[Senate Hearing 113-853]
[From the U.S. Government Publishing Office]
S. Hrg. 113-853
NOMINATION OF LAUREN McFERRAN TO SERVE AS A MEMBER OF THE NATIONAL
LABOR RELATIONS BOARD
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HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
ON
NOMINATION OF LAUREN McFERRAN TO SERVE AS A MEMBER OF THE NATIONAL
LABOR RELATIONS BOARD
__________
NOVEMBER 20, 2014
__________
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
TOM HARKIN, Iowa, Chairman
BARBARA A. MIKULSKI, Maryland LAMAR ALEXANDER, Tennessee
PATTY MURRAY, Washington MICHAEL B. ENZI, Wyoming
BERNARD SANDERS (I), Vermont RICHARD BURR, North Carolina
ROBERT P. CASEY, JR., Pennsylvania JOHNNY ISAKSON, Georgia
KAY R. HAGAN, North Carolina RAND PAUL, Kentucky
AL FRANKEN, Minnesota ORRIN G. HATCH, Utah
MICHAEL F. BENNET, Colorado PAT ROBERTS, Kansas
SHELDON WHITEHOUSE, Rhode Island LISA MURKOWSKI, Alaska
TAMMY BALDWIN, Wisconsin MARK KIRK, Illinois
CHRISTOPHER S. MURPHY, Connecticut TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts
Derek Miller, Staff Director
Lauren McFerran, Deputy Staff Director and Chief Counsel
David P. Cleary, Republican Staff Director
(ii)
C O N T E N T S
__________
STATEMENTS
THURSDAY, NOVEMBER 20, 2014
Page
Committee Members
Harkin, Hon. Tom, Chairman, Committee on Health, Education,
Labor, and Pensions, opening statement......................... 1
Alexander, Hon. Lamar, a U.S. Senator from the State of
Tennessee, opening statement................................... 3
Prepared statement........................................... 4
Mikulski, Hon. Barbara A., a U.S. Senator from the State of
Maryland....................................................... 13
Murray, Hon. Patty, a U.S. Senator from the State of Washington.. 13
Burr, Hon. Richard, a U.S. Senator from the State of North
Carolina....................................................... 15
Franken, Hon. Al, a U.S. Senator from the State of Minnesota..... 16
Casey, Hon. Robert P., Jr., a U.S. Senator from the State of
Pennsylvania................................................... 18
Warren, Hon. Elizabeth, a U.S. Senator from the State of
Massachusetts.................................................. 19
Witness
McFerran, Lauren, nominee to be a member of the National Labor
Relations Board, Washington, DC................................ 8
(iii)
NOMINATION OF LAUREN McFERRAN TO SERVE AS A MEMBER OF THE NATIONAL
LABOR RELATIONS BOARD
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THURSDAY, NOVEMBER 20, 2014
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The committee met, pursuant to notice, at 10:03 a.m. in
room SD-430, Dirksen Senate Office Building, Hon. Tom Harkin,
chairman of the committee, presiding.
Present: Senators Harkin, Alexander, Mikulski, Murray,
Casey, Franken, Warren, and Burr.
Opening Statement of Senator Harkin
The Chairman. The Senate Committee on Health, Education,
Labor, and Pensions will please come to order.
We have convened this hearing to consider the President's
nomination of Lauren McFerran to fill an impending vacancy on
the National Labor Relations Board. Ms. McFerran is well known
to most of us as a senior staffer on this committee, and I look
forward to her speedy confirmation. She has been nominated to
fill a vacancy that will result from the departure next month
of a current Board member, Ms. Nancy Schiffer. And I would like
to take this opportunity to thank Ms. Schiffer for her
dedicated service on the Board. She has been a highly respected
Board member, and I wish her every success in her future
endeavors.
The National Labor Relations Board is an agency that is
absolutely critical to our country, to our economy, and to our
middle class. Over 75 years ago, Congress enacted the National
Labor Relations Act guaranteeing American workers the right to
form and join a union and bargain for a better life. The Act
sets forth a national policy to encourage collective
bargaining. A lot of people do not know that. The Act sets
forth a national policy to encourage collective bargaining. And
specifically the National Labor Relations Act states,
``It is declared to be the policy of the United
States to eliminate the causes of certain substantial
obstructions to the free flow of commerce and to
mitigate and eliminate these obstructions when they
have occurred by encouraging the practice and procedure
of collective bargaining and by protecting the exercise
by workers of full freedom of association, self-
organization, and designation of representatives of
their own choosing for the purpose of negotiating the
terms and conditions of their employment or other
mutual aid or protection.''
For union and non-union workers alike, the Act provides
essential protections. It gives workers a voice in the
workplace, allowing them to join together and speak up for fair
wages and benefits and for safe working conditions. These
rights ensure that the people who do the real work in this
country have a shot at receiving a fair share of the benefits
when our economy grows, and with rising income inequality in
our country, these rights are more important than ever.
The NLRB is the guardian of these fundamental rights.
Workers themselves cannot enforce the National Labor Relations
Act, but they can turn to the Board if they have been denied
the basic protections provided under the law. In short, the
Board plays a vital role in vindicating workers' rights. In the
past 10 years, the NLRB has secured opportunities for
reinstatement for 22,544 employees who were unjustly fired. And
it has recovered more than $1 billion on behalf of workers
whose rights were violated.
But the Board also provides relief and remedies to our
Nation's employers. For example, employers can turn to the
Board for relief if a union commences a wildcat strike or
refuses to bargain in good faith during negotiations. The NLRB
has a long history of helping businesses resolve disputes
efficiently. By preventing or resolving labor disputes that
could disrupt our economy, the work that the Board does is
vital to every worker and every business across the Nation.
That is why it is so important that we maintain a fully
functional, five-member NLRB. I am proud of the fact that just
a little over a year ago we were able to confirm members to
completely fill the Board for the first time in over a decade.
Now we need to fill a soon-to-be-open seat so that the Board
can continue to function effectively.
Ms. McFerran is not the first nominee for this seat. In
September, this committee approved the nomination of a
dedicated public servant, Sharon Block. We, both Republicans
and Democrats, agreed on Ms. Block's reputation and
qualifications, but her nomination was withdrawn in the face of
circumstances totally beyond her control. As a result, Ms.
Block will not have the opportunity to serve on the Board. Ms.
Block is a tremendous public servant whose qualifications are
unaffected and undiminished by the present circumstances, and I
look forward to Ms. Block's future service to our country.
I am heartened, however, by the President's decision to
nominate Lauren McFerran. Ms. McFerran currently serves as
Chief Labor Counsel and Deputy Staff Director of this
committee, the Senate Health, Education, Labor, and Pensions
Committee. I am proud to have her as a member of our staff. She
has served this committee with excellence and great
professionalism since 2005. And I know firsthand the President
could not have found a more able successor to Ms. Schiffer. Ms.
McFerran is an incredibly talented lawyer with deep knowledge
of labor law. She is a person of sterling integrity and strong
character, and she will be a great asset to this Board.
It is my hope that by promptly confirming Ms. McFerran's
nomination to fill this pending vacancy, we can continue the
progress that has been made recently and begin a new era where
orderly transitions on the NLRB are the norm. We should set a
new precedent of confirming nominees, Democratic and Republican
alike, in a timely manner.
I have no doubt that Ms. McFerran will do an excellent job
in this important position. I look forward to her testimony
today and to moving her nomination expeditiously through this
committee and hopefully through the Senate floor.
