The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“JOINT EMPLOYER DECISION” mentioning the U.S. Dept of Labor was published in the Senate section on pages S7264 on Oct. 8, 2015.
The publication is reproduced in full below:
JOINT EMPLOYER DECISION
Mr. ALEXANDER. Mr. President, I ask unanimous consent to have printed in the Record a copy of my remarks to the Committee on Health, Education, Labor, and Pensions at the hearing titled, ``Stealing the Dream of Business Ownership: The NLRB's Joint Employer decision.''
There being no objection, the material was ordered to be printed in the Record, as follows:
Joint Employer Decision
This morning we are having a hearing about the recent National Labor Relations Board decision that threatens to steal the American dream from owners of the nation's 780,000 franchise businesses and millions of contractors.
We will also discuss the legislation I have introduced to undo this decision.
Last week, I met a man named Aslam Khan. He is an immigrant from Pakistan who started out as a dishwasher at Church's Chicken and who today has become a very successful owner of Church's Chicken franchises.
He talked about achieving the American Dream. He said it was possible because of our nation's ``free enterprise, entrepreneurial spirit.''
But on August 27, the National Labor Relations Board released a decision that threatens to steal the American dream from owners of the nation's 780,000 franchise businesses and millions of contractors.
It threatens to destroy that free enterprise, entrepreneurial spirit.
The labor board's new ``joint employer'' standard will make big businesses bigger and make the middle class smaller by discouraging larger companies from franchising and contracting work to small businesses.
It is the biggest attack on the opportunity for small businessmen and women in this country to make their way into the middle class that we've seen in a long, long time--and I am committed to fighting it with legislation that already has 45 cosponsors in the Senate and bipartisan support in the House.
For three decades, federal labor policies have held that two separate employers are ``joint employers'' if both have direct and immediate control over employment terms and working conditions.
That means two employers who are both responsible for tasks like hiring and firing, setting work hours, issuing direction to employees, determining compensation and handling day to day record keeping.
Under the new ``joint employer'' standard adopted in August in Browning Ferris Industries, a 3-2 NLRB majority said that merely indirect control or even unexercised potential to control working conditions could make a franchisee and franchisor joint employers.
That means that for all these franchisees and contractors who have worked so hard to build businesses in their communities, hire the right people, and spend 12 hours a day serving customers, meeting a payroll, dealing with government regulations, paying taxes, and trying to make a profit--they will no longer be considered their workers' sole employer. Rather, they are just one of their workers' employers.
And for the businesses that have franchised their brand or used subcontractors to haul their waste or clean their offices--and are now considered one of the employers of those companies' workers--there will be a huge incentive to retake control of those franchises, and retake control of those contracted tasks. Because if you're going to have all the liability of being the boss, you're much better off actually being the boss.
If those businesses stop using franchisees and subcontractors, their costs go up. The system of letting other businesses invest their capital in carrying forward your business goal evaporates.
When costs go up, these businesses lose their ability to grow and create more jobs.
As joint employers, business owners will be forced to engage in collective bargaining and share liability for labor law violations.
As this new standard is applied, we will learn just how much liability an employer will face for another employer's decisions. Will she be required to contribute to healthcare costs, workers compensation and pension funds? Will this scheme mean new ``joint employers'' will be on the hook for notoriously underfunded multi-employer pension plans?
As if facing legal liability for another employer's labor problems isn't bad enough, the Administration is about to make it even more costly.
The President and his Department of Labor are currently in the process of finalizing regulations that will increase the impact of having labor law violations on your record if you want to contract with the federal government.
Under the Fair Pay and Safe Workplaces regulation, labor law violations will be counted against federal contractors when they bid for contracts.
This change also harms employees:
Millions of employees will 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.
As one employee put it in an interview with a local Denver news channel: ``I would be just another number to a corporation. I'm a person to my employer now.''
Franchising will be particularly impacted by this decision.
In my opinion, this is one of the biggest attacks on the opportunity for small businessmen and women in this country to make their way into the middle class that we've seen.
There are 780,000 franchise establishments across this country--and they create nearly 9 million jobs.
Last week I met with a Chattanooga, Tennessee, couple who started their own franchisee location of ``Two Men and a Truck,'' a moving company.
With hard work and commitment, they have been able to grow that first franchise into 6 locations. They would like to continue growing but this new NLRB decision is causing them to put those plans on hold.
The Two Men and a Truck franchisor is an excellent example of how franchising allow entry into business ownership and the middle class. It was started in Michigan by a mom who had two sons she was ready to put to work. Her first franchisee was her daughter.
It has now grown to 220 franchisees, who have created 8,000 jobs.
38 percent of their franchisees began by working on a truck.
75 percent of Two Men and Truck managers began by working on a truck.
Successfully operating a franchise business is today one of the most important ways to climb the ladder of success.
The International Franchise Association estimates that every $1 million in lending to starting or growing franchisees creates 40 jobs.
Franchising has been a way for many women and minorities to jump into business ownership.
Women own or co-own nearly half of all franchise businesses.
Minorities own about 20 percent of all franchises.
Why would the NLRB want to cut off this business model, as well as the opportunity of millions of small, local subcontractors to work with larger companies?
The Protecting Local Business Opportunity Act (S. 2015) would roll back the NLRB ruling and reaffirm that an employer must exercise actual, direct and immediate control over essential terms and conditions of employment.
This is the commonsense standard that has been applied for decades.
We have 45 cosponsors on S. 2015 already, and 60 cosponsors on the House bill, including 3 House Democrats. I hope we will be able to add more.
This is an issue that is so important--I believe that Congress must act as soon as possible to stop this destructive policy change from damaging the middle class growth that has made this nation what it is today.
I hope my colleagues on both sides of the aisle will agree.
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