MacArthur Op-Ed: Joint employer rule will kill the ‘shop local’ movement

October 17, 2016

The new joint employer standard will result in corporate consolidation of local small businesses.

Americans love to shop local. Many of us actively seek out the smaller mom-and-pop establishments in order to support our local communities. Last year, more than 95 million people took part in Small Business Saturday, and I was one of them.

What I love about shopping locally is the knowledge that local small-business owners are generally more in tune with the needs of the community. They often live locally — might have even grown up locally — and they know their customers. Where I live in South Jersey, small businesses are the backbone of our economy. They do most of the hiring in our area, they support one another, and consumers and workers are better off for it.

In fact, behind many familiar brands across various industries — child care, home care services like plumbing or landscaping, moving services, restaurants and hotels, and many other industries — are hundreds of thousands of local small-business owners who operate as a franchisee of a larger brand. Franchising has created 770,000 new businesses that account for nearly 18 million direct and indirect jobs and contribute $2.1 trillion, or over 10 percent, to our economy each year. Through franchising, national companies are able to expand the reach of their products and services, and local entrepreneurs are able to start their own small businesses.

Unfortunately, many small-business owners are at risk of being absorbed by a handful of large corporations if the National Labor Relations Board and special interest trial lawyers have their way. They are trying to create a new joint employer rule, which would hold businesses liable for the management and actions of workers they do business with, but don’t actually employ or control. The new standard could extend liability from individual franchisees to brand companies, from subcontractors to larger employers, and even from a vendor or supplier to the company purchasing their products or services.

This will endanger businesses like the Hilton Garden Inn and Holiday Inn Express in Mount Laurel. Larger companies, faced with such increased liabilities, could decide it’s just not worth it to work with local franchisees or contractors and start providing their products and services directly, rather than through local partners. And with 7 of 10 new jobs coming from America’s 28 million small businesses, anything that hurts them hurts America’s workers and their local communities.

Massive corporate consolidation of franchisees removes the “shop local” component that many of us value. If the joint employer rule becomes law, consumers and workers will be left out of the conversation, and small-business owners will be left with little decision-making power. Many of them will essentially become middle managers in large companies.

In short, the U.S. government will have killed the initiative that has caused millions of ambitious, creative and hardworking Americans to venture out, take the risks, and build the small businesses that are so vital to a vibrant economy — a truly misguided idea.

Small-business owners deserve better, and I will stand with them and their employees to prevent this harmful regulation from becoming the law of the land.

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