I will turn to Senator Alexander for his opening statement.
Opening Statement of Senator Alexander
Senator Alexander. Thank you, Mr. Chairman. Welcome, Ms.
McFerran.
I am glad the President withdrew his controversial
nomination, and I hope his gesture of respect to the Senate is
a new beginning. Ms. Block, about whom Senator Harkin talked,
and her fellow appointee, Richard Griffin, were appointed
unconstitutionally in January 2012. They chose to stay in their
office and decide hundreds of cases after courts ruled their
appointments were not legitimate. This created a great deal of
confusion for the workers and employers who count on the Board
to fairly and properly adjudicate their disputes. The 436
decisions issued between January 2012 and July 2013 were made
invalid by the U.S. Supreme Court's unanimous ruling last
summer that they were unconstitutionally appointed. Today there
are 62 of those decisions still pending at the Board.
As Senator Harkin said, Ms. McFerran serves as Chief Labor
Counsel and Deputy Staff Director for this committee. Chairman
Harkin and I have some ideological differences, but no Senate
committee has produced more legislation than ours has because
we work together to get a result.
It is no secret that one of my biggest concerns about the
National Labor Relations Board has been growing partisanship at
the NLRB.
Mr. Chairman, rather than make an extensive statement, I
would ask consent to put my complete remarks in the record.
Just to summarize my thoughts, as I look at Ms. McFerran,
my hope will be that she will strive to be an impartial
decisionmaker, which is what Board members are called upon to
be. NLRB was, as the chairman said, created more than 75 years
ago to be an impartial umpire in labor disputes that threaten
the free flow of commerce and its decisions affect millions of
private sector workers. Of course, too often it tilts toward
the political leanings of the President who appointed the
members. That is true with Democratic appointees; it is true
with Republican appointees. But the trend has grown more
pronounced recently.
I would like to see more stability at NLRB, and for that
reason, Senator McConnell and I have introduced legislation
that would turn the Board from an advocate for one side to an
umpire, as it ought to be. It would help deal with the problem
of partisan advocacy. It would deal with the problem of a free-
wheeling general counsel. It would deal with the problem of a
Board that has been too slow to resolve disputes. Last year,
109 cases--that is 30 percent of the Board's caseload--were
pending for more than a year.
The way it would do that is to have a six-member board,
three Republicans, three Democrats. Four would make a decision.
It would rein in the general counsel by allowing businesses and
unions to challenge complaints filed by the general counsel in
Federal court. It would encourage timely decisions by saying
that either party to a case may appeal to a Federal court of
appeals if the Board fails to act within a year.
Our bill would offer these solutions without taking away
any rights or remedies for any employee, business, or union. It
is something I look forward to working on here in the next
Congress. That is how important I believe the Board is.
Ms. McFerran, I look forward to hearing from you your
thoughts on whether the Nation's workers and employers deserve
stability from this important agency and why you are the best
person to provide it.
Thank you, Mr. Chairman.
[The prepared statement of Senator Alexander follows:]
Prepared Statement of Senator Alexander
Thank you Mr. Chairman for holding this hearing on the
nomination of Lauren McFerran to serve on the National Labor
Relations Board (NLRB).
Ms. McFerran's nomination comes after the President last
week withdrew his nomination of Sharon Block for the NLRB--for
the second time. I'm glad the President withdrew that
controversial nomination and I hope his gesture of respect to
the Senate is part of a new beginning. I opposed Sharon Block's
nomination twice before this committee. Sharon Block accepted
an unconstitutional recess appointment. She was appointed by
the President at a time the Senate was not in recess. This was
not a matter of perspective, but of fact.
The D.C. Circuit case said the appointments were
unconstitutional in January 2013. July 2013, the 4th Circuit
Court of Appeals weighed in--also finding that the recess
appointment of Ms. Block violated the constitution. This
summer, the Supreme Court, in a resounding unanimous decision,
found that the appointments were unconstitutional. Sharon Block
and her fellow-appointee Richard Griffin stayed in office for
18 months and decided hundreds of cases long after it was clear
that the appointments were likely illegitimate.
I believe this displayed a troubling lack of respect for
the constitution, the separation of powers, and the Senate's
constitutional role to advice and consent. It also created a
great deal of confusion for the workers and employers who count
on the Board to properly and fairly adjudicate their disputes.
The NLRB had hundreds of decisions to re-decide--436
decisions issued between January 2012 and July 2013 were made
invalid by the U.S. Supreme Court's unanimous ruling last
summer. Today, 62 of these decisions are still pending at the
Board. So some of the mess left by the actions of Sharon Block
and Richard Griffin remains--and it is something today's
nominee will be sorting out, should she be confirmed.
Ms. McFerran currently serves as the chairman's Chief Labor
Counsel and Deputy Staff Director. While Chairman Harkin and I
have some ideological differences, no Senate committee has
produced more legislation than ours in the 113th Congress. So,
Ms. McFerran, I have a great respect for your boss as we work
together to get a result, despite some areas where we don't
necessarily agree.
It's no secret that one of my biggest areas of concern has
been the growing partisanship at the NLRB.
When looking at the nomination of an individual to serve as
a member of the NLRB, I am interested primarily in whether they
will serve as an impartial umpire, which is what they are
called to be. The NLRB was created 79 years ago to act as an
impartial umpire in labor disputes that threaten the free flow
of commerce, and its decisions affect millions of private-
sector workers.
However, the current NLRB has demonstrated a willingness to
tilt the playing field toward organized labor, showing little
interest in the rights of employers or individual employees who
want to exercise their right to not join a union. The NLRB has
become more and more partisan in recent decades. Policy
reversals and dramatic shifts are becoming a regular
expectation with each new administration.
We need to reverse this trend and move toward providing
stability to our Nation's workplaces.
I am looking forward to hearing from you today whether you
think the Board is an umpire or an advocate, and whether you
think the proper role of a Board member is to serve as an
impartial decisionmaker.
This is such a priority that in September Leader McConnell
and I introduced legislation called the NLRB Reform Act to turn
the Board from an advocate for one side or the other to the
umpire it ought to be.
There are three significant problems the Board faces today:
1. This is the biggest problem: Partisan advocacy. Today,
the majority of the five-member Board is made up of appointees
who follow the President's political leanings. President Obama
has appointed 3 labor union lawyers to the Board.
2. It has a freewheeling advocate for a general counsel.
The Board's most recent general counsels have been exceeding
their statutory authority and bringing questionable cases that
threaten American jobs.
3. It's too slow to resolve disputes. Last year, 109
cases--that's 30 percent of the Board's caseload--were pending
for more than a year.
Our bill provides three fixes:
1. It ends partisan advocacy. A six-member Board of 3
Republicans and 3 Democrats and a majority of 4 will require
both sides to find a middle ground.
2. It reins in the general counsel. Businesses and unions
would be able to challenge complaints filed by the general
counsel in Federal district court, and they will have greater
transparency about the basis and legal reasoning of charges
brought by the general counsel.
3. It encourages timely decisions. First, either party in a
case before the Board may appeal to a Federal Court of Appeals
if the Board fails to reach a decision in their case within 1
year. Second, funding for the entire NLRB would be reduced by
20 percent if the Board is not able to decide 90 percent of its
cases within 1 year over the first 2-year period post-reform.
