[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
H.R. 3441, SAVE LOCAL BUSINESS ACT
=======================================================================
JOINT HEARING
before the
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
and the
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR, AND PENSIONS
of the
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN WASHINGTON, DC, SEPTEMBER 13, 2017
__________
Serial No. 115-27
__________
Printed for the use of the Committee on Education and the Workforce
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: www.govinfo.gov
or
Committee address: http://edworkforce.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
26-736 PDF WASHINGTON : 2018
COMMITTEE ON EDUCATION AND THE WORKFORCE
VIRGINIA FOXX, North Carolina, Chairwoman
Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Duncan Hunter, California Virginia
David P. Roe, Tennessee Ranking Member
Glenn ``GT'' Thompson, Pennsylvania Susan A. Davis, California
Tim Walberg, Michigan Raul M. Grijalva, Arizona
Brett Guthrie, Kentucky Joe Courtney, Connecticut
Todd Rokita, Indiana Marcia L. Fudge, Ohio
Lou Barletta, Pennsylvania Jared Polis, Colorado
Luke Messer, Indiana Gregorio Kilili Camacho Sablan,
Bradley Byrne, Alabama Northern Mariana Islands
David Brat, Virginia Frederica S. Wilson, Florida
Glenn Grothman, Wisconsin Suzanne Bonamici, Oregon
Elise Stefanik, New York Mark Takano, California
Rick W. Allen, Georgia Alma S. Adams, North Carolina
Jason Lewis, Minnesota Mark DeSaulnier, California
Francis Rooney, Florida Donald Norcross, New Jersey
Paul Mitchell, Michigan Lisa Blunt Rochester, Delaware
Tom Garrett, Jr., Virginia Raja Krishnamoorthi, Illinois
Lloyd K. Smucker, Pennsylvania Carol Shea-Porter, New Hampshire
A. Drew Ferguson, IV, Georgia Adriano Espaillat, New York
Ron Estes, Kansas
Karen Handel, Georgia
Brandon Renz, Staff Director
Denise Forte, Minority Staff Director
------
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
BRADLEY BYRNE, Alabama, Chairman
Joe Wilson, South Carolina Mark Takano, California,
Duncan Hunter, California Ranking Member
David Brat, Virginia Raul M. Grijalva, Arizona
Glenn Grothman, Wisconsin Alma S. Adams, North Carolina
Elise Stefanik, New York Mark DeSaulnier, California
Francis Rooney, Florida Donald Norcross, New Jersey
A. Drew Ferguson, IV, Georgia Raja Krishnamoorthi, Illinois
Carol Shea-Porter, New Hampshire
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS
TIM WALBERG, Michigan, Chairman
Joe Wilson, South Carolina Gregorio Kilili Camacho Sablan,
David P. Roe, Tennessee Northern Mariana Islands
Todd Rokita, Indiana Ranking Member
Lou Barletta, Pennsylvania Frederica S. Wilson, Florida
Rick W. Allen, Georgia Donald Norcross, New Jersey
Jason Lewis, Minnesota Lisa Blunt Rochester, Delaware
Francis Rooney, Florida Carol Shea-Porter, New Hampshire
Paul Mitchell, Michigan Adriano Espaillat, New York
Lloyd K. Smucker, Pennsylvania Joe Courtney, Connecticut
A. Drew Ferguson, IV, Georgia Marcia L. Fudge, Ohio
Ron Estes, Kansas Suzanne Bonamici, Oregon
C O N T E N T S
----------
Page
Hearing held on September 13, 2017............................... 1
Statement of Members:
Byrne, Hon. Bradley, Chairman, Subcommittee on Workforce
Protections................................................ 1
Prepared statement of.................................... 3
Norcross, Hon. Donald, Ranking Member, a Representative in
Congress from the state of New Jersey...................... 8
Prepared statement of.................................... 11
Takano, Hon. Mark, Ranking Member, Subcommittee on Workforce
Protections................................................ 3
Prepared statement of.................................... 5
Walberg, Hon. Tim, Chairman, Subcommittee on Health,
Employment, Labor, and Pensions............................ 6
Prepared statement of.................................... 7
Statement of Witnesses:
Granger, Mr. MacDonald, CEO, MacDonald Companies, Kerrville,
TX......................................................... 14
Prepared statement of.................................... 16
Kennedy, Ms. Tamra, President, Twin City T.J.'s Inc.
Roseville, MN.............................................. 22
Prepared statement of.................................... 24
Rubin, Mr. Michael, Partner, Altshuler Berzon LLP, San
Francisco, CA.............................................. 29
Prepared statement of.................................... 31
Fasman, Mr. Zachary, Partner, Proskauer Rose LLP, New York,
NY......................................................... 43
Prepared statement of.................................... 45
Additional Submissions:
Chairman Byrne:
Letter dated September 12, 2017 for House Committee on
Small Business......................................... 84
Mr. Norcross:
Primary case document.................................... 10
Mr. Takano:
Letter dated July 28, 2017 from the Teamsters, SEIU, UAW,
UFW, UFCW, AND USW..................................... 95
Letter dated September 7, 2017 from AFL-CIO.............. 93
Letter dated September 19, 2017 from United Brotherhood
of Carpenters and Joiners of America................... 98
Slides................................................... 88
H.R. 3441, SAVE LOCAL BUSINESS ACT
----------
Wednesday, September 13, 2017
House of Representatives,
Subcommittee on Workforce Protections,
joint with the
Subcommittee on Health, Employment, Labor, and Pensions,
Committee on Education and the Workforce,
Washington, D.C.
----------
The subcommittees met, pursuant to call, at 10:03 a.m., in
Room 2175, Rayburn House Office Building, Hon. Bradley Byrne
[chairman of the subcommittee on Workforce Protections]
presiding.
Present: Representatives Byrne, Walberg, Wilson, Roe, Brat,
Grothman, Stefanik, Allen, Lewis, Mitchell, Smucker, Estes,
Handel, Foxx, Takano, Courtney, Fudge, Bonamici, Adams,
DeSaulnier, Norcross, Blunt Rochester, Krishnamoorthi, Shea-
Porter, and Scott.
Staff Present: Bethany Aronhalt, Press Secretary; Andrew
Banducci, Workforce Policy Counsel; Courtney Butcher, Director
of Member Services and Coalitions; Michael Comer, Press
Secretary; Rob Green, Director of Workforce Policy; Callie
Harman, Professional Staff Member; Nancy Locke, Chief Clerk;
Geoffrey Macleay, Professional Staff Member; Kelley McNabb,
Communications Director; Rachel Mondl, Professional Staff
Member; James Mullen, Director of Information Technology;
Krisann Pearce, General Counsel; Molly McLaughlin Salmi, Deputy
Director of Workforce Policy; Olivia Voslow, Legislative
Assistant; Joseph Wheeler, Professional Staff Member; Lauren
Williams, Professional Staff Member; Tylease Alli, Minority
Clerk/Intern and Fellow Coordinator; Kyle deCant, Minority
Labor Policy Counsel; Denise Forte, Minority Staff Director;
Christine Godinez, Minority Staff Assistant; Eunice Ikene,
Minority Labor Policy Advisor; Stephanie Lalle, Minority Press
Assistant; Kevin McDermott, Minority Senior Labor Policy
Advisor; Richard Miller, Minority Senior Labor Policy Advisor;
Udochi Onwubiko, Minority Labor Policy Counsel; Veronique
Pluviose, Minority General Counsel; Erin Robinson, Minority
Policy Fellow; and Kimberly Toots, Minority Labor Policy
Fellow.
Chairman Byrne. Good morning. A quorum being present, the
subcommittees will come to order.
Let me welcome everybody to a joint subcommittee hearing on
H.R. 3441, the Save Local Business Act. We look forward to
hearing from an excellent panel of witnesses who travel led
from different parts of our country to be here today. We want
all of you to know, who have come to be here with us, that we
appreciate the time you have taken away from your jobs and
businesses to testify.
To most Americans, the question over who their employer is
seems to be an obvious answer. It is the person who hired them,
the one who signs their paycheck. As a former labor attorney, I
can tell you it used to be very clear in legal terms how you
become someone's employer. But that is no longer the case since
the National Labor Relations Board stepped in. Many people
would be shocked to find out that some company they have had
zero contact with is also considered their employer in addition
to the employer that actually hired them and signs a paycheck.
Now, we all agree there are times when two or more
employers should be deemed joint employers. Before the NLRB
stepped in and overstepped, there was a commonsense
understanding of the circumstances establishing that joint
employer relationship. Both employers had to have, quote,
``actual, direct, and immediate,'' close quote, control, over
the central terms and conditions of employment.
That standard made sense. But today, business owners and
their employees face a standard vastly different and far more
confusing. They face a situation where a group of unelected
bureaucrats in Washington are interfering with their
relationship in a way that has created a lot of problems. The
NLRB's decision, the Obama administration's actions that
followed it, in addition to a litany of rulings by activist
judges, have inserted a great deal of uncertainty and confusion
into the traditional employer/employee relationship. Two
completely separate employers can be considered joint employers
if they made a business agreement that, quote, ``indirectly,''
close quote, or, quote, ``potentially,'' close quote, impacts
their employees.
Indirectly or potentially. What does that even mean? It's
vague, and it's confusing. Think of it from the employee's
standpoint. There shouldn't be any room for question on who
their employer is. As for employers, they should have the
clarity they need to look out for their employees in the way
the law requires. Because in order for employees to have strong
protections in the workplace, it needs to be crystal clear who
was responsible for providing those protections. If everyone
is, no one is.
We are here today because we are determined to provide that
clarity once and for all and protect jobs and small businesses
in our communities. I'm proud to say that three of our
Democratic colleagues, Representatives Chorea, Cellar, and
Peterson are cosponsors of the Save Local Business Act, and we
hope to continue to build bipartisan support so we can restore
commonsense to the joint employer issue.
