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As promised, Republicans introduce bicameral bills to roll back NLRB’s joint employer standard

Claiming the NLRB’s new “joint employer” standard “would make big businesses bigger and the middle class smaller by discouraging companies from franchising and subcontracting work,” Republicans in both chambers introduced legislation September 9 to roll back the labor board’s August 27 decision in Browning-Ferris Industries. The chairmen of the House and Senate labor committees say the NLRB’s approach “threatens to steal the American dream from owners of the nation’s 780,000 franchise businesses and millions of contractors.”

According to Senator Lamar Alexander (R-Tenn.), chairman of the Senate Committee on Health, Education, Labor, and Pensions and Representative John Kline (R-Minn.), chairman of the House Committee on Education and the Workforce, their “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.”

S. 2015. 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 recent decision. The full text of the legislation, S. 2015, would amend the NLRA by stating that, “Notwithstanding any other provision of this Act, two or more employers may be considered joint employers for purposes of this Act only if each shares and exercises control over essential terms and conditions of employment and such control over these matters is actual, direct, and immediate.”

Franchising concerns. “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,” said Senator Johnny Isakson (R-Ga.), chairman of the Senate HELP subcommittee on Employment and Workplace Safety. “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.”

The old joint employer standard. 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 recordkeeping, a joint release by the GOP lawmakers noted.

And the new. Under the new standard, the 3-2 NLRB said that “indirect control” or even “unexercised potential” to control working conditions will now make two separate employers joint employers. According to the committee chairmen, 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 … 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.”