Problems and Solutions
With each new administration, the pendulum has swung
farther from the middle. The result is labor policy that
whipsaws back and forth, taking employers and employees on a
wild ride.
Problem: Under the partisan advocacy of today's Board:
Small factions of employees within single stores have a
path to forming their own unions: In 2011, the Board suddenly
adopted a new way to define what makes a local union bargaining
unit. The Board changed the law so that any group of employees
with an overwhelming community of interests could become a
bargaining unit, and therefore a union.
At the same time, the Board is moving a regulation to limit
the employer's ability to question which employees should be in
a bargaining unit. This allows a union to cherry-pick employees
who will be most likely to support forming a union.
How has this worked in the real world? The Board recently
approved a bargaining unit of cosmetic and fragrance employees
in a Macy's department store. Not the shoe salespeople, not the
ladies fashion employees, not the juniors department--just
cosmetic and fragrance.
Imagine if every department of the Macy's decided to form a
union. The employer would have dozens of different groups to
negotiate with, and the different unions would be fighting each
other over who got the better raises, break rooms and terms of
employment.
During this Administration, the NLRB has ruled that common
employment policies are unfair labor practices, such as:
Requiring employees to be courteous to customers
and fellow employees.
Prohibiting employees from making negative
comments about the business that employs them on social media.
Selecting arbitration for employment disputes.
Our Solution: This bill will solve this by requiring a six-
member board of 3 Republicans and 3 Democrats. Like the Federal
Election Commission, a majority of 4 will require both sides to
find a middle ground.
Problem: The Board's general counsel acting like a
freewheeling advocate, stretching Federal labor law to its
limits, and sometimes beyond its limits. For example, the
general counsel is allowing complaints about conduct of
restaurant franchisee owners to be filed against the brand
company.
For 30 years, under its joint-employer standard, the NLRB
has taken the position that one business cannot be held liable
for the employment-related matters of another business unless
that business had direct control over the employees in
question.
Now the general counsel and the Board appear to be
preparing to change that standard in what can only be an effort
to help labor unions add more members.
Imagine being an owner of a local franchise business and
being told that all the employees that you recruit, hire,
train, pay, promote, and work alongside day after day are
actually another company's employees, too.
This won't just impact fast food--it will endanger the
businesses of thousands of local franchise owners or
subcontractors who are building the American dream as small
business owners. In Tennessee, that's approximately 21,291
local franchise establishments employing nearly 224,000 workers
that would be subject to the general counsel's absurd ruling.
Another example: In 2011, the general counsel moved to stop
Boeing from building new airplanes at a non-union plant in
South Carolina.
The general counsel jeopardized a $1 billion factory and
hundreds of jobs with this move, but even worse he tried to
make the case that a unionized American company cannot expand
its operations into one of the 24 States with right-to-work
laws, which protect a worker's right to join or not join a
union.
The general counsel withdrew the outrageous complaint
against Boeing, but if it had set a precedent, jobs would have
fled overseas as manufacturers looked for a competitive
environment in which to make and sell cars around the world.
Our Solution: Our bill will allow employers and unions to
challenge complaints filed against them in Federal court and
give them new rights to learn the basis and legal reasoning of
charges filed against them.
Problem: The NLRB is taking too long to resolve cases. For
example, the NLRB recently issued a decision in a case
involving whether CNN subcontractors were employees that had
been pending for 11 years. (CNN vs. TVS)
Another case has been pending at the Board for more than 7
years. The case involves the question of whether an employer
has to allow labor union organizers access to private property.
(Roundy's, Inc. vs. Milwaukee Building and Construction Trades
Council, AFL-CIO)
Our Solution: We encourage a timely resolution of cases--
first by allowing either party to appeal to a Federal court of
appeals for a de novo, or fresh, review if the Board fails to
reach a decision on their case within a year.
Our bill, the NLRB Reform Act will:
end partisan advocacy,
rein in the general counsel, and
encourage timely decisions.
And our bill would offer these solutions without taking
away rights or remedies for any employee, business, or union.
This bill is something I look forward to working on here in
the committee next year.
That's how important I think the Board is, and that's how
important I think it is that the Board be a stabilizing force
in our Nation's workplaces, rather than a destabilizing force.
Ms. McFerran, I look forward to hearing your thoughts on
whether this Nation's workers and employers deserve stability
from this important agency, and why you believe you are the
best person to provide it.
The Chairman. Thank you, Senator Alexander.
Now I have the privilege of formally introducing Lauren
McFerran today. It is rather odd. I am usually turning to her
here to ask what I should be doing next.
[Laughter.]
And now to have you at the table.
As has been said, Ms. McFerran is presently the Deputy
Staff Director and Chief Labor Counsel to this committee, which
she has done for 9 years since 2005.
Prior to joining this committee, she was an associate at
the law firm of Bredhoff & Kaiser for 3 years, was a law clerk
for Chief Judge Carolyn Dineen King of the Court of Appeals for
the Fifth Circuit.
She has her bachelor's degree from Rice University in Texas
and her J.D. from Yale University.
Let me just add that I have known Ms. McFerran now,
obviously, for 9 years working on this committee. She is
everything you could want in a public servant: a keen mind, a
legendary work ethic, and a very strong sense of justice and
fairness. I know she will be an excellent addition to the NLRB.
Lauren, thank you very much for being here and for taking on
this task. I know you are going to do an excellent job there.
Your statement will be made a part of the record in its
entirety, and if you could sum it up in 5 minutes, as you know
we do around here, I would sure appreciate it. The floor is
yours.
STATEMENT OF LAUREN McFERRAN, WASHINGTON, DC
Ms. McFerran. Chairman Harkin, Ranking Member Alexander,
and members of the committee, I thank you for the opportunity
to appear before you today as a nominee to serve on the
National Labor Relations Board. For someone in my field, both
appearing before this committee and being considered for a
position on the Board are the highest of honors. I am deeply
grateful and I am humbled to be here.
I would like to take a moment to introduce and thank my
family. My husband Sam is here with me today, as well as my
parents, Tom and Cathy McGarity. I am grateful today, as
always, for their steadfast love and support. I have spared the
committee the presence of my children, Brendan and Ryan, who
are 4 years old and 5 months old, respectively. They are lovely
children, but sitting quietly is not one of their strong suits.
I am glad they are at daycare today and I thank the wonderful
women at their daycare, without whom I certainly would not be
sitting here today.
Finally, I realize that this is probably the last time that
my boss, Chairman Harkin, will hold the gavel for this
committee. So I hope that members of the committee will permit
me a moment to speak on behalf of his HELP Committee staff.
Everyone who knows Chairman Harkin knows that he is a
tremendous leader, but only those of us who have been lucky
enough to serve on his staff know what a tremendous boss he is.
He wears his heart on his sleeve for the issues that he cares
about, and I can assure you he wears his heart on his sleeve
for the people who work for him as well.
I have been blessed to work for two legendary Senators in
my time on the HELP Committee. I never got the chance to thank
Chairman Kennedy for all that he did for me. So I am glad to
have that opportunity now with Chairman Harkin. It has been an
honor and a privilege to work for you, and I thank you for
giving me the opportunity to serve.
It is a bit surreal to be sitting here in this chair in the
committee room after spending almost a decade sitting in the
staff chairs behind you. But while the view is different from
this angle, this room still feels like home to me. I have
learned so much sitting in this room, and I think that those
are lessons that will serve me well if I am confirmed to the
National Labor Relations Board.