This is an issue of great importance to both of our
workforce subcommittees, which is why this critical legislation
has been a joint effort with my colleague Mr. Walberg. Chairman
Foxx has made the Save Local Business Act a top priority for
the full committee, and this hearing will bring us one step
closer to moving it through the legislative process.
I'm going to give Mr. Walberg an opportunity to provide his
own opening remarks, but before I do, I will yield to,
Workforce Protections Subcommittee Ranking Member Takano for
his brief opening remarks.
Mr. Takano.
[The statement of Chairman Byrne follows:]
Prepared Statement of Hon. Bradley Byrne, Chairman, Subcommittee on
Workforce Protections
To most Americans, the question over who their employer is seems to
be an obvious answer. It's the person who hired them, the one who signs
their paycheck.
As a former labor attorney, I can tell you it used to be very clear
in legal terms how you become someone's employer. But that's no longer
the case since the National Labor Relations Board stepped in.
Many people would be shocked to find out that some company they've
had zero contact with is also considered their employer, in addition to
the employer that actually hired them.
Now, we all agree there are times when two or more employers should
be deemed ``joint employers.'' Before the NLRB overstepped, there was a
commonsense understanding of the circumstances establishing that joint
employer relationship. Both employers had to have ``actual, direct, and
immediate'' control over essential terms and conditions of employment.
This standard made sense. But today, business owners and their
employees face a standard vastly different, and far more confusing.
They face a situation where a group of unelected bureaucrats in
Washington are interfering with their relationship in a way that has
created a lot of problems.
The NLRB's decision and the Obama administration's actions that
followed, in addition to a litany of rulings by activist judges, have
inserted a great deal of uncertainty and confusion into the traditional
employer-employee relationship. Two completely separate employers can
be considered joint employers if they made a business agreement that
``indirectly'' or ``potentially'' impacts their employees.
What does that even mean? It's vague and confusing. Think of it
from the employee's standpoint. There shouldn't be any room for
question on who their employer is.
As for employers, they should have the clarity they need to look
out for their employees in the way the law requires. Because in order
for employees to have strong protections in the workplace, it needs to
be crystal clear who is responsible for providing those protections.
We are here today because we are determined to provide that clarity
once and for all and protect jobs and small businesses in our
communities. I'm proud to say three of our Democrat colleagues,
Representatives Correa, Cuellar, and Peterson, are cosponsors of the
Save Local Business Act, and we hope to continue to build bipartisan
support so we can restore commonsense to the joint employer issue.
This is an issue of great importance to both of our workforce
subcommittees, which is why this critical legislation has been a joint
effort with my colleague, Mr. Walberg. Chairwoman Foxx has made the
Save Local Business Act a top priority for the full committee, and this
hearing will bring us one step closer to moving it through the
legislative process.
I'd like to give Mr. Walberg an opportunity to provide his own
opening remarks, but before I do, I will yield to Ranking Member
Takano.
______
Mr. Takano. Thank you, Chairman Byrne.
We are here today to discuss H.R. 3441, the Save Local
Business Act. But I believe this bill is more accurately
described as a gift to large corporations that will further rig
the economy against workers. More and more employees are
working for a company whose name is not on the front of their
office building. Instead of hiring employees directly,
companies are renting employees from staffing agencies and then
evading responsibility for upholding the rights of those
workers, even though they profit from their work.
For decades, joint employment standards have ensured
workers can hold employers accountable for violating wage and
hour laws or refusing to collectively bargain. This bill
represents a significant and dangerous break from that
precedent. It denies millions of workers the right to hold
their employers accountable for wage theft and undermines their
ability to have the responsible parties at the table in order
to collectively bargain for better wages.
This bill amends the FLSA and the NLRA to set a very narrow
standard for who can be considered a joint employer. By setting
a standard that is far more restrictive than the existing
economic realities test used under the FLSA, this bill would
seriously undermine worker protections.
We'll hear today about a case involving workers at a
Walmart warehouse that underscores the importance of the FLSA's
joint employment standards. In this case Walmart contracted out
the operations of the warehouse to one company, and that
company, in turn, contracted out the staffing of the warehouse.
The contractors violated wage and hour laws. And because of the
joint employment standard under the FLSA, 1700 workers were
able to bring Walmart and both contractors to the table to
collect the pay that they had earned. The joint employer
standard plays an important role in protecting the rights of
American workers and combating the extreme and crippling
inequality in our economy, which should be the central focus
and top priority of this committee. Unfortunately, our focus
and our priorities have been elsewhere.
Studies have shown that for every dollar invested in high-
quality early learning programs, there are $7 in economic
returns. As a teacher, I know that improving early learning --
early learning provides more children the opportunity to reach
their full potential and puts more communities on the path to a
better future. Yet, this committee has only held four hearings
or markups on early childhood education since the 112th
Congress.
In comparison, as the chart shows, during that same time we
have had 35 hearings and markups attacking labor unions and
workers' rights to collectively bargain for better wages and
working conditions.
Now, there's a fine line between streamlining the economy
and targeting workers' rights, and I believe this committee has
moved well past that line several hearings ago. Even when we
debate federal wage and hour standards, we're debating policies
that would put financial stability even further out of reach
for many workers.
At no point since 2011, including in the 19 hearings and
markups we've held on the subject, has this committee
considered a single policy to raise workers' pay or create a
fair playing field for millions of hard-working people who are
struggling to make ends meet. Workers do not have the leverage
in the workforce. The joint employment standard offers them the
basic ability to hold both their employer and the joint
employer liable for wage theft claims.
This bill would strip workers of one of the few areas of
leverage they have left. Victims of our two-tiered economy need
this committee to realign its priorities. As this chart shows,
a recent study found that wages for the bottom half of earners
were stagnant from 1980 to 2014. In this same time, income for
the top 1 percent grew by 205 percent. I'm going to say that
again, 205 percent.
So I challenge my colleagues, what are we going to do for
the bottom half of income earners? I have great respect for
small businesses, and I know the business owners here today
will say that joint employer standards cause them uncertainty.
And I'm not indifferent to your concerns. But I, too, am
worried about uncertainty. And it's the uncertainty felt by
millions of American workers who do not know if they'll be able
to meet their basic expenses and provide for their children.
This is the type of uncertainty that no one should have to live
with, and it's the uncertainty that this committee is obligated
to address.
Thank you all for being here today, and I look forward to
your testimony.
[The statement of Mr. Takano follows:]
Prepared Statement of Hon. Mark Takano, Ranking Member, Subcommittee on
Workforce Protections
We are here today to discuss H.R. 3441, the Save Local Business
Act. But I believe this bill is more accurately described as a gift to
large corporations that will further rig the economy against workers.
More and more employees are working for a company whose name is not
on the front of their office building. Instead of hiring employees
directly, companies are renting employees from staffing agencies...and
then evading responsibility for upholding the rights of those workers,
even though they profit from their work.
For decades, joint employment standards have ensured workers can
hold employers accountable for violating wage and hour laws or refusing
to collectively bargain.
This bill represents a significant and dangerous break from that
precedent.
It denies millions of workers the right to hold their employers
accountable for wage theft and undermines their ability to have the
responsible parties at the table in order to collectively bargain for
better wages.
This bill amends the F-L-S-A and N-L-R-A to set a very narrow
standard for who can be considered a joint employer. By setting a
standard that is far more restrictive than the existing economic
realities test used under the F-L-S-A, this bill would seriously
undermine worker protections.
We'll hear today about a case involving workers at a Walmart
warehouse that underscores the importance of the FLSA's joint
employment standards. In this case, Walmart contracted out the
operations of the warehouse to one company, and that company in turn
contracted out the staffing of the warehouse. The contractors violated
wage and hour laws.
And because of the joint employment standard under the FLSA, 17
hundred workers were able to bring Walmart and both contractors to the
table to collect the pay they had earned.
The joint employer standard plays an important role in protecting
the rights of American workers and combating the extreme and crippling
inequality in our economy, which should be the central focus and top
priority of this committee.
Unfortunately, our focus and our priorities have been elsewhere.
Studies have shown that for every dollar invested in high-quality
early learning programs...there are seven dollars in economic returns.
As a teacher, I know that improving early learning provides more
children the opportunity to reach their full potential, and puts more
communities on the path to a better future. Yet, this Committee has
only held four hearings or markups on Early Childhood Education since
the 112th Congress.
In comparison, as the chart shows, during that same time we've had
35 hearings and markups attacking labor unions and workers' rights to
collectively bargain for better wages and working conditions.
There is a fine line between streamlining the economy and targeting
workers' rights. I believe this committee moved well past that line
several hearings ago.
Even when we debate federal wage and hour standards, we're debating
policies that would put financial stability even further out of reach
for many workers. At no point since 2011, including in the 19 hearings
and markups we've held on the subject, has this committee considered a
single policy to raise workers' pay or create a fair playing field for
millions of hardworking people who are struggling to make ends meet.
Workers do not have enough leverage in the workforce. The joint
employment standard offers them the basic ability to hold both their
employer and the joint employer liable for wage theft claims. This bill
would strip workers of one of the few areas of leverage they have left.
Victims of our two-tiered economy need this Committee to realign
its priorities.
As this chart shows, a recent study found that wages for the bottom
half of earners were stagnant from 1980 to 2014. In this same time,
income for the top 1 percent grew by 205 percent. I'll say that again--
205 percent.
So I challenge my colleagues: What are we going to do for the
bottom half of income earners?
I have great respect for small businesses and I know the business
owners here today will say that the joint employer standard causes them
uncertainty. I am not indifferent to your concerns.
But I, too, am worried about uncertainty. It's the uncertainty felt
by millions of American workers who do not know if they will be able to
meet their basic expenses or provide for their children.
That is the type of uncertainty that no one should have to live
with. And it's the uncertainty that this committee is obligated to
address. Thank you all for being here today, and I look forward to your
testimony.
