For decades, there was a commonsense legal test that determined when two or more separate businesses could be considered joint employers and held jointly responsible for the same group of employees. Employers had to share “direct” and “immediate” control over essential terms and conditions of employment.
This standard was fair, straightforward and provided clarity about legal obligations for businesses of all sizes. But in 2015, the National Labor Relations Board issued a ruling in Browning-Ferris Industries that upended this cornerstone of federal labor law and created a vague and unworkable new joint employer policy. Federal agencies then made matters worse by incorporating the new standard in their regulatory agenda.
Under the new standard, two independent businesses can be considered joint employers if they make a business agreement that “indirectly” or “potentially” impacts their employees. It’s hard enough for labor attorneys to even agree on what exactly those terms mean. Imagine how confusing it is for Main Street businesses to follow this standard in the real world.
The result is unlimited joint employer liability, which threatens legitimate business relationships of all kinds, such as franchising and contracting.
Members of both parties should be concerned when misguided federal policies restrict avenues to business ownership. Countless entrepreneurs have gotten a leg up through franchising and achieved the American Dream. Contracting has also proven to be a key ingredient for businesses large and small to succeed and create jobs in their communities.
We know this expanded joint employer standard has led to a litany of real-world consequences because we’ve heard directly from business owners in our districts. We’ve sat down in local restaurants. We’ve heard firsthand from hardworking men and women who took time away from their business to travel to Washington and urge Congress to act.
The owner of an Alabama oyster restaurant said “the uncertainty is nothing more than governmental overreach” that’s “discouraging growth throughout the restaurant industry.” And a second-generation Texas homebuilder who relies on contracting testified that the new standard “calls into question the very basic idea of what it means to be a business.”
We’ve heard these stories nationwide. Policy experts on both sides of the political spectrum agree the NLRB missed the mark. The Progressive Policy Institute says the expanded standard “may do more harm than good.” And the American Action Forum projects that 1.7 million jobs are at risk.
These are consequences America’s workers and small businesses cannot afford, and that Congress should not accept. That’s why we introduced the Save Local Business Act, which will soon be voted on by the House of Representatives. The bill amends the National Labor Relations Act and the Fair Labor Standards Act to roll back the NLRB’s unworkable policy and reestablish a fair standard as law of the land.
This commonsense legislation will provide the long-term certainty local businesses desperately need. It also protects the rights of workers and ensures employers have clarity on their responsibilities to their employees.
Congress now has an opportunity to put politics aside and do what’s right for those we are elected to serve by passing the Save Local Business Act.
Rep. Bradley Byrne is a Republican who represents Alabama’s 1st Congressional District and serves as chairman of the House Education and the Workforce Subcommittee on Workforce Protections. Rep. Henry Cuellar is a Democrat who represents Texas’ 28th Congressional District and serves on the House Appropriations Committee.