Perhaps the most important lesson that I have learned is
that even people who have very different viewpoints can agree
more often than you would think, and even when we disagree on
some things, we can find common ground on others. Both of the
chairmen that I have worked for and both of the ranking members
that they have worked with have shared this philosophy. I
believe it was Senator Enzi that referred to it as the 80-20
rule. We focus on the 80 percent that we can agree on and not
the 20 percent that we do not. As Deputy Staff Director of the
committee, I am deeply proud to have played even a small role
in helping this committee to shepherd--in my written remarks,
it says 20 but with the passage of CCDBG, it is now 21 pieces
of bipartisan legislation to the President's desk this
Congress. We do not always agree on everything, but we can
still get a lot of important work done.
I think what we often forget about the Board is that they
operate largely on the same principle. The vast majority of the
cases that come before the Board are decided unanimously by
consensus. While there certainly are difficult issues where
interpretations of the law will differ, those cases are the
exception, not the norm. The bulk of the cases before the Board
are not precedent-setting or groundbreaking, but they are
critically important to the parties involved. And the Board's
role is to provide an efficient and fair resolution of the
dispute so that everyone involved can continue working and
doing business as usual. If confirmed, I would very much look
forward to working on these cases with my colleagues on the
Board. These cases are at the core of the important service
that the Board provides for our country and for our economy.
A second important lesson I have learned in my time on the
Hill is about the importance of listening. Some of the most
significant meetings that I take as a staffer are with
constituents or other stakeholders who disagree with what my
boss is doing or who have concerns about a piece of legislation
he supports. I always learn from these meetings and even when
we do not come to a place where we eventually see eye to eye,
my work and the legislation that I am working on usually
improve as a result of these conversations.
If confirmed to the Board, I look forward to the
opportunity to spend a lot of time listening, listening to my
experienced colleagues on the Board, listening to the many
stakeholders who care about the Board's work, and especially
listening to the amazing and dedicated career staff at the
Board across the country. The NLRB attracts some of the best
and brightest staff of any agency I have ever worked with.
These are immensely talented people who dedicate their lives to
working at the Board because they believe in the importance of
its mission. I welcome the opportunity to work with them and to
learn from them, if confirmed.
Finally, I have learned in my time on this committee the
critical difference between what you all do sitting up in those
chairs and what I would do if confirmed to the Board. Your job
is to advocate for changes in the law that you think will make
people's lives better. It has been exciting and fulfilling to
participate in that process for so much of my career. But I
fully understand that, if confirmed, my job would change
dramatically. The job of the Board is to interpret and
implement the law as fairly and efficiently as possible. My
role model in this work would not be the many talented
legislators that I have worked with over the years, but instead
the judge that I was privileged to work for during my time as a
clerk on the Fifth Circuit Court of Appeals. Judge King--or
Chief Judge King at the time--she would not want me to leave
that out. She was a rule of law judge, first, last, and always.
She never wanted a particular outcome in a case that was before
her. What she wanted us to do as clerks was to help her get the
answer right. That is the attitude and the approach that I
would take if confirmed to the Board.
Again, I thank you for the opportunity to be considered for
this critically important position, and I welcome any questions
that you might have.
The Chairman. Thank you, Lauren. Ms. McFerran, thank you,
and thanks for your kind words in my behalf. And let me
reciprocate by saying that I am personally going to miss
working with you. But I know you are going to be a great Board
member at the NLRB.
We will start 5-minute rounds of questions here.
Lauren, one of the previous NLRB nominees we had before
this committee some time ago described himself as not being
pro-worker or pro-union or pro-employer, but rather being pro-
Act. Do you consider yourself to be pro-Act? And if so, what
does that mean?
Ms. McFerran. Thank you for that question.
I absolutely do consider myself to be pro-Act. Any Board
member's job is to approach the case before them impartially
and objectively to resolve the dispute that is before them. It
is not about who wins or who loses. It is about how that
dispute should be resolved consistent with the language, the
goals, and the purposes of the Act. So one's foremost
consideration as a Board member should always be the Act and
what it says and what its purposes and goals are.
The Chairman. A common misconception is that the National
Labor Relations Act and the Board exist only to protect the
rights of labor unions and union workers. Can you tell us a
little bit more about how the Board protects the rights of non-
union employees and how about employers? Why is a fully
functioning Board critical for employers as well?
Ms. McFerran. The Board is critical for employers because
of its primary purpose, which is to provide stability in labor
relations in this country. And an employer benefits just as
much as workers do from having a Board that is going to work
efficiently and effectively to resolve disputes so that
everyone can go about their business. When an employer has a
contract with a group of employees and there is a dispute about
how to interpret that contract, the Board plays a vital role in
letting everyone say their position, get a decision, and move
on with their business and with their lives. And the Board's
role in that respect is absolutely vital to employers as well
as to workers.
The Chairman. So you see as a critical role for you and for
other Board members to work with employers and employees before
the crisis becomes unmanageable, before it results in strikes
and other types of things like that. And you see that as a
proper function and role for the Board.
Ms. McFerran. Absolutely. And in the statute, one of the
purposes of the Act is, as I mentioned, to promote stability in
labor relations. Contracts can provide that kind of stability,
and when there is a dispute under the contract, the Board is
there to help things continue to run smoothly.
The Chairman. I appreciate that because even recently we
have had some cases of national prominence come up before the
Board. There was a lot of political fire power on both sides of
that for a period of time. But you ask people what happened
today, and they do not really know whatever happened to that.
Well, what happened is the NLRB sat down with the employers and
the employees and the unions and got it all worked out and
everything went ahead. So I think a lot of times people do not
realize that this is a very powerful and important function of
the NLRB. I thank you for your comments on that.
With that, I will now turn to Senator Alexander for the
questioning.
Senator Alexander. Thank you, Ms. McFerran.
Mr. Chairman, I spoke with Ms. McFerran ahead of time and
from that end, she said the lights were very bright. That might
be something she had not noticed when she was back here.
[Laughter.]
Ms. McFerran, Senator Harkin read from the Act. You talked
about the Act. You talked about Judge King, I believe it was,
who liked to read the Act and come to the right result. That is
very encouraging to me.
The Act says,
``employees shall have the right to join unions,''
but it also says, ``they shall have the right to
refrain from forming, joining, or assisting labor
organizations to bargain collectively, or for any of
those activities.''
And 24 States, including my own State, have what is called a
right to work law which says if you work at the Saturn plant,
which is a UAW partnership, you do not have to belong to the
UAW to do that, although you may want to. Or if you work at the
Nissan plant, you do not have to form a union or join a union.
This Board's general counsel sent a chill through our State
when he ruled, in effect, that expanding Boeing's manufacturing
work into South Carolina from Washington might be prima facie
evidence of an unfair labor practice. That seemed to many of us
undermining the right to work laws in our State.
Would you in your decision making uphold the right of
employees in Tennessee and 24 States to refrain from joining
the union as the law provides as well as the right to join a
union?
Ms. McFerran. As that right is articulated in section 7,
absolutely.
Senator Alexander. Senator Burr and I were student
athletes. He was better than I was. He had a scholarship to
Wake Forest. I was on the track team at Vanderbilt. But we both
had that experience. And we went to the Senate floor pretty
quickly after a decision was made March 26th by the NLRB
Chicago regional director ruling that Northwestern University
football players can unionize under the NLRB Act. That raised
the prospect of Northwestern or Vanderbilt or Wake Forest
recruiting a $500,000 quarterback or a $400,000 defensive end.