______
Chairman Byrne. Thank you, Mr. Takano.
I will now yield to my distinguished colleague from
Michigan, Health, Employment, Labor, and Pensions Subcommittee
Chairman Walberg for his brief opening remarks.
Mr. Walberg.
Chairman Walberg. Thank you, Mr. Chairman. And good morning
to everyone. I, too, would like to extend a warm welcome to our
witnesses who have traveled from out of state to join us today.
We appreciate you being here, and have had hearings on this
issue in the past, and I am excited for this again.
I listen to my friends and colleagues on the other side
talk about the things that we should be doing that weren't done
when they were fully in control with the White House and both
houses as well. So it is our time now to deal with things that
I think make a difference in the real world of the American
dream. This committee has been fighting to roll back the
extreme joint employer scheme since it first took effect and
for good reason. It's a threat to jobs, entrepreneurship, and
local employers across the country.
We know this new joint employer standard has led to a whole
host of real world consequences. Because that's exactly what
we've heard from business owners and their employees in each of
our districts before this committee. We've all heard the voices
of local job traders who fear they could lose control of their
business to larger companies. One small business owner who
described himself as, and I quote, ``the living definition of
the American dream,'' warned the committee that he would --
and, again, quote, ``virtually overnight become a manager of a
large company.''
We've also heard how this new standard has made it harder
for small businesses to grow and create jobs in their
communities. Kristie Arslan, the owner of a small gourmet
popcorn shop, said she was considering opening five new
locations through franchising but the joint employer threat
made her expansion plans too risky. She decided she could only
open one new store instead of five. This is just one concerning
example of lost jobs and opportunity.
So many hard-working entrepreneurs who took a risk to start
their own business now find themselves in the sea of
uncertainty. And it's not just those in the franchising
industry. Many small businesses and local vendors rely on
contracts with larger companies, and they are concerned those
contracts could soon be harder to come by.
According to the American Action Forum, the joint employer
scheme threatens 1.7 million jobs. To protect those jobs, we
have to restore a commonsense definition of what it means to be
an employer.
I'd like to remind some of our critics that the Save Local
Business Act reflects the same straightforward joint employer
test that workers and job creators relied on for decades. To be
someone's employer it makes perfect sense that you need to have
actual, direct, and immediate control over terms and conditions
of employment. This clear test does nothing to let employers
off the hook for their obligations to their employees. What it
does ensure -- what it does is ensure the actual employer is
the one held responsible. And that's the way it should be.
It's time to settle, once and for all, what constitutes a
joint employer, not through arbitrary and misguided NLRB
decisions and rulings by activist judges, but through
legislation. This is obviously an area of labor law that is in
desperate need of clarity as recognized by at least three of
our colleagues on the other side of the aisle. This isn't a
Democrat verse Republican issue.
The Save Local Business Act is about providing certainty
for job creators in each and every one of our districts. It's
about keeping the American dream within reach. I look forward
to today's discussion.
And, Mr. Chairman, I yield back.
[The statement of Mr. Walberg follows:]
Prepared Statement of Hon. Tim Walberg, Chairman, Subcommittee on
Health, Employment, Labor and Pensions
This committee has been fighting to roll back the extreme joint
employer scheme since it first took effect, and for good reason. It's a
threat to jobs, entrepreneurship, and local employers across the
country.
We know this new joint employer standard has led to a whole host of
real-world consequences, because that's exactly what we've heard from
business owners and their employees in each of our districts and before
this committee.
We've all heard the voices of local job creators who fear they
could lose control of their businesses to larger companies. One small
business owner, who described himself as the ``living definition of the
American Dream,'' warned the committee that he would ``virtually
overnight become a manager for a large company.''
We've also heard how this new standard has made it harder for small
businesses to grow and create jobs in their communities. Kristie
Arslan, the owner of a small gourmet popcorn shop, said she was
considering opening five new locations through franchising, but the
joint employer threat made her expansion plans too risky. She decided
she could only open one new store instead of five.
This is just one concerning example of lost jobs and opportunity.
So many hardworking entrepreneurs, who took a risk to start their own
business, now find themselves in a sea of uncertainty. And it's not
just those in the franchising industry. Many small businesses and local
vendors rely on contracts with larger companies, and they are concerned
those contracts could soon be harder to come by.
According to the American Action Forum, the joint employer scheme
threatens 1.7 million jobs. To protect those jobs, we have to restore a
commonsense definition of what it means to be an employer.
I'd like to remind some of our critics that the Save Local Business
Act reflects the same straightforward joint employer test that workers
and job creators relied on for decades.
To be someone's employer, it makes perfect sense that you need to
have ``actual, direct, and immediate control'' over terms and
conditions of employment. This clear test does nothing to let employers
off the hook for their obligations to their employees. What it does is
ensure the actual employer is the one held responsible. And that's the
way it should be.
It's time to settle once and for all what constitutes a joint
employer--not through arbitrary and misguided NLRB decisions and
rulings by activist judges--but through legislation. This is obviously
an area of labor law that is in desperate need of clarity.
As recognized by at least three of our colleagues on the other side
of the aisle, this isn't a Democrat versus Republican issue. The Save
Local Business Act is about providing certainty for job creators in
each and every one of our districts. It's about keeping the American
Dream within reach.
______
Chairman Byrne. Thank you, Chairman Walberg.
I now yield to my distinguished colleague from New Jersey,
Congressman Norcross, the ranking member pro tempore on the
Health, Employment, Labor, and Pensions Subcommittee for his
brief opening remarks.
Mr. Norcross. Thank you, Chairmen Byrne and Walberg for
holding this meeting today. And I would like to thank my,
Ranking Member Mark Takano for what you do each and every day
for working families, and certainly to the witnesses who you
will be bringing your experiences to this issue.
I'd like to start by offering my thoughts and prayers to
the people of Texas and Florida and all those who have been
impacted by the devastating storms over the last two weeks.
There are 60,000 what they call storm break workers in those
two states restoring power, one of the most dangerous jobs that
you can imagine.
But today we're here to consider a bill that attacks
workers' rights to fight for better wages and conditions.
Employers have increasingly moved away from direct hiring,
relying on leased employees, subcontractors, permatemps.
There's approximately 3 million Americans that are now employed
by temporary staffing agencies, and one-fifth of all new jobs
since 2009 have been through those temp agencies.
Labor and employment laws have long held that there are
multiple joint employers, when more than one entity controls
the terms and conditions of employment. This bill would rig the
National Labor Relations Act and the Fair Labor Standards Act
to make it nearly impossible for workers to hold joint
employers responsible for unfair labor practices, wage theft or
others.
Research shows that the fissuring of the workforce to
increase outsourcing is already contributing to wage
stagnation, and this bill would make that problem even worse.
The joint employer standard that exists today started out
in the common law standard as existed for hundreds of years. In
America, that standard has existed through most of the 20th
Century and exactly intended to do what it is doing. But when
the NLRB narrowed that joint employer standard back in 1984, it
made it easier for companies to evade this joint employer. So
from 1935 to 1984 it was the same standard. Hundreds of
decisions were made based on that. And it wasn't until 1984
that changed.
In 2015, the NLRB considered a case where workers at
Browning-Ferris, BFI, Recycling Plant wanted to organize a
union. These workers were hired by the staffing agency
Leadpoint to sort recycling materials at the BFI facility. But
BFI capped their wages and assigned their workers' shifts. BFI
claimed it wasn't the employer. But here's the problem. If a
worker had joined the union with Leadpoint as the only
employer, then Leadpoint wouldn't be able to bargain over
anything without BFI's permission. Workers wouldn't even be
able to bargain for better wages because the amount Leadpoint
could pay was capped by BFI. The NLRB finding: that BFI was a
joint employer. And this is critical to help raise wages.
So let's look what happened at the table behind you and on
the walls showing the disparity in those wages since the
Leadpoint came into this equation. The wages of workers in
nearly all the plants that have unions were from $19 to $30 an
hour, plus healthcare, retirement savings. Leadpoint only made
$12.50 an hour total package. Without being able to bargain
with both of their employers, Leadpoint BFI workers and
hundreds of thousands like them will never see their wages rise
again. And this isn't the only example. And we've seen these
trends continue.
Mr. Chairman, I'd ask for unanimous consent to introduce
this document which lists three primary cases that the
carpenters' union has dealt with into the record.
Chairman Byrne. Without objection, so ordered.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Norcross. Thank you.
The right to join a union and collectively bargain helps
workers raise wages. I've lived this. I've fought on behalf of
workers to raise wages for almost two decades. This bill
enables corporations to keep wages low by subcontracting out
the work. They're subcontracting their conscience to put
profits over people.
This bill even goes further. It amends the FLSA, the Fair
Labor Standards Act, to prevent workers from holding employers
accountable for wage theft, overtime violations or others. It
immunizes the employers from child labor violations. Under this
bill, all a company has to do is outsource control of just one
essential term of employment, just one essential term of
employment to its subcontracting. You could be -- scheduling.
This bill relieves that company from any liability of wage
theft for which it would be responsible.
This is where I think the crux of what we're discussing
today comes down to. This bill is pushing for a solution in
search of a problem when it claims this bill would help
franchisees. The current joint employer standards do not hurt,
do not hurt, franchisees in any way. There are approximately
800,000 franchisees in this country. The NLRB has never found
one of them was a joint employer, 800,000, and not one decision
to create a joint employer. It's a remarkable fact. But it's an
important fact when we're talking about what we're trying to do
here today.
That's because the board carefully draws a line between
what a franchisor maintains its brand, like requiring training
on how to prepare hamburgers, hot dogs or whatever else that
the company produces. But they also do something now, the terms
and conditions, wages, benefits, and hold that subcontractor to
their exact standards.
Mr. Chairman, I'm happy to work on legislation that would
help small businesses and raise wages. This bill does neither.
