March 22nd, 2016
Frederick News-Post: Frederick County man testifies at House subcommittee hearing on joint employer definition
Danny Farrar, a Frederick County resident and founder of Soldierfit, a gym with military-style fitness training, testified last week at a U.S. House of Representatives subcommittee hearing.
Farrar urged members of the Small Business Subcommittee on Investigations, Oversight and Regulations last Thursday to support a bill that would change the definition of a “joint employer” under the National Labor Relations Act, which aims to protect the rights of employees and employers.
Under the proposed bill, two or more employers would be considered a joint employer under the law “only if each employer shares and exercises control over essential terms and conditions of employment and such control over these matters is actual, direct, and immediate,” according to the bill’s text.
Farrar said this change would make him no longer liable for labor violations committed by franchisees of his business and would allow franchisees to maintain autonomy. Soldierfit has gyms in Frederick, Gaithersburg and Chantilly, Virginia.
The definition of a joint employer under the National Labor Relations Act changed in August 2015 after the National Labor Relations Board ruled that the waste management company Browning-Ferris Industries was a joint employer with Leadpoint, the company that supplied employees to BFI, according to an August 2015 press release issued by the board.
The board determined BFI and had “indirect and direct control” over “essential terms and conditions of employment of the employees supplied by Leadpoint.”
Farrar argued that the new definition was vague and held him responsible for labor violations out of his control.
“For decades, the joint employer standard has protected businesses like mine from liability for employees over which they do not have actual or direct control. … But now, in adopting this new ambiguous indirect control standard, the NLRB has made employers potentially liable for employees they do not employ,” a copy of Farrar’s testimony read.
Farrar said the current joint employer definition also hurts small businesses because it forces large, primary businesses to exercise more control over over their subcontractors or to look in-house for contracted services to avoid liability.
At the end of the meeting, Chairman Crescent Hardy asked Farrar if he would have started his franchises in a similar method today given the current joint employer definition.
“I probably would not have,” Farrar responded. “We have invested already at least $300,000 in [expanding Soldierfit], and that’s not chump change for a small business by no stretch of the imagination.”
Soldierfit receives 7 percent in royalties on each franchise, which would not fund the amount needed to hire more staff to oversee the franchises and daily operations, Farrar told The Frederick News-Post.
“That’s going to cost us a lot of money and the return on the investment isn’t there, so it wouldn’t make sense,” Farrar told Hardy at the hearing.
Farrar said the International Franchise Association chose him to testify about the joint employer definition after he expressed interest in doing so at a conference in San Antonio earlier this year. The Thursday hearing was Farrar’s first time testifying before Congress, he said.
Farrar said he felt no fear or stage fright testifying before members of the subcommittee, noting that he regularly speaks in front of large crowds as the “face and voice” of Soldierfit. Although Farrar spoke in front of a more somber audience Thursday, he said this had no bearing on his presentation or role.
“I don’t look at them with a fear … The way I look at it, they’re a public servant so they work for me and they work for you,” Farrar said. “My job is to give them information so they can work best for us.”
Farrar described his time testifying on Capitol Hill as a “learning experience,” saying that seeing “the House and bustle and amount of aides” helped him to realize how many issues lawmakers deal with on a daily basis.
Farrar said he could not be certain whether the bill will move forward or whether his testimony had an impact, but said he hoped it would prompt more people to voice their opinion on the issue.
If the bill is struck down and the current joint employer definition remains, Farrar said he has no plans to change the current structure at Soldierfit.
“We’re going to continue to move forward and be a voice of reason for small business and the franchise model,” he said.
Read the full story here.