It would destroy the concept of student athlete.
I was a member of the Knight Commission in 1991 when I was
president of the University of Tennessee. This is a group of
university presidents, Father Hesburgh, the head of North
Carolina system, and many others. We said this: We reject the
argument that the only realistic solution to the problems of
intercollegiate athletics is to drop the student athlete
concept, put athletes on the payroll, or reduce or even
eliminate their responsibilities as students. Such a scheme has
nothing to do with education, the purpose for which colleges
and universities exist. Scholarship athletes are already paid
in the most meaningful way possible, with a free education.
Do you believe that a scholarship athlete at Vanderbilt or
Wake Forest is an employee of the university?
Ms. McFerran. Thank you for that question, Senator
Alexander.
With respect, because that is an issue that is likely to
come before me if I were confirmed to the National Labor
Relations Board, it would be inappropriate for me to prejudge
the resolution of that particular case. I will freely admit
that I know very little about college athletics, and I would
look forward to the opportunity to learn. I would talk to my
colleagues on the Board. I would read the briefs. I would read
the law, and I would learn as much as I could before rendering
any decisions.
Senator Alexander. I understand your answer, but I would
hope you would talk to student athletes whether they have been
scholarship athletes or non-scholarship athletes and who
realize that if you are, say, at Vanderbilt University, it may
be worth $75,000 a year if you are a low-income student. About
40 percent of the students also have a Pell grant to help pay
for their expenses. In addition to that, many of the athletic
conferences are moving to change things so that student
athletes have more coverage for expenses.
And the other side of the issue is that if you begin to
move toward too much cost for student athletes at large
universities, you then begin to undermine student athletes at
smaller universities who cannot afford that, and you cut out a
lot of programs, including women's programs which do not make
enough money to pay for themselves and are supported by men's
football.
So it is a complicated area. And all I can say to you is
when that comes before you, I hope you will think carefully
about the fact that ``student athlete'' is a valuable concept
and that the universities are dealing with it and that the
presidents are in charge of that, and that for the NLRB to move
into a situation and suddenly destroy that experience for
thousands and thousands of students would be a terrible mistake
in my judgment.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Alexander. I cannot help
just to say how I feel about things like that. I think the
Ivies have got it right. The Ivy League schools have got it
right. They just do not give sports scholarships. If I had my
way, I would do away with all sports scholarships at any
college anywhere in the United States.
Senator Alexander. If I could just----
The Chairman. Sure.
Senator Alexander. If you live in Ames, IA and you are 6
foot 7 and you weigh 260 pounds and you can run 40 yards in 5
seconds, you will get an awfully good academic scholarship to
Brown.
[Laughter.]
And Harvard and Yale.
The Chairman. Academic scholarship. But still, it has to be
an academic scholarship, not a sports scholarship. OK, we could
get into that.
In order, I have Senator Franken, Senator Burr, Senator
Murray, Senator Casey, Senator Mikulski.
Senator Mikulski. I think Senator Murray. Franken is not
here. It is Murray.
The Chairman. Senator Murray I guess.
Senator Murray. Senator Mikulski has asked if she can go
ahead of me.
Statement of Senator Mikulski
Senator Mikulski. No. I am not going to ask my questions. I
am going to yield to Senator Murray. But because of the
negotiations going on with appropriations, Mr. Chairman, I
wanted to note my presence here and my support for Ms.
McFerran's nomination. And I think we need a functioning NLRB.
Thank you very much, and I look forward to working with you
on this side of the table when we are all at the table. Thank
you very much.
The Chairman. Thank you, Senator Mikulski.
Senator Murray.
Statement of Senator Murray
Senator Murray. Good morning and thank you, Mr. Chairman. I
really appreciate you scheduling this hearing so quickly so
that we can process this critical nomination expeditiously.
Ms. McFerran, let me thank you for being here today and for
answering the President's request to serve on this really vital
Board. As you well know, as you talked about in your opening
statement, from your years here in the Senate with Senators
Kennedy and Harkin, the National Labor Relations Board is
absolutely essential to our Nation, our workers, and our
employers, let alone our financial markets and our very
economy, all of whom really depend on a full functioning and
effective Board.
Mr. Chairman, I also wanted to extend my thanks and respect
to Sharon Block. She was a true public servant whom I really
hold in the highest regard, and I really appreciated her
willingness to serve. I want to express my personal regret
publicly for how this entire ordeal unfolded. It has really
saddened me and worried me to see this Board demeaned and
politicized by some, and I really think she deserved better.
And every American who, whether they know it or not, is
impacted by this Board, and deserves better too. I just wanted
to publicly say that.
But I am very grateful, Ms. McFerran, that someone of your
high intellect and strong experience and keen sense of public
duty and lifelong dedication to our Nation's labor laws is
before us today. It has been good to work with you here with
you behind us. I look forward to working with you once again
when you join the Board.
Chairman Harkin talked about how this is a Board that is
good for business and good for employees. And I appreciated
your answer. But I also presume that in order for the NLRB to
protect both employees and business, it needs to function
properly, no political games being played, and get back to
having orderly transitions. Would you agree with that?
Ms. McFerran. Absolutely, Senator, and I thank you for the
question.
The importance of orderly transitions for Board members is
both symbolic and practical. Too often in the past, the Board
has become something of a political football, and there have
been long gaps or periods of time where seats have been empty
and there has been the need for recess appointments and
kerfuffling. We would all rather that not be the case and we
would all rather there be an orderly and smooth transition
between Board members both because it signifies the importance
of what the Board does and the important role that the Board
plays in our economy and also because it lets the Board do its
job better.
I really appreciate the trouble that everyone has gone to
to try to have an orderly transition here. We are entering what
I feel like is a new era with the Board with the confirmation
of the full five members. And starting a new precedent where
transitions happen for Democrats, for Republicans in an orderly
manner would be tremendously beneficial to both the Board and
the administration of the law.
Senator Murray. And to employees and to businesses. We
created this Board many years ago long before I was here to
make sure that that could have a place that we could resolve
issues expeditiously and in the best manner. So I hope we can
move this forward quickly.
I did want to ask you if you could just explain how the
Board is a voice in the issue of ensuring fair pay for all
workers.
Ms. McFerran. Absolutely. One thing that many people do not
realize about the National Labor Relations Act is it does not
just protect union workers and unions and employers. The Board
protects every worker in this country. Section 7 rights, the
right to join together collectively to speak up for better
wages and working conditions is a right that every American has
regardless of whether they are represented by a union or not.
So in situations where there has been, for example, unequal pay
for women, unequal pay for people with disabilities, two
workers who come together and say we think this is not fair, we
think this is not right--they are protected in that activity by
the National Labor Relations Act even if they have no idea what
a union is and have never signed a union card. It is a
critically important function that the Board plays and it is
something that I hope every American can be aware of.
Senator Murray. Again, thank you for being here. Thank you
for accepting this nomination and for your willingness to serve
your country. I wish you the very best and I encourage our
colleagues to quickly get this confirmation through.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Murray.
Senator Burr.
Statement of Senator Burr
Senator Burr. Thank you, Mr. Chairman.
Ms. McFerran, I heard what you just said. This is the
responsibility of the National Labor Relations Board to protect
those workers. Is it the responsibility of the Labor Relations
Board to determine who their employer is or is it who pays
their salary?
