WASHINGTON – U.S. Senators Bill Cassidy, M.D. (R-LA) and Roger Marshall, M.D. (R-KS) introduced the Save Local Business Act, which clarifies the joint employer standard. Since 2015, the definition of a “joint employer” has been dramatically expanded, resulting in confusing regulations and an unpredictable liability standard for small and local businesses across the country. As a result, employers have seen increases in operational and legal costs, less compliance assistance, and fewer opportunities to create jobs. The Save Local Business Act will provide clarification to ensure franchisees remain small business owners, rather than being relegated to store managers, to provide certainty for small businesses while strengthening protections for American workers.
“Small businesses are the heartbeat of our communities. The Save Local Business Act provides clarity for job creators trying to keep their lights on,” said Dr. Cassidy.
“The current definition of a joint employer is obscure and broad, and is a clear example of federal overreach,” said Senator Marshall. “Under this definition, business owners from construction companies, manufacturers to franchisees are faced confusing rules and uncertainty about their legal liabilities. Small businesses have always been economic drivers, and as the economy continues to recover from COVID-19 we need to be empowering job growth and creation, not stifling it with harmful regulations and ambiguous standards.”
U.S. Senators Tim Scott (R-SC), Jim Inhofe (R-OK), Richard Burr (R-ND), and Mike Braun (R-IN) have also signed on to the bill. In the House of Representatives, U.S. Representative James Comer (KY-01) introduced companion legislation.
“In addition to promoting policies that encourage workforce participation, unchaining small businesses from harmful regulations is the key to guiding our economy out of the COVID-19 pandemic,” said Congressman Comer. “The Save Local Business Act would reverse anti-private sector overreach from unelected bureaucrats by adding some common sense to the definition of a joint employer – creating more certainty and opportunity for both workers and employers. Our bill will protect the franchise business model, empower small businesses to prosper, and create fewer bureaucratic headaches for American job creators at a time when our economy desperately needs a lift.”
“Franchise small businesses have endured a long pandemic. As the country emerges from the COVID-19 health crisis, these locally owned businesses are now facing unfair regulation that will only impede the economic recovery. The Save Local Business Act will provide the legal clarity that will allow the more than 700,000 franchise small businesses to continue to create jobs, serve their communities and lead the recovery. The IFA and our members are grateful to Sen. Marshall and Rep. Comer for working to help save local businesses across America,” said Michael Layman, Vice President, Federal Government Relations, International Franchise Association.
“Returning to a ‘direct-control’ joint employer standard will provide small business owners with the certainty they have historically enjoyed. This standard will make it clear to small employers when they may be liable for the actions of a subcontractor,” said Jeff Brabant, Senior Manager of Federal Government Relations, National Federation of International Business. “NFIB thanks Senator Marshall and Congressman Comer for leading on this issue and being champions of small business.”
“Efforts by Democrats in Congress and the White House to redefine and expand the joint employer standard under the dangerous PRO Act (S. 420/H.R. 842) would disrupt hundreds of thousands of business operations throughout the country and threaten the ability of America’s workers to achieve the American dream of owning their own business. ABC thanks Senator Marshall and Rep. Comer for introducing this critical legislation to ensure stability in the economy and help contractors and subcontractors across the country recover from the COVID-19 pandemic. We support the Save Local Business Act and urge Congress to act swiftly to pass it,” said Kristen Swearingen, Vice President of Legislative & Political Affairs, Associated Builders and Contractors.
“This legislation is particularly needed now, when many in Washington are eagerly trying to codify the National Labor Relations Board’s controversial Browning-Ferris Industries joint employer standard, despite the devastating impact it will have for small businesses nationwide,” said David French, Senior Vice President, Government Relations, National Retail Federation.
“The restaurant industry was the nation’s second largest private sector employer prior to the pandemic,” said Sean Kennedy, executive vice president of Public Policy for the National Restaurant Association. “As we rebuild our workforce and strive toward economic recovery, we appreciate Sen. Marshall’s support of small business and franchise owners across the country. The Save Local Businesses Act will provide important legal clarity that restaurant operators need right now to help them rebuild and to help them easily understand their state and federal obligations as they create jobs,” said Matt Walker, Vice President of Government Affairs, National Restaurant Association.
Over 65 industry groups signed a letter of support regarding this legislation.
Background
In 2015, the National Labor Relations Board (NLRB) placed itself squarely in the middle of the employer-employee relationship, changing it in a way that hurt working families and small businesses but empowered union interests. Important matters such as hiring, work schedules, and pay increases were no longer simply between an employer and an employee. This prompted a similar expansion of the joint employer standard under the Fair Labor Standards Act (FLSA). With these actions, the Obama administration and the NLRB discarded settled labor policy and blurred the lines of responsibility for decisions affecting the daily operations of local businesses across the country. Two or more employers can be considered joint employers for making a business agreement that “indirectly” or “potentially” impacts their employees’ day-to-day responsibilities and working environment. According to the American Action Forum, the joint employer scheme could result in 1.7 million fewer jobs.
The Save Local Business Act amends the National Labor Relations Act and the Fair Labor Standards Act to clarify that two or more employers must have “actual, direct, and immediate” control over employees to be considered joint employers. This piece of legislation:
- Rolls back a convoluted joint employer scheme that threatens job creation and undermines the American Dream.
- Restores a commonsense definition of employer to provide certainty and stability for workers and employers.
- Protects workers and local employers from future overreach by unelected bureaucrats and activist judges.
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