It empowers massive corporations and stagnant wages at a time
when working families need relief.
I'll remind everybody it's been a decade since a vote was
taken on the minimum wage. It's been eight years since they
have received a raise. We should be lifting people up, not
pushing wages down.
While we disagree on the merits of the bill, I want to
thank the chairman for following regular order, and I want to
thank each of witnesses for traveling to Washington and look
forward to your testimony.
Thank you.
[The statement of Mr. Norcross follows:]
Prepared Statement of Hon. Donald Norcross, a Representative in
Congress from the state of New Jersey
Thank you Chairmen Byrne and Walberg for holding this hearing
today. And I would like to thank my colleague, Ranking Member Mark
Takano for all you do on behalf of working families.
I would like to start by offering my thoughts and prayers to the
people of Texas, Florida, and all the states impacted, particularly
those who lost loved ones as well as those who remain displaced. I know
I speak for my Democratic colleagues in stating that we stand ready to
work with you to ensure that the affected states have the resources
they need to recover and rebuild.
Today we consider a bill that attacks workers' rights to fight for
better wages and conditions. Employers have increasingly moved away
from direct hiring, relying on leased employees, subcontractors, and
perma-temps. Approximately 3 million Americans are now employed by
temporary staffing agencies, and one fifth of all new jobs since 2009
have been through temp agencies.
Labor and employment laws have long held workers have multiple,
``joint employers'' when more than one entity controls the terms and
conditions of employment. This bill would rig the National Labor
Relations Act and the Fair Labor Standards Act to make it nearly
impossible for workers to hold joint employers responsible for unfair
labor practices or wage theft. Research shows that the fissuring of the
workforce through increased outsourcing is already contributing to wage
stagnation, and this bill would make the problem even worse.
The joint employer standard that exists today is based on a common
law standard that has existed for hundreds of years. In America, the
standard that existed through most of the twentieth century did exactly
what it was intended to. But when the NLRB narrowed the joint employer
standard under the NLRA in 1984 it made it easier for companies to
evade joint employer status.
In 2015, the National Labor Relations Board considered a case where
workers at the Browning Ferris (BFI) recycling plant wanted to organize
a union. These workers were hired by the staffing agency Leadpoint to
sort recyclable materials at BFI's facility, but BFI capped their wages
and assigned the workers' shifts. BFI claimed it wasn't an employer,
but here's the problem: if the workers joined a union with Leadpoint as
the only employer, then Leadpoint wouldn't be able to bargain over
anything without BFI's permission. The workers wouldn't even be able to
bargain for better wages, because the amount Leadpoint could pay was
capped by BFI. The NLRB's finding that BFI was a joint employer is
critical for these workers to raise their wages.
[Referencing the chart:] Let's look at what actually happened. This
table compares what the subcontracted Leadpoint workers were making
with the wages of workers at nearby plants that have unions. The union
workers nearby make anywhere from $19 to $30 an hour, plus healthcare
and retirement savings. The Leadpoint workers only make $12.50 an hour
with no wages and benefits. Without being able to bargain with both of
their employers, the Leadpoint/BFI workers, and hundreds of thousands
like them, will never see their wages rise. And this isn't the only
example - we have seen similar trends in the telecom and construction
industries.
Mr. Chairman, I ask unanimous consent to introduce this document
into the record.
The right to join a union and collectively bargain helps workers
raise wages. I've lived this--I fought on behalf of workers to raise
wages for over two decades. This bill enables corporations to keep
wages low by subcontracting out their work. They are subcontracting
their consciences to put profits over people.
This bill goes even further. It amends the Fair Labor Standards Act
to prevent workers from holding employers accountable for wage theft or
overtime violations. It even immunizes employers from child labor
violations. Under this bill, all a company has to do is outsource
control over just one essential term of employment to its
subcontractors--say scheduling. The bill then relieves the company of
any liability for any wage theft for which it may be responsible.
Workers and businesses want stability and predictability. Instead we
are giving them chaos.
The Majority [alternative: This bill] is pushing a solution in
search of a problem when it claims that this bill would help
franchises. The current joint employment standards do not hurt
franchises in any way. There are around 800,000 franchisees in America
and the NLRB has never found that one of them was a joint employer.1
That's because the Board carefully draws a line between when a
franchisor maintains its brand--like requiring training on how to
prepare burgers--and when a franchisor governs terms of employment,
like wages. This bill would leave countless hardworking Americans
without a voice in their workplace at a time when Congress should be
helping to lift up workers by raising wages and improving workplace
conditions.
Mr. Chairman, I'm happy to work on legislation that would help
small businesses and raise wages. This bill does neither: it empowers
massive corporations and stagnates wages at a time when working
families need relief. We should be lifting people up, not pushing wages
down.
While we disagree about the merits of this bill, I want to thank
the Chairman for following regular order. I also want to thank each of
the witnesses for traveling to Washington, DC, and taking the time to
appear here today.
I yield back.
https://www.cnbc.com/2016/01/20/us-franchises-set-to-grow-in-2016-
report.html
______
Chairman Byrne. Thank you, Mr. Norcross.
Pursuant to committee Rule 7(c), all subcommittee members
will be permitted to submit written statements to be included
in the permanent hearing record. Without objection, the hearing
record will remain open for 14 days to allow statements,
questions for the record, and other extraneous material
referenced during the hearing to be submitted in the official
hearing record.
Now, it's my pleasure to introduce our distinguished panel
of witnesses.
Our first witness is Mr. Granger MacDonald. He is the CEO
of MacDonald Companies, a group of companies specializing in
developing, building, and managing multi-family neighborhoods
in Texas, and is testifying on behalf of the National
Association of Home Builders.
And, Mr. MacDonald, let me just say on behalf of all of us,
we're all praying for the state of Texas. We appreciate you
being here.
Now I recognize Representative Lewis to introduce our next
witness.
Mr. Lewis. Thank you, Mr. Chairman, for holding this
hearing and for introducing this very important piece of
legislation to provide clarity and relief to local businesses
and job creators across this country who are threatened by this
joint employer scheme.
It is my pleasure to introduce a local business owner from
my state of Minnesota, Ms. Tamara Kennedy who will be
testifying on behalf of the International Franchise
Association. She began her career as a secretary and worked her
way up to owner by working nights in the restaurants while
studying accounting and managing the books for a previous
owner.
Ms. Kennedy now owns and operates nine Taco John's
franchises, eight of them in the Twin Cities area. She
epitomizes the American dream of work, investment, and risk.
But America's economy's tolerance for risk is not unlimited.
You know, her favorite part of the job is getting to teach
young people how to be good employees and good teammates, an
important role franchises play across this nation.
Ms. Kennedy is serving her second year as a member of the
International Franchise Association's convention committee and
will be soon be taking a seat on the IFA board of directors. I
look forward to hearing about her experiences, and I thank her
for joining us today.
Chairman Byrne. Thank you, Mr. Lewis. I will now continue
with this mornings' introductions.
Mr. Michael Rubin is a partner at Altshuler Berzon LLP, in
San Francisco, California. Welcome sir.
Mr. Zachary Fasman is a partner in the labor and employment
law department at Proskauer Rose LLP, in New York City.
Distinguished panel.
I now ask our witnesses to raise your right hand.
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth, and nothing
but the truth?
Let the record reflect the witnesses answered in the
affirmative.
Before I recognize each of you to provide your testimony,
let me briefly explain our lighting testimony. You will each
have five minutes to present your testimony. When you begin,
the light in front of you will turn green.
When one minute is left, the light will turn yellow. When
your time has expired, the light will turn red.
At that point, I will ask to you wrap up your remarks as
best as you are able.
After everyone has testified, members will each have five
minutes to ask questions of the panel.
Now, I am not, like, really harsh about the lights. But
sometimes people go a little bit over. We have a lot of members
here that want to ask questions. And only so much time for you
and for them. So if I push you a little bit, please don't take
it personally. It's because we're trying to keep everything
moving.
So when that light turns yellow please start getting to the
point where you're winding up. Okay. Are we all clear on that?
Good.
Also, before you testify, just as Mr. MacDonald is doing,
press the button for your microphone or we won't hear you good
Mr. MacDonald thank you look forward to your testimony.
STATEMENT OF GRANGER MACDONALD, CEO, MACDONALD COMPANIES,
KERRVILLE, TEXAS, TESTIFYING ON BEHALF OF THE NATIONAL
ASSOCIATION OF HOME BUILDERS
Mr. MacDonald. Thank you, Mr. Chairman appreciate being
here today.
My business, MacDonald Companies, specializes in developing
affordable multi-family housing across Texas. We currently own
and manage 4571 units in 41 different apartment communities in
25 cities. We directly employ 131 workers from construction
supervisors, to property managers, to maintenance and repair
staff, many of whom are full-time, salaried individuals.
Beyond our regular staff, MacDonald Companies contracts
with 80 other companies and specialty trades to perform a range
of services across all of our properties including HVAC work,
piling, drywall, et cetera. This type of arrangement is not
unique to the entire construction industry. It's made up of a
system of building contractors and subcontractors who have been
this together. For the most builders they don't have enough
work to hire someone full time to just do tile work for
example. I might only need a drywaller for a few weeks each
year.
These numerous specialized task require a complete project
we contract with other small companies out of necessity. This
is why I'm very concerned about the ongoing ambiguity over what
constitutes a joint employer. A builder can now be considered a
joint employer if he has indirect or potentially ability to
exercise control over the workers' subcontractors the question
of what can deemed indirect control and when it legally
constitutes joint employment has been left to an open ended
situation by the NLRB. This threatens to upend the foundation
of the entire industry.
For example, we'll schedule a painter or an electrician to
come to a jobsite at a certain time. Does that trigger a
finding of joint employment? Do I have indirect control if I
ask a contractor to bring on extra staff to make up for delays?