Ms. McFerran. Thank you for that question, Senator.
The issue of how you define who an employer is under the
Act is one that is very likely to come before me if I am
confirmed as a Board member. So I would not want to prejudge
that issue. I would be called on to interpret that definition
if I was----
Senator Burr. This is a really, really important thing. And
I did not ask you to make a ruling on the joint employment
matter. What I asked you was, ``is the person that the NLRB is
responsible to protect employees from, the company that pays
their check.''
Ms. McFerran. Again, the question of who meets the
definition of an employer under the Act is actually always a
very fact-specific inquiry too. It is going to very much depend
on the circumstances on the ground. There is a number of terms
and conditions of employment that can implicate that question.
So it is a difficult question to answer in the abstract.
Senator Burr. Let me tell you why this is important.
Senator Alexander is right. I think the NLRB determination as
it related to college scholarships is just ludicrous. But if
you apply what the general counsel at NLRB is trying to do
relative to joint employment, not only would the school be
liable but the donors would be liable, the donors who gave to a
college fund to fund the scholarships of the athletes. And I
might say to Senator Harkin that it would be extremely easy to
extrapolate this under that definition to say the academic
scholarships that were awarded--those students are protected
from the university and the university would also then, under
this ruling, I think be extended to the donors to the
university who would be potentially liable for the conditions
that those students are under. This has incredible, incredible
impact.
I have just one question of you. Do you believe there are
any limitations to what the NLRB can do to determine how many
people who do not actually pay the check are in the chain of
liability for an employee?
Ms. McFerran. If the issue were to come before me as a
Board member, all I can pledge to you is that I would consider
it with a very open mind. I would look at the arguments
presented to me in the case. I would review the record. I would
consult with my colleagues, and I would review the issue with a
completely open mind.
Senator Burr. I appreciate that. Since I have a minute 53
left, I will continue to editorialize a little bit.
We have disagreements with determinations made by not just
NLRB but other Government agencies, and when it is a Republican
administration, I have just as many problems with some of them
as Tom does as a Democrat--we go back and forth.
Where we are headed does not pass the smell test. It is
going so far outside of what the public believes to be the
responsibility of the NLRB. The claimed responsibility of
Government that somebody that is not involved in the
management, the contracting of an employment relationship, the
payment of a check, the funding of the check is somehow in the
chain of liability if in fact their employer makes the wrong
decision has implications to economic growth that could be
devastating in this country. It could have implications to
higher education that means no student--no student--receives a
scholarship. It is further than what Senator Alexander raised
and that is that if this were to be enacted and student
athletes under scholarship could unionize, I can tell you who
the loser is. It is female sports. Because the money will flow
out of Division 1 football, and it is Division 1 football that
pays all of the scholarships for women. It is the only
profitable sport out there other than ACC basketball by the
way.
[Laughter.]
And I point that out to make the strong point that Senator
Alexander and I feel, but also to say for gosh sakes,
understand the implications of what you are getting ready to do
because when you do this, you will never reverse it fully and
the impact across our economy--and the U.S. economy is I think
the greatest entrepreneurial, innovative economy in the world.
And every day there is somebody coming out with something.
Without the capital to create a network of businesses in 50
States, they franchise. And if you now say if you franchise,
you are just as liable as the franchisee as the person that
franchises from you even though you have no responsibilities to
pay their employees, to manage their employees, to make the
decisions on their employees, but you are in the chain of
responsibility as it relates to the Labor Relations Board, I
can tell you what is going to happen. We are going to kill
franchise businesses in this country. And that right now is the
employment engine of America. I want to rev it up. I do not
want to kill it.
I thank you for being here. I thank the chairman.
The Chairman. Thank you, Senator Burr.
Senator Franken.
Statement of Senator Franken
Senator Franken. Ms. McFerran, good to see you. And I too
want to thank you for agreeing to serve on the NLRB, which was
created to protect Americans' rights. Over the years, though,
vacancies on the Board have threatened the NLRB's ability to
operate, which has a real impact on the lives of workers and
employers.
Thank you also for your service to this committee. You have
significant working experience on Capitol Hill to find
consensus on both sides of the aisle. You have experience as a
practicing lawyer at a law firm working on labor issues. In
your testimony you referenced Senator Enzi's 80/20 rule, which
is the idea that when working together, we should focus on the
80 percent we can agree on not the 20 percent we do not.
Sometimes I call it the 64 percent rule because I think 80
percent of the time we agree on 80 percent. That was my attempt
at a math joke.
[Laughter.]
I think you bring a wonderful perspective to the NLRB.
Could you expand on how your experience working on
bipartisan legislation here in the Senate on this committee has
prepared you to find common ground with other members of the
NLRB?
Ms. McFerran. Absolutely, and thank you for the question.
When I first came here as a staffer in 2005, I was assigned
to work on a bill that was kind of midway through the
development process called the Genetic Information
Nondiscrimination Act. And it was a bipartisan bill and a
bipartisan process. I learned a lot as a new staffer from being
part of that process. I learned that sometimes when you want to
do things in a bipartisan manner, things are going to take a
little longer and that it is worth taking that time. I learned
that sometimes if you do not have to reach an area of conflict,
you do not have to reach an area of conflict and you focus on
what you can agree on. I learned that nobody is going to get
everything they want in the context of a negotiation. Every
side is going to have to give so that we can find common ground
and find a product we can all agree on.
I was really excited to be part of what was a pretty
groundbreaking piece of legislation at that point and will
always be proud that I was able to help get it to the
President's desk.
Senator Franken. I have asked previous nominees about the
case of Susie Stetler from Elk River, MN who worked as a school
bus driver. In 2012, the Board issued a decision, but her case
has been in legal limbo as a result of the D.C. Circuit's Noel
Canning decision. Today Ms. Stetler is still waiting on a
decision on her case and for $40,000 in back pay. I am sure
there are many similar cases currently at the Board.
What effect do you think having a fully confirmed NLRB will
have for individuals like Ms. Stetler and others with
backlogged cases? What do you think will be the consequences
for workers and employers if the NLRB does not have a fully
confirmed Board?
Ms. McFerran. Thank you for that question.
The importance of orderly transitions on the Board and
maintaining a full component of Board members hopefully will
help the Board in increasing the speed of its case processing.
Nobody likes long delays in case processing. Nobody benefits
from that. And that certainly is an issue that if I were lucky
enough to be confirmed to the Board, appropriate to my role as
a Board member, I would like to take a look at and work on. But
certainly having a fully confirmed Board that has orderly
transitions between members is a key part of that process.
Senator Franken. Thank you.
The NLRB plays an important role in making sure that
workers are able to exercise their collective bargaining
rights. And according to the Pew Research Center, 64 percent of
Americans agree that labor unions are necessary to protect
working people. But in part due to broken election processes,
union membership has declined. Today only 7 percent of private
sector workers are represented by unions. This is important
because being able to exercise collective bargaining rights in
the workplace helps support middle-class jobs. According to the
Economic Policy Institute, workers covered by a collective
bargaining contract earn almost 13 percent more than those not
covered, and union workers are more likely to have paid leave
and other benefits that help put them on stronger financial
footing compared to non-union workers.
Given the challenges that our economy is currently having
and has had recovering from the recent recession and the
frustratingly stagnant wage growth for middle-class workers,
can you talk just a little bit about the role the NLRB plays in
our Nation's economy?
