankford (R-Okla.), Mike Lee (R-Utah), John McCain (R-Ariz.), Jerry Moran (R-Kan.), Rand Paul (R-Ky.), David Perdue (R-Ga.), Pat Roberts (R-Kan.), Mike Rounds (R-S.D.), Marco Rubio (R-Fla.), Richard Shelby (R-Ala.), Thom Tillis (R-N.C.), David Vitter (R-La.) and Roger Wicker (R-Miss.).

###

For access to this release and Chairman Alexander’s other statements, click here.