Congress needs to finish the job on ending new joint employer standard

Last week, the House of Representatives passed in a bipartisan manner the Save Local Businesses Act (H.R. 3441).  By voting on this legislation, Congress finally took another step toward offering workers a much-needed reprieve from one of the Obama-era National Labor Relations Board’s (NLRB) most harmful regulations.  And in ending the new joint employer standard, this legislation undoes undue and unfair burdens on workers and businesses that threaten badly-needed American jobs.

This misguided standard came about when the supposedly independent NLRB passed down a series of confusing and vague regulations that negatively impacted various industries, but few as dramatically as franchises. The franchise industry is unique due to the economic mobility it creates by providing ambitious entrepreneurs with a pre-packaged business model and concept they can then manage on a local level to create jobs and turn a profit. However, Obama’s NLRB turned the franchise industry on its head when it created the new joint employer standard.

{mosads}Before the standard, businesses were only liable for employment violations that occurred in workplaces under their “direct control.”  By enforcing a new standard, the liability was expanded to workplaces under their “indirect control,” meaning a business or company could be found liable in a variety of situations, not under their dominion, such as work contracted to a completely separate entity. 

H.R. 3441 amends the National Labors Relations Act and Fair Labor Act to state that more than two employers must have “actual, direct and immediate” control over employees to be considered a new joint employer. In practical terms, this would free franchise organizations from assuming liability for their local chains, which set their own workplace policies.

According to data from the International Franchise Association, franchises are responsible for 7.6 million jobs and create $674 billion in economic impact. For an industry that creates so much opportunity, our government should be taking proactive steps to protect it from – not inflicting – job-killing regulations.  In making the Save Local Businesses Act the law, Congress would finally lift rules that hurt employees and employers alike.

Lawmakers on both sides of the aisle have been unified in their support to repeal this burdensome regulation. The legislation was co-sponsored by both Republicans and Democrats, including Reps. Luis Correa (Calif.), Henry Cuellar (Texas) and Collin Peterson (Minn.). Not surprisingly, supporters of the new joint employer standard namely union bosses have struggled to attract new members to organized labor, and sought and received special deals from Obama’s NLRB. 

The new joint employer standard is not, as its supporters would lead us to believe, a check on big business. It is simply a massive hurdle for small business owners seeking to grow jobs across the country. Rep. Bradley Byrne (R-Ala.), who introduced the legislation, aptly made this point when he stated, “The people who own these fast food franchises, they’re big time members of our community.  They’re the ones we go to get sponsorships for the Little League. They’re the ones participating in the Chamber of Commerce.”

With the House having acted, it is time for the Senate to do the same. The new joint employer standard was one of the Obama-era NLRB’s most damaging regulations and the Save Local Businesses Act is important legislation which sends a message to both workers and small businesses that their government is committed to restoring the balance of power in workplaces across the country.

Heather Greenaway is a spokesperson for the Workforce Fairness Institute (WFI).