Ms. McFerran. Absolutely.
Again, one of the purposes of the National Labor Relations
Act is to promote stability in labor relations, and when you
have a contract in place and a functional relationship between
an employer and workers where they know they can get those
disputes resolved, where they all know what the rules of the
game are, I think it can promote really good relationships
between labor and management and the Board plays a critical
role in helping that. And good relationships between labor and
management often lead to smooth performance of an economy.
Senator Franken. Thank you. Thank you, Mr. Chairman.
The Chairman. Senator Casey.
Statement of Senator Casey
Senator Casey. Mr. Chairman, thank you very much. We are
grateful that Lauren McFerran is before us today and we are
grateful for your service on this committee, I guess under two
chairmen. And we are grateful for that.
I wanted to talk to you a little bit about public service
and about how important it is that one have experience in
public service and experience working in a bipartisan fashion.
I am always reminded, when we have hearings about the NLRB,
about the foundational determinations that were made back in
the 1930s and thereafter about why we have a National Labor
Relations Act and the Board itself. And I may, before we are
done, quote from the findings of the original Act about the
purpose of the statute, one of them being to promote commerce
so that we have labor-management relations or labor-management
circumstances that will promote commerce. But we do not have a
lot of time for the recitation of the history.
I wanted to ask you how you believe your, what I would
argue, substantial and significant public service in the Senate
on this committee working on very difficult issues in a status
where you were on the minority staff and then you were also in
the majority--how that experience will help you on the NLRB to
be able to fashion the kind of compromises that are going to be
important but also how that experience informs your ability to
reach a bipartisan consensus where you can.
Ms. McFerran. Absolutely and again thank you for the
question.
Two answers to that question actually spring to mind, and I
hope I do not sound too self-serving when I say that one of the
lessons that I have learned here on the Hill is the importance
of good staffing. What I would be very, very fortunate to have
at the Board is an amazing career staff of dedicated public
servants. And they would be my first and most helpful resource
in any question that was presented to me. These are people who,
as I mentioned in my opening statement--brilliant people who
have dedicated their lives to serving at this agency and to
helping make this law function. And I have deep respect for the
work that they do, for their service to this country, and I
would use them as my primary resource.
Obviously, I would approach questions at the Board with an
open mind and not with any prejudgment based on my policy work
here on the Hill. Certainly the experiences that I have had on
the Hill working collaboratively would illuminate my work
there. One thing that I have learned in my role as Deputy Staff
Director of the committee is that even when you do not agree on
the substance of something necessarily, it is really important
to have a visible, functioning, and cooperative process for
this committee. And we have always tried, even when we agree
and we do not agree, to have all of our practices and
procedures of this committee work in a smooth, efficient, and
bipartisan manner. And certainly that is something I would
bring to the Board. There are going to be cases we disagree on
but let us work together. Let us respect the process. Let us
follow our own rules and let us do it right.
Senator Casey. The other question I have for you is the
role that the Board plays in two related issues, two very
important issues for our country. One is the role that the
Board can play in advancing economic growth and the related
issue, of course, of strengthening the middle class which has
taken a real beating over the last generation. Anything you can
say about the impact of Board determinations and decisions on
economic growth for the middle class.
Ms. McFerran. Yes, absolutely.
Again, the role that the Board plays for the economy in
promoting stable labor relations is absolutely critical. And
for workers, the Board is the only recourse that they have to
enforce their rights under the National Labor Relations Act.
There is no private right of action under the Act. So the Board
obviously plays an absolutely essential role in ensuring that
workers who have engaged in protected activity under the
statute can have their rights vindicated in the same way there
are rights for employers under the Act and the Board is their
only recourse as well in certain circumstances to, for example,
stop a wildcat strike or something like that. So it is the only
entity that both sides can sometimes go to to make sure that
they are heard and to make sure that their disputes are
resolved.
Senator Casey. Thank you very much.
The Chairman. Thank you, Senator Casey.
Senator Warren.
Statement of Senator Warren
Senator Warren. Thank you, Mr. Chairman, and welcome, Ms.
McFerran.
Before I begin my questions, I want to join others to take
a moment to acknowledge Sharon Block, the previous nominee for
the NLRB, and to thank her for her willingness to serve. Ms.
Block has served this country at the Department of Labor, at
the EEOC, at the National Endowment for the Humanities, and as
senior labor and employment counsel. She is currently the
senior counselor to Secretary Perez at the Department of Labor.
She is a dedicated public servant, and I am disappointed that
her nomination has been blacklisted by the Republicans. She did
not get blacklisted because of the quality of her opinions, the
quality of her work, but because she once served on the Board
as part of a recess appointment that was perfectly legal and
supported by decades of precedent and circuit court opinions at
the time that it was made.
I understand that the Supreme Court later decided to change
the law and invalidate her appointment to the Board, but I have
no idea why the Republicans seem to think that this dedicated
public servant should be blocked from further service to this
country simply because of a technical change in the law that
has nothing to do with Ms. Block's experience, her
qualifications, or her dedication to this country.
And frankly, I think it is this kind of political nonsense
that makes it easy to understand why good people would refuse
to serve in any position that requires Senate confirmation, and
I hope this is not a sign of how the Republicans intend to
treat other qualified nominees in the new Congress. So under
these very difficult circumstances, I am very pleased that Ms.
McFerran is willing to serve.
The benefit of going last in the questions is that people
have already had a chance to ask you many things that are
important. The one that I want to give you is the chance to
summarize. Ms. McFerran, you served on the HELP Committee for
many years, which means you have been on the other side of
this. You have vetted many nominees. So let me just ask you
about what you think are your best qualifications for serving
in this role and what you think you will bring to it.
Ms. McFerran. Thank you very much and thank you for your
kind words about Ms. Block.
I have learned so much from the people sitting in this
room, from the members that I have been privileged to work for,
from the brilliant fellow staffers that I have been absolutely
privileged to work with, and from the people who have come to
visit me, I think maybe most of all from the people who have
come to visit me. A lot of people think that every meeting we
take here is with some high-powered lobbyist or some big
interest group, and every Iowan and every Massachusetts
resident who has walked in my door and shared their problem and
their story with me reminds me that when I am going to the
Board, I am solving real problems for real people. And it is
not about me. It is not about making grandiose policy
statements. It is about solving those problems for those people
and helping make their lives better. And that is what I would
try to bring with me to the Board.
Senator Warren. Thank you very much. I think that is an
eloquent statement for what it is that government should always
be about. So thank you very much. I trust that your nomination
will not be controversial, and I hope that we get you quickly
confirmed in this spot.
Thank you, Mr. Chairman.
The Chairman. Thank you very much, Senator Warren.
Senator Alexander.
Senator Alexander. Ms. McFerran, I wanted to just comment
about the joint employer standard a little bit and take this
opportunity before you are a member of the NLRB. I will not ask
you to comment on a case that might be before you, but I assume
you would agree that buying a local franchise of a national
brand is one of the main pathways to business ownerships for
thousands of Americans.
Ms. McFerran. I actually am not much of an expert on
formations of business ownership, but if someone were to
present that evidence to me before the Board, I would
absolutely consider it.
Senator Alexander. I would suggest that it is. I know in
our State, for example, there are 21,291 local franchise
establishments employing about 224,000 workers. And for a
person without a lot of capital who wants to get started, a
chance to be a franchisee is a chance to begin to make your way
up the economic ladder and realize the American dream.