One might think that an indirect or potential control over just
one factor like scheduling would not justify a finding of joint
employment. But because of the indirect test, it's so vague,
the NLRB has not ruled on that possibility. And there is
nothing stopping the courts from ruling on the basis of just
one factor.
Over the last three weeks, I've been overseeing cleanup and
reconstruction efforts at some of our buildings in the wake of
Hurricane Harvey's historic devastation. The process of
rebuilding from a natural disaster is chaotic and time lines
are anything about predictable.
I have contractors and subcontractors coming in and out of
our properties round the clock right now. I may ask a
contractor to bring on more staff to finish up drywalling that
has fallen behind so that the next stage of workers can get
started or tell the cabinet installer that he can't come as
planned because the replacement floor tiles have not been set
because of lingering humidity because of the storm damage. Can
these acts meet the test for indirect control? The expanded
joint employer test provides no clarity.
My focus is on getting families back to their homes. We
have endured and rebuilt from bad storms before, and we're
doing it again. But this time is with the added worry of
whether my company will be held liable for the practices of
contractors, third-party vendors, and suppliers that we've
hired to help with this important job over whom we have no
direct control.
The reality is that the line that once clearly separated
two employers is so blurry that neither I nor others in the
industry can see where it lies. The scope of the liability will
only grow for builders as courts explore and expand the limits
of the new standard. Exposed to unlimited and unpredictable
joint employment liability, small businesses will find it
increasingly challenging to comply and, therefore, compete.
This is true for residential building firms, the majority of
which have less than ten employees, as well as specialty
trades.
With less competition among small firms, construction
costs, and subsequently home prices, will rise, particularly
troubling for those of us who are in the business of providing
affordable housing.
The bipartisan Save Local Business Act offers a commonsense
solution to the ambiguity created by the Browning-Ferris
decision by affirming that a company may be considered a joint
employer of a worker only if it directly, actually, and
immediately exercises significant control over the primary
elements of employment.
This is reasonable. I should be held accountable for my
employees but not for those of another company. Codifying the
definition will provide the legal certainty every business
owner needs. I urge the Committee to take swift action to
advance the Save Local Business Act.
Thank you.
[The statement of Mr. MacDonald follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Byrne. Thank you, Mr. MacDonald.
Ms. Kennedy, you are recognized for five minutes.
STATEMENT OF TAMRA KENNEDY, PRESIDENT, TWIN CITY T.J.'S, INC.
ROSEVILLE, MN, TESTIFYING ON BEHALF OF THE INTERNATIONAL
FRANCHISE ASSOCIATION
Ms. Kennedy. Chairman Byrne, Chairman Walberg, Ranking
Member Takano, Ranking Member Norcross, and distinguished
members of the subcommittees, good morning. My name is Tamara
Kennedy, and I'm the president of Twin Cities' Taco John's,
multi-unit franchisee based in Minnesota. I'm honored here
today to speak here on behalf of small businesses throughout
the nation, and I thank you for your invitation.
I want to start by recognizing that all of our prayers and
thoughts are with the people of Florida, Alabama, Georgia,
South Carolina, Texas, Louisiana, all of whom have been
affected by the hurricanes of Irma and Harvey.
Today I'm representing the Coalition to Save Local
Businesses and its thousands of members who are supportive of
the Save Local Business Act. I'm appearing before you today
with over 400 franchise brand leaders coming around Capitol
Hill urging their Representatives and Senators to take close
look at this legislation. We consider H.R. 3441 the most
important federal legislation in franchising in over a
generation.
Mr. Chairman, I got my start working as a secretary for a
Taco John's franchisee. It took me 17 years to realize my dream
of owning my own business, and in 1999, when my employer
retired, I bought the restaurants. Today my organization
operates nine locations, eight in Minnesota and one in central
Iowa. My business has overcome many challenges, including the
recession, but we have stayed the course because I believe our
company has the potential for growth, should the regulatory
environment allow us the certainty and the flexibility to do
so.
Countless people in the franchisee industry start out in
entry-level positions like mine, as busboys, line cooks or
cashiers, or as secretaries, working towards their dream of
someday owning their own business and being their own business
and being their own boss. The franchise structure has created
that path.
As a local business owner, I am very fortunate to have the
privilege of providing jobs in our neighborhoods. My company's
values really are about giving people a place to earning a
living and learn skills at the same time. It's the greatest
honor a local business can have to pay forward the opportunity
to learn how to be good employees, good teammates, and
eventually great leaders in their own right. I'm here today to
encourage this committee and this Congress to act on the
legislative solution to address the joint employer problem
pending before the subcommittees.
It is important that you know how much I love my brand and
that partnership that I have with Taco John's. If you've ever
heard the phrase or used the phrase taco Tuesday, I'm proud to
say you're using a Taco John's trademark. But now, after two
years operated under the expanded joint employer standard, the
impact of my business is clear.
Joint employee means I must pay more to run my business and
earn less in return. Franchisors, including mine, have been
compelled to consider the potential liability risk of the new
joint employer standard that the National Labor Relations Board
has imposed. Changing the rules' language with less clear, more
widely interpreted definitions of joint employer by adding
words like indirect and even reserved or unexercised control,
opens up very real concerns.
Some examples: My franchisor used to provide employee
management products as options for franchisees. Basic but
essential tools like job descriptions, performance reviews, and
employee handbooks, and recruiting tools like banners, fliers,
and ad copy, used to be available. But due to expanded joint
employment liability, the company no longer provides most of
these tools.
Now I must hire an outside attorney to write an employee
handbook. That employee handbook cost me $9,000. Just this year
we no longer have access to a branded job application form from
the franchisor. I must create my own application or use an off-
the-shelf, non-branded form.
The reality is that joint employer is impacting my ability
to recruit employees. Quite simply, we want and need employees
to consider our business when they're searching for a job. It
could not be more important today to have a powerful, creative,
systemwide set of employment tools. I don't blame our brand for
some of these changes, because I know they're watching what's
at stake for everyone.
Our brands are coming under attack for involvement in the
hiring process which some believe indicates a direct
relationship with my employees. Those of us running our
businesses know that's simply not the case. My view and my
brand's view is that my employees are my employees alone. My
brand's role is to provide me with tools and never to exert
control over my employees.
In its August 2015 decision to expand the joint employer,
the NLRB removed the clear understanding from a business
relationship and the now the industry is justifiably struggling
with this new legal landscape.
Chairman Byrne, Chairman Walberg, on behalf of the
Coalition to Save Local Businesses, thank you so much for
introducing the Save Local Business Act. The expanded joint
employer standard is simply not working. It's time we provide
some security to local business owners. Thank you.
[The statement of Ms. Kennedy follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Byrne. Thank you, Ms. Kennedy.
Mr. Rubin, you're recognized for five minutes.
STATEMENT OF MICHAEL RUBIN, PARTNER, ALTSHULER BERZON LLP, SAN
FRANCISCO, CA
Mr. Rubin. Thank you. Let me begin by thanking Chairmen
Byrne and Walberg, and Ranking Members Norcross and Takano for
this opportunity to testify about the impacts of the Save Local
Business Act.
I've been representing low-wage workers for more than 35
years. My clients include janitors; security guards; warehouse,
garment, fast food workers; and others. For these workers, and
for many small businesses operating in a low-wage economy, H.R.
3441 will have disastrous consequences.
The bill purports to redefine the term joint employer under
the NLRA and FLSA. But its practical effect would be to
completely eliminate joint employer responsibility under those
statutes. The proposed definition narrows the NLRA's common law
standard and the FLSA's direct or indirect suffer or permit
standard so dramatically that no company could meet the
definition of joint employer once it contracts out any direct
control over its workers' employment.
The bill exempts from joint employer responsibility any
company that does not exercise direct and significant control
over all essential terms and conditions of its workers'
employment. That means once an employer has delegated any
significant control over any terms and conditions of its
workers' employment, it has ceased exercising direct control
over those terms and conditions and is no longer a potential
joint employer.
Why does that matter? In a low-wage economy, wage and hour
violations, discrimination, and other unlawful conduct are
rampant. All too often, though, the injured workers have no
real ability to enforce their rights, even in the face of
flagrant violations, especially when their direct employer is
an under-capitalized labor services subcontractor.
Mr. Rubin. In case after case, we have seen law-violating
subcontractors, whether they supply garment workers in Los
Angeles, janitors in Texas, or warehouse workers in California
or Illinois, simply declare bankruptcy in the face of a court
judgment for backpay or other relief, while their owners or
their owners' relatives or business partners later incorporate
under another name to carry on the company's same business,
leaving the judgments unsatisfied.
The proposed definition of joint employer would leave
without remedy the workers most in need of statutory
protection, the at-will, nonunion employees who are most
susceptible to exploitation.
It would also leave small business owners in the difficult
position of being solely responsible for labor law compliance
and collective bargaining even when they lack sufficient
authority and control to meet that responsibility. The problem
faced by small businesses is not that a court might impose
joint employer liability on the company that shares their
control over the workforce.
The problem is the small businesses' economic dependence on
that larger company may leave it no choice but to accept that
shared control without correspondingly shared responsibility.
The proposed bill radically redefines joint employment
under the FLSA and NLRA, abandoning the statutory directly or
indirectly suffer-or-permit standard that has been key to
effective FLSA enforcement since 1935, and rejecting the common
law of agency-based NLRA standard. Under the proposed bill, it
would be easier to prove a company's responsibility for
wrongful acts committed by an employee against a stranger under
the traditional common law master-servant standard than to
prove that company's own responsibility for wage and hour
violations committed against its own employees. This turns the
purposes of the FLSA and the common law standard on its head.
There's no need for these changes. Any lead company that
does not want to be responsible for bargaining over workplace
conditions it controls can simply restructure its relationships
to give its suppliers greater independence in controlling
wages, hours, and working conditions.