For 30 years, the NLRB has taken the position that one
business cannot be held liable for the employment-related
matters of another one. That is called the ``joint employer
standard.'' But on July 29th of this year, the NLRB general
counsel authorized complaints against McDonald's USA, a
franchisor, to hold it responsible as a joint employer for
actions of local franchise business owners.
There are about 770,000 small business employers in America
that own franchises. And what this could lead to saying by the
NLRB is that if there is an unfair labor practice by one of
those small business franchisees, that the franchisor, or brand
company, would be liable. As Senator Burr indicated, that
liability could be so great that it would wipe out the
opportunity for a person to be a franchisee and destroy that
opportunity for small business.
Tasty Delight is a frozen yogurt business in Franklin, TN.
It has 100 local franchise business locations across the
country. Let us take an example of a Tasty Delight franchise.
At some point, you might have to decide as a member of the NLRB
whether the company in Franklin should be responsible for an
unfair labor practice by a local franchise business in St.
Louis, MO. But to make decisions like that, you would have to
begin to consider to what extent the franchisor controls what
goes on in St. Louis. Does that have to do with what uniform
the employees wear, the prices they charge for yogurt, the
advertising they post around town, how long the operating
manual is, what level of detail it includes?
I raise this simply to underscore what a breathtakingly
important step it would be if the NLRB were suddenly to decide
that a franchisor is responsible for the actions of a
franchisee when it considers unfair labor practices. And I
would hope that if a case like that comes before you, that you
would be very careful in considering how these actions by the
Board might chill this opportunity for literally hundreds of
thousands of Americans to own a small business franchise.
Ms. McFerran. I would.
Senator Alexander. That is all I have, Mr. Chairman.
The Chairman. I do not mean to get too involved in this,
but again it is a question.
I always wondered if you asked someone who worked in a
McDonald's serving hamburgers, if you asked that person who do
you work for, they would say McDonald's. They would not say Joe
Smith or Lamar Alexander or somebody else who might own that
franchise. They work for McDonald's.
Plus, there is some evidence--I do not know how much--that
in a lot of these franchises that McDonald's actually is
involved more heavily than what they say. One person who mops
floors and does other maintenance work in Kansas City said the
company executives visit as often as six times a year to tell
the franchisee how to run their business and what to do and
keep the standards up, I guess, so McDonald's looks good.
I do not know. I just do not know what the facts are in the
case on this. I was looking at some of the stuff that Senator
Burr gave me. It is interesting to note that since November
2012, 181 cases involving McDonald's were filed with the NLRB.
68 were found to have no merit; 43 moved forward. Investigation
is still pending on others. So it is obviously not a clear-cut
kind of thing. This is something again where it will go through
the process.
I think there is always some confusion about how the NLRB
operates. I just wrote it down here again for my own knowledge
that the general counsel is really not part of the NLRB. He is
not on the Board.
Ms. McFerran. That is right.
The Chairman. The general counsel is sort of like what I
think of, Senator, as a prosecutor. Well, the prosecutor has
regional directors out there that may make findings, and then
the general counsel can then get involved to settle the
disputes, to work with the businesses to try to get it solved
before it slips out of control. But then, sometimes the general
counsel can bring a charge, and that goes to an administrative
law judge. The administrative law judge makes the decision.
Well, one side or the other, if they do not like it, can appeal
it to the NLRB, and that is where the judges of the NLRB look
at what the ALJ did. And as I am told, the NLRB can affirm,
overturn, or modify whatever the administrative law judge did,
and again, either party to that can then take it to the Federal
courts. That is just sort of the process.
I think the fact that some were dismissed out of hand and
some were pending, 68 were found to have no merit, 43 moved
forward, it is, it seems to me, again fact-based. What are the
facts of the situation? I can see some franchisees where there
is a lot of distance between the franchisor and the franchisee
and they are not involved in making sure their name is good and
how they act and how they portray themselves to some that are
heavily involved. So somewhere in there, there is probably a
gray area. I have no idea where that gray area is, but that is
why you have judges and that is why you have administrative law
judges to make those decisions.
I think that rather than prejudging it, let the system
work. It is like that Boeing case that was mentioned earlier. I
referred to it. I just did not mention it by name. But that was
settled. That was all settled. So the system worked. But, boy,
before it was settled, we had all kinds of political
commentaries on it and people doing this political thing and
going to do this and going to do that. But the system worked.
And that is why I think we should not be prejudging something.
Let the judges do their work. Let it go through the system. If
at the end of all of this, we do not like what the district
court did or the Federal or the Supreme Court did, we can
change the law. That is why we have this system set up, and I
think so far it seems to have worked pretty darned well for all
these years.
That is just my observation. That is all.
Senator Alexander. The only thing I would add to that, if I
may, Mr. Chairman, is it is such an important question. I think
we ought to be the ones who change it if it is changed. I think
it ought to be a matter for Congress. There are 770,000 small
business owners who call themselves franchisees in the United
States. These are hardworking, independent small business
people. And if you take a company--let us say Ruby Tuesday that
has 800 or 900 restaurants in the United States. If we meddle
around too much and confuse the liability too much, then all
the Ruby Tuesday restaurants in the country will be owned by
Ruby Tuesday and there will not be that opportunity 800 times
over for a franchise in a small town to own the restaurant. And
the same for McDonald's and the same for Burger King and the
same for all the others.
So there is a good reason to keep a clear, distinct line
between a franchisor and a franchisee. And it is an enormously
important engine for economic growth and advancement up the
ladder in the United States. So I would prefer that if there is
any change, that we make it, not the NLRB.
The Chairman. Fair enough. Fair enough.
I just remembered a court case we studied in law school--
now, for me that has been a long time ago--about piercing the
corporate veil, about how companies were hiding behind the
corporate veil. And there was a famous Supreme Court case,
which I cannot remember. Someone is going to tell me as soon as
this hearing is over with. That case said you cannot hide
behind this false veil of being a corporate entity. You still
are liable.
And it seems to me that franchisees probably have a
spectrum, those where the franchisor is very heavily involved
in what the franchisee does, on the other hand, probably not
involved at all. So somewhere in there, there are these gray
areas in there.
I assume that at some point the Congress and the Senate
will probably want to address this, depending on how it goes. I
do not know. Maybe everybody will be happy with the outcome of
this when they finally make their decision and work it out.
Maybe everybody will say that is fine. We do not know that yet.
I just say let the system work. I do not mean to go on about
this.
I just want to say thank you. Thank you so much for your
public service. Thank you so much, Lauren, for your work on
this committee for all these years. You have just been
wonderful. As I said, we are going to miss you, but we know you
are going to perform admirably on the National Labor Relations
Board.
I might just say for the record I have a picture with
Brendan, but I do not with Ryan yet.
[Laughter.]
Ms. McFerran. We will work on that.
The Chairman. I have to see Ryan before I leave here.
Ms. McFerran. Thank you.
The Chairman. Thank you very much.
The record will be open for 5 days for comments. And
questions for the record are due on Tuesday, November 25th.
I have not checked with Senator Alexander yet. We are going
to work out a time to have a markup on this when we come back
after Thanksgiving, but sometime shortly after we come back
from Thanksgiving.
Thank you very much.
With that, the hearing will stand adjourned.
[Whereupon, at 11:10 a.m., the hearing was adjourned.]