In my law practice, I've seen the destructive impacts of
the fissured economy and the critical need for meaningful labor
enforcement in many industries. Let me briefly share one
example as mentioned by Representative Takano.
In a case we settled a few years ago in southern
California, hundreds of warehouse workers were employed in four
warehouses, loading and unloading trucks for deliveries to
Walmart distribution centers. Walmart owned the warehouses and
their contents. It contracted with a subsidiary of Snyder
Logistics to operate the warehouses, and Snyder, in turn,
retained two labor services contractors to hire the workers. By
contract, all responsibility for legal compliance rested with
the contractors, yet Walmart and Snyder retained and exercised
control over almost every aspect of those workers' employment.
We ended up settling that case for $22.7 million. Class
members got tens of thousands of dollars in recovery and
significant injunctive relief that stopped those violations,
that increased the wages and allowed health benefits for the
first time for those workers only because the courts made
preliminary findings of --
Chairman Byrne. Mr. Rubin, you're beginning to run over.
Can you wind up, please?
Mr. Rubin. Absolutely.
The proposed bill would have required a completely
different result in that case. None of those defendants would
have been a joint employer under H.R. 3441. The new narrow
definition would have left those workers and millions like them
almost completely without recourse.
I'd be pleased to answer your questions.
[The statement of Mr. Rubin follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Byrne. Thank you, Mr. Rubin.
Mr. Fasman, you're recognized for five minutes.
STATEMENT OF ZACHARY D. FASMAN, PARTNER, PROSKAUER ROSE LLP,
NEW YORK, NY
Mr. Fasman. Chairman Byrne, Chairman Walberg, Ranking
Member Takano, Ranking Member Norcross, and members of the
committee, thank you for inviting me to testify today. I'd like
to address my remarks to the legal issues that are before this
committee.
As this committee knows, beginning in 1984, the National
Labor Relations Board and the courts instituted a standard in
which the courts determined whether two separate entities were
joint employers by applying exactly the standard set forth in
this bill. The accepted test was, and should be, whether the
alleged joint employers' control over employment issues was
direct and immediate. The NLRB and the courts properly
distinguished direct and immediate control from situations
where the alleged joint employers' supervision was limited and
routine.
And I want to emphasize for the committee this is not a new
standard. This is the traditional standard that was followed by
the NLRB and the courts in hundreds of cases for more than 30
years. This bill will simply restore the law to where it was
before the NLRB's decision in Browning-Ferris. Now, why is this
important? The key for me is that the traditional standard is
based upon facts, the actual conduct of the parties, as opposed
to hypothetical, after-the-fact legal conclusions about
indirect or potential but unused authority. The traditional
standard affords stability and predictability by asking a
factual question: Who actually makes employment decisions?
I want to emphasize that this standard does not prevent
collective bargaining. It allows collective bargaining between
unions and the employer that actually hires, fires,
disciplines, supervises, and directs the employees. In
Browning-Ferris, the NLRB abandoned the facts and actual
conduct and created a new test based upon whether the alleged
joint employer has the potential to control aspects of the
workplace either directly or indirectly, whatever that means,
even though it's never exercised that authority.
In other words, the Browning-Ferris test is not based upon
the parties' actual conduct but turns on after-the-fact legal
conclusions about who has what potential authority. That test
is not based upon the common law. Indeed, in my view, it is no
test at all.
As the dissent in Browning-Ferris observed, virtually every
business that subcontracts part of its operations falls into
this category. Contracting parties will always have the
potential economic control over the relationship, even though
they've never exercised it. And that's the key problem with
Browning-Ferris. It makes virtually every business that
subcontracts any of its operations into a joint employer.
This standards negates freedom of contract and allows
imposition of joint employer liability after the fact through
administrative determinations about the level of potential or
indirect control retained but never exercised by the joint
employer. It destroys any level of predictability on thousands
of vital commercial relationships.
For me, as someone who's negotiated many contracts, the
justification of this standard, because it is allegedly
necessary for meaningful collective bargaining, makes no sense.
In fact, to me, it's just the opposite. Adding in an employer
that has potentially conflicting interests that is a third
employer or second employer into the bargaining sessions will
make it much more difficult to reach agreements, not easier.
And I can tell you from experience it's difficult to reach
agreements between one union and one employer, let alone
multiple employers who have conflicting interests.
Applying such a broad definition of joint employer also
undermines the Taft-Hartley Act where Congress confined labor
disputes to a dispute between the primary employer and outlawed
secondary boycotts, outlawed secondary picketing and
involvement of a broader series of employers. A joint employer
could easily be -- under this standard, under the Browning-
Ferris standard, might easily be considered sufficiently
related to the primary employer to allow picketing at the joint
employer's facilities. And that's contrary to Taft-Hartley.
A slightly different question is raised under the Fair
Labor Standards Act which does have different definitions. But
under that act there's a crying need for a definition of joint
employer. As I've said in my written comments, there were 9,000
Fair Labor Standards Act lawsuits filed in 2016 alone. That's
not 9,000 total in the courts. That's 9,000 new lawsuits. And
there has never been a clear definition of joint employment
under that act.
There is a crying need for a clear definition. And my
colleague on the panel has cited a case called Salinas v.
Commercial Interiors where the Fourth Circuit, in 2017, goes
through all the different standards, itemizes them, comes up
with a clearly unworkable new test. That goes on all the time.
And it's time for Congress to --
Chairman Byrne. Mr. Fasman, you're going to have to wind up
too.
Mr. Fasman. Let's get a definition that works. And, in my
view, this one would work under that act.
[The statement of Mr. Fasman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Byrne. Thank you, Mr. Fasman. I'm a lawyer. We
just can't help ourselves. We can't stick to the timeframe. I
understand it. But I do appreciate all your testimony. That was
excellent for all of us.
Now we get to the time period where it's question-and-
answer time from the members of the committee. Let me remind
the members of the subcommittees and the witnesses, each member
gets five minutes. So however many people he asks, it's just
five minutes for that one member. And we're going to try to
stick to that as close as we can, because we have a lot of
members here today.
We'll start off our questioning from the distinguished
chairwoman of the committee, Dr. Foxx from the great state of
North Carolina.
Dr. Foxx, five minutes.
Mrs. Foxx. Thank you, very much, Mr. Chairman. I want to
thank all of our members for being here and certainly thank our
panelists for being here today. Their testimony has been great.
Mr. Fasman, I want to start with you, because I think you
gave such a wonderful statement at the beginning about the
traditional standard being based on facts. You know, I think
that's so important that we continue to talk about that, and
that the Browning-Ferris decision based on potential authority
and on intent, not action. I think too many times in our
culture these days there is this decision to judge people on
intent and not action. And I thank you so much for making this
so succinct.
It's been suggested that the BFI standard is not as broad
as some claim and that business owners should not worry about
it. Do you agree?
Mr. Fasman. Chairwoman Foxx, thank you for your comments. I
don't agree. I think that the potential in this standard, to
use the standard's own terms, is amazingly broad. The potential
to control a relationship, I think basing a decision upon that,
sweeps everything into the standard. So I would not agree with
that.
Mrs. Foxx. So your concern is that the potential
application of this expanded standard is far reaching. Is there
anything in BFI that serves to limit its application so
business owners we have here today should not be concerned?
And, on the other hand, would the joint employer standard in
Save Local Business Act be limited in such a way as to assuage
business owners' concerns?
Mr. Fasman. Well, I think there is nothing in BFI that
suggests a limitation. And that, indeed, is the problem, as the
dissent observed in BFI. And the standard in this bill restores
the law to what it was and the law that we've lived under for
30-plus years. So I think that people should take some comfort
in that. There are many, many decisions applying the standard
that's in this bill.
Mrs. Foxx. Thank you very much.
Mr. MacDonald, my husband and I were in the construction
business for many years several times in our lives. And we did
a lot of subcontracting with people. So I understand a little
bit about your business.
Does your company have any way to control all the actions
of your vendors or subcontractors that you could be held liable
for under expanding joint employer definitions?
Mr. MacDonald. Well, thank you very much. And I'm glad that
you got out of the business and found good work. It was a good
move.
You know, under Browning-Ferris, it's so overly broad, and
it doesn't provide employers with clarity so we know where
we're headed. We all agree that there needs to be some common
sense guidelines. And that's what we're not seeing currently.
Essentially, we're working under a scenario where you'll know
it when you see it if it's bad. I mean, which doesn't give
anyone any certainty as to what's going forward or where we're
headed with all this.
And we don't have the opportunity to direct every single
task with our subcontractors. We don't set the price. We don't
do anything like that. And we certainly don't do any more than
just scheduling our folks when we need a task done, which is --
you know, this morning at breakfast I got a menu. I selected
something. The gentleman brought it to me. I asked him to
hurry. You know, was I scheduling him? He didn't bring me what
he wanted to bring me for breakfast. You know, it seems
facetious, but it's really the same thing.
Mrs. Foxx. Right.
Well, Ms. Kennedy, I would like to know if you would have
been able to have gained the same level of experience as an
employer without the franchise help? And would you have been as
eager to have become a franchise owner yourself if you knew the
franchiser would have had such a level of control over your
business?
Ms. Kennedy. Thank you. No. There's no way that I could
have gained that experience without following the path that I
did through the course of franchising. It is one of the true
quintessential American products, franchising is. It gives us
the opportunity to learn all of the many important parts of
running a business but gives us the security of knowing that
we're working with a proven process. So it limits the risk that
we take when we go into business for yourself.
It's important to remember that same path that I followed,
I hope more people can. And that's what we're risking here if
we don't get this fixed.
Mrs. Foxx. Thank you, Mr. Chairman.
Thank you, lady and gentlemen.
Chairman Byrne. Thank you, Madam Chairwoman. The chair now
recognizes the ranking member of the full committee, the
gentleman from Virginia, Mr. Scott, for five minutes.
Mr. Scott. Thank you, Mr. Chairman.
Mr. Rubin, you have a copy of the bill in front of you?
Mr. Rubin. Yes.
Mr. Scott. On page 2, line 8, it says a person may be
considered a joint employer ``only if such person directly,''
then goes down to exercises essential control over the central
terms of employment, including hiring/firing, determining rates
of pay and benefits, day-to-day supervision, assigning work
schedules, positions and tasks and administering discipline. To
be called a joint employer, you would have to do all of those.
Mr. Rubin. Under the language of the bill, you have to do
all of those, which is why --
Mr. Scott. So if you do everything, if you hire, fire,
determine rates of pay, but you don't assign individual work
schedules, you would not be a joint employer under this
definition. Is that right?
Mr. Rubin. That is right.
Mr. Scott. Now, exactly how would your right to negotiate
wages as a union work if the person who hires, fires, and
determines rates of pay and benefits is not at the table?
Mr. Rubin. You can't. And contrary to Mr. Fasman's
testimony, and as the Board made clear in Browning-Ferris, and
later in Miller and Anderson, it's only if the companies that
can actually control the essential terms and conditions are at
the table that you can have meaningful bargaining.
Mr. Scott. Now, in Ms. Kennedy's testimony, she said that
the franchisor used to have employee handbooks, a job
application form, and helping recruiting employees. Would
anybody doing that ever be considered a joint employer?
Mr. Rubin. Well, in the Freshii case, the advice memorandum
by the Boards' general counsel made clear that a franchisor
would not be liable for making available handbooks and other
materials as long as they're optional. The circumstances that
Ms. Kennedy described would not, under the Board's current
view, trigger joint employer liability, which is why, of the
800,000 franchisees, none have ever been found in a joint
employer relationship.
Mr. Scott. Ms. Kennedy, in light of the fact that of
800,000 franchisees, none of the franchisors have ever been
held joint employment. And I'm trying to find out what the
problem is that you are articulating. Did lawyers help prepare
your testimony and interpret the laws, give you advice on that?
Ms. Kennedy. No.
Mr. Scott. Who prepared your testimony?
Ms. Kennedy. I did.
Mr. Scott. Now, why did you think that -- where did you get
the idea that a franchisor might become a joint employer?
Ms. Kennedy. We are taking a look at all of the many
written articles that are out there in not only the franchise
space but in all the business magazines, and trying to
understand how our relationship is changing right now with our
franchisor, and trying to determine where we're going to head
as a partnership.
Mr. Scott. But are lawyers helping you get through that?
Ms. Kennedy. No.
Mr. Scott. Okay. Well, I think that most of the lawyers are
suggesting, as Mr. Rubin said, that there's 800,000
franchisees, and not a single franchisor has ever been declared
a joint employer. And so we're trying to find out what the fear
is. If they are joint employers, they will be responsible for
what they did. If they are controlling the wages, then they
would have to be subject to the NLRB.
Mr. Rubin, if there is an OSHA violation created by the
franchisor, would the franchisor be a joint employer under
present law or under the bill?
Mr. Rubin. Under the present law governing OSHA, yes. Under
the bill, absolutely not. Because under the bill there is no
joint employer anymore.
Mr. Scott. And if there is a wage -- if there's a failure
to pay overtime directed by the franchisor, under present law
would they be a joint employer for that purpose?
Mr. Rubin. Yes. And there are many examples of that. But
under the current bill, they would not be a joint employer
because there are no more joint employers who control every
single term and condition directly and actually.
Mr. Scott. And how does the bill return us to the
traditional definition of employer?
Mr. Rubin. It doesn't at all. The traditional definition of
employer, under the FLSA, is directly or indirectly suffers or
permit. It's a completely different standard, the most worker-
protective standard ever enacted by this Congress.
And under the National Labor Relations Act, the Supreme
Court said you return to the common law standard. So if you
actually read the Browning-Ferris opinion, you see them
extensively quote from the Restatement of Agency, 1933, 1958,
which states the legal standard, which the Board adhered to.
And the test in Browning-Ferris, despite what I'm hearing
about perspective, and indirect, is very clearly stated in the
context of collective bargaining. If they are -- they have to
be employers within the meaning of the common law, which
includes direct and indirect and if they share or codetermine
those matters governing the essential terms and conditions of
employment.
That is the standard that has always been applied. That
goes back to the beginning of the National Labor Relations Act.
That is the standard that should continue. And, of course,
these are fact-based inquiries.
Chairman Byrne. Mr. Rubin, we're going to have to wind up.
Mr. Rubin. I'll end it there.
Chairman Byrne. Thank you, Mr. Scott.
Mr. Byrne. Thank you, Mr. Scott. The chair now recognizes
the chair of the Subcommittee on Health, Employment, Labor, and
Pensions, Mr. Walberg, for five minutes.
Mr. Walberg. Thank you, Mr. Chairman, and thanks again to
the witnesses.
Ms. Kennedy, thanks for grabbing the whiplash by the tail
of franchisee and going for the American dream, as you have.
And we applaud you and congratulate you.
You spoke about receiving less assistance and help from
your franchisor due the expanding joint employer standards and
the fear that these programs will create unintended joint
employer liability.
Could you further explain why this type of assistance is so
critical to the franchisee and to all business owners, and
especially, first time business owners who are in the franchise
system?
Ms. Kennedy. Thank you. I'll be glad to.
What's important to remember is that at the heart of
franchising is someone's idea, I make really good tacos. But
that doesn't make me an expert in legal matters. It doesn't
make me an expert in construction. It doesn't make me an expert
in all of the things that it takes to run a business.
When you join a franchise, when you choose to partner with
a franchise, you get some of the support in those areas that
you're looking to learn more about. It lessens the risks and it
creates the opportunity to grow faster, become more profitable,
and put more people to work.
It is, for me, probably one of the most important parts of
this is to try to understand that my employees are my
employees. And I get to pick them. I get to watch them grow and
move on and, through our company, on to better things. And my
employer doesn't have any role in that employment process other
than to supply me with what I desperately need right now, which
is really good recruiting tools and training tools to keep
people growing into what they're going to become.
And where we're at now is, does that make them potentially
indirectly responsible for part of the employment process.
Mr. Walberg. We'll go on with that. What problems may
develop and be created in an expanding joint employer standard
that isn't reined in? What additional problems would you see?
Ms. Kennedy. Goodness. Trying to wait to see whether or not
we want to use the court system to decide whether or not there
was indirect control, whether or not there is reserved and
unexercised control, means that I'm not going to be able to
open restaurants as often as I'd like to and at a speed that I
think that I could, because I'm not sure whether or not I'm
eventually not really going to be an owner.
If I'm in some way just a middle manager because my
franchisor is somehow indirectly responsible for my employees.
And that's, that's concerning.
Mr. Walberg. Thank you. Mr. Fasman, your written testimony
noted that bringing two or more alleged joint employers to the
bargaining table in a union contract negotiation may result in
conflicts of interest between the two employers.
Do you think this would result in better deals for
employees, and would it promote labor peace?
Mr. Fasman. Chairman Walberg, I don't think it would
promote labor peace at all, and I don't think it would promote
better deals for employees. I don't think it would promote
deals. Because you would have two employers with differing view
points pointing fingers at each other saying, ``It's your
responsibility. No, it's your responsibility.'' And nothing is
likely to get done in those circumstances.
So, no, I don't think it's a better deal at all.
Mr. Walberg. Okay. Mr. MacDonald, you spoke about shortages
of workers in especially construction trades. And we hear about
that all over our districts, all across the country.
It seems to me that one of the driving forces to get
workers into specialty trades would be the potential to own
their own business some day after they learn the process.
Do you think the expanding joint employment standard could
take away that incentive and how might this impact the
construction industry?
Mr. MacDonald. Well, it would be an extreme negative
impact. You know, most of our smaller subcontractors now are
the ones that do the majority of the work. They are people that
have under 15 employees total in their shop. They are the great
American dream. They are the guys who started off as a
journeyman and made their way to a master status and then
started their own companies. And with their own sweat and
blood, have gotten it done.
And they're not out trying to do anything but a good job.
Most of the people in the construction industry, the homeowners
that I represent are just like myself. I started off in a
pickup truck with a toolbox. And we've built a very good
company. We've been blessed and we've gotten a lot done. And
we've made a lot of good, safe affordable housing for Americans
because of it.
With the storm that we've had in Texas and it's occurred in
Florida, we're going to be short in Texas alone, somewhere
between 10 and 20,000 construction workers just to put people
back in the home where they were, not to accelerate to a new
level, just to bring us back to where we were.
And anything that we do that stymies the effort to keep
people in business, to keep people going is just going to make
it more and more impossible to put people back at home and back
at work.
Mr. Walberg. Thank you. My time has expired. I yield back.
Mr. Byrne. Thank you, Chairman Walberg. The chair now
recognizes the ranking member of the subcommittee on Workforce
Protections, Mr. Takano, for five minutes.
Mr. Takano. Thank you, Mr. Chairman. Mr. Rubin, in your
testimony you mentioned a case you litigated involving
warehouse workers in a Walmart-Schneider facility.
That case hits close to home. In fact, the facilities in
question are in my congressional district.
The case of these workers takes what, to many, seems like a
technical, legal debate, and puts a face to the workers who are
protected by our joint employer laws. I want to give you a
chance to share a little more about the facts of the case.
Mr. Rubin. Sure, 1700 workers, many earn far less than the
minimum wage, they earned money based on a bogus piece rate,
where because the company up the ladder paid the labor services
contractor on a piece rate for truck loaded or unloaded, the
contractor in turn paid the workers, depending on how many
trucks were loaded or unloaded, on a shift among the four
warehouses at the same time.
So no worker had any idea what any other worker was doing
in terms of loading or unloading, whether those numbers were
accurate.
Many of the workers had to sign their pay stubs when they
went to work in the morning and the supervisors filled those in
later with whatever hours the supervisors claimed should be in
there. The workers had to show up hours before the work began.
They weren't paid for those hours. The workers were often sent
home early when there weren't enough trucks to unload. They
weren't paid for those hours. There was a whole series of
egregious labor violations that went on for decades in those
warehouses and that was the basis of the lawsuit.
And the control was exercised by Walmart and by its
operator by dictating the terms and conditions of employment,
acting indirectly through the next level down. Indirect simply
means you're using someone else as your agent. You're telling
that next company down what to do, how to do it. Your
instructions are carrying through to the workers. So the
ultimate responsibility was held to be shared by all of the
companies.
Mr. Takano. So that's a horrible situation for those
workers, terrible working conditions, being cheated out of
their pay.
What remedy would they have had if this bill were to pass?
Mr. Rubin. They would have no remedy at all. Their only
recourse would be against the labor services contractor, who as
we found out when we finally entered into settlement
negotiations, had only enough money to pay, I think, it was
about seven percent of the total settlement combined over a
period of years.
What happens in real life, when you're talking about the
facts, is that as soon as there's a threat of labor organizing,
as soon as there's a threat of a wage-and-hour lawsuit, the
company up the ladder terminates its contract with the small
business. If small businesses are concerned, the concern should
be based on the fact that they have no job security.
What happens is they lose their contracts and the workers
lose their jobs as soon as one worker complains. So if a worker
complains, not only is that worker out of a job, but all of his
or her coworkers are out of jobs, too, because the labor
services contract is terminated.
Mr. Takano. So let me get this right. So right now, I mean
the law gives some protection to these workers, but if we pass
this new bill, remedies go away for those workers, and you're
telling me that even the small business, that the contractor,
the contractor with the big business becomes even more
vulnerable under this law?
Mr. Rubin. That's why I don't understand why this is called
the Save the Small Business Act. The small businesses are the
ones who are caught in the squeeze. They're the ones who are
hurt by this language because they will bear full
responsibility even if they don't have full responsibility.
Mr. Takano. So this really should be called the Screw
Workers and Screw Small Businesses Act.
Mr. Rubin. Not for me to say.
Mr. Takano. I'm sorry for using such a word.
Mr. Rubin. That's the effective impact.
Mr. Takano. So I'm curious about as to whether this bill
creates perverse incentives that could harm franchisees or
smaller businesses that operate as subcontractors for larger
firms. Under this bill could franchisors or warehouse owners
exercise exceptionally broad control over the labor relations
of its franchisees or subcontractors but enjoy immunity from
liability for employment law violations associated with that
control?
Mr. Rubin. Yes, that's exactly what can and would happen.
Mr. Takano. Ms. Kennedy, did any of your, did you -- you
didn't ever recall consulting any lawyers, but did you ever
read any articles about this possibility that your franchisor
could exercise far more control over your operations but yet
put all the liability for violations onto you?
Ms. Kennedy. I have read information about that. But I
would, I'm always --
Mr. Takano. Did you ever talk to your own attorney, not the
franchisor's attorneys?
Ms. Kennedy. I do have counsel --
Mr. Byrne. Let me just interrupt for a second.
Mr. Takano. Wait, wait, Mr. Chairman, this is my time.
Mr. Byrne. Well, I'm going to just -- I'm going to give you
your time. The communication between an attorney and client is
privileged and, I don't think you mean to insert yourself into
that privilege and get her to divulge --
Mr. Takano. No, Mr. Chairman, I'm not. I just want to know
if she's --
Mr. Byrne. I don't think she should be asked --
Mr. Takano. -- consulted her own attorney or the company's
attorney --
Mr. Byrne. We should not be asking her about what her
attorney told her. That's inappropriate.
Mr. Takano. But, Mr. Chairman, this is my time.
Mr. Byrne. I'm going to let you have your time, I'm just
saying --
Mr. Takano. But it is my time, Mr. Chairman.
Mr. Byrne. -- she has a recognized privilege and we cannot
invade that privilege here.
Mr. Takano. Okay. Well, Ms. Kennedy, have you consulted
your own attorney about this -- not, not -- the franchisor's
attorney?
Ms. Kennedy. Yes.
Mr. Takano. Okay. Well, I'd be interested to know just
whether or not, whether you have any advice on whether the
company's control, the franchisor's control would leave you in
a more vulnerable situation, more liable?
Ms. Kennedy. I don't know that I have any information or
advice that I want to share about that today. I don't think
that that's really what I'm here to talk about. It hasn't
happened. I can't speak to what has happened.
What I am most concerned about is, is that it could happen.
If we don't find a way to bring this language back into what is
my reality, which is defining what is direct, immediate control
over employees. It's the language that we've always worked
under. Those employees that I have, I'm proud of, and they work
for me. And when we open -- when we use these words like
indirect or reserved, unexercised control, that's where the
danger is.
Mr. Takano. Thank you for your response, Ms. Kennedy. Thank
you.
Mr. MacDonald. Mr. Chairman, if I might --
Mr. Byrne. We got to follow the protocol here.
Let me make sure I say this for everybody here who is not
an attorney. It is not appropriate to ask somebody to tell us
what an attorney has -- their attorney has told them. They have
an attorney-client privilege, and it's not appropriate for the
House of Representatives to try to invade that privilege.
Ms. Fudge. Then they can say no.
Mr. Byrne. Well, they are not lawyers and they don't have
their lawyers here with them to give them that advice. And I
think it would not be responsible for those --
Ms. Fudge. And you cannot be their lawyer.
Mr. Byrne. I'm not trying to be their lawyer.
Mr. Takano. Mr. Chairman --
Mr. Byrne. But I --
Mr. Takano. Mr. Chairman --
Mr. Byrne. Let me finish, let me finish what I'm saying.
Now, those of us that are lawyers understand this is a very
serious thing. And some of us are officers of the court,
whether we're these folks lawyers or not. And we've got to be
careful -- and I don't think it's the intention of anybody on
this panel to try to invade the attorney-client privilege. But
it is a privilege. It is recognized by the courts. And we
should not be invading that privilege.
If they want to consult their attorneys to come back to us
and give us an answer, that's a different thing. But to ask
them without their attorneys being present to give us
information about what their attorneys have told them, I don't
think is appropriate.
Mr. Takano. Well, Mr. Chairman, I was merely trying to
clarify whether such communication had taken place, whether she
had her own attorney, whether she had consulted her own
attorney or whether she was being guided by the franchisor's
attorney.
I wanted to make sure that her interest as a small business
owner was being represented, as opposed to receiving guidance
from the franchisor's interest. And because the law, the way
this law is written is so perversely against both workers and
small business people.
Mr. Byrne. Mr. Takano, you are welcome to ask the questions
that you want to ask, and they can give you the answers. But
when we're wandering into a situation where we might be asking
a non-lawyer to make a decision about whether or not they're
going to give up a privilege that is recognized by the courts,
I think it is appropriate for us to--
Mr. Takano. Well, I have no intention of asking for any
privilege to be waived, merely whether or not the
communication, whether she had consulted her own attorney
versus the franchisor's attorney.
Mr. Byrne. Thank you.
The Chair now recognizes the gentleman from South Carolina,
Mr. Wilson, for five minutes.
Mr. Wilson. Thank you, Chairman Byrne. And thank you all
for being here today, particularly Ms. Kennedy. I appreciate
the opportunities you provide.
The International Franchise Association gives such
opportunities, and then from that, you help develop -- and the
members help develop -- small businesses that provide entry-
level jobs for people to have first time employment and prove
themselves and succeed. In fact, in South Carolina we
particularly recognize this. U.S. Senator Tim Scott had his
first job at a Chick-fil-a franchise in North Charleston. And
so how wonderful it was that he had that opportunity. And so I
want to thank you for what you do.
In regard to that, in your testimony you provided several
examples how the joint employer standard has increased the cost
for you to run your business.
You mentioned that you now provide job application forms,
employee handbooks and recruitment materials that were
previously provided by the franchisor.
Could you elaborate as to how the cost of the joint
employer standard is reducing job creation and growth?
Ms. Kennedy. Thank you very much. I'd be glad to.
The one thing that I can tell you for sure is we keep track
in the restaurant business, my restaurant business, of every
penny and how it is spent, and we find that the most valuable
way to spend our resources on something that I'm passionate
about, which is education and helping our young people get
started in their work life.
In order to do that we need good tools. We need to provide
them with training documents, standard structures that help
them learn different parts and different skills of the
restaurant business. It's not as simple as just becoming a
cashier and running a cash register. It's about food safety.
It's about understanding how to direct employees and manage
money and manage inventory. And those skills, given the
opportunity to learn them, can help them run any business in
the world.
The costs for me to do that have gone up substantially. I
have to source, find, pay for, and produce many of the items
that I used to get from my franchisor. Simple things like ``Now
Hiring'' banners, flyers that go on bags and on trays, all of
those pieces and products that I use to let people know that I
am looking for really great people, cost me more money to go
produce.
My handbook, the $9,000 was just a start. Every time
there's a change in the work environment, I have to update that
handbook. That's expensive, and it's definitely not something
that I'm an expert at. And so I have to pay to get the legal
representation that I feel I need to make sure that I'm
complying with all of the many pieces of legislation and work
rules that I'm responsible for.
Mr. Wilson. Well, again, thank you so much. I know
personally the opportunities you provided -- my third son
Julian began at Ruby Tuesday, and did great work. And then my
youngest son started at Atlanta Bread Company serving. So, what
great opportunities you provide.
Equally, Mr. MacDonald, I appreciate the National
Association of Home Builders.
In fact, I, in my real estate practice, was a member of the
Columbia Area of Home Builders Association, and I still pay my
dues.
Mr. MacDonald. Thank you.
Mr. Wilson. I know -- well, they are very persistent.
But I appreciate the jobs created. And it's family-run
businesses that span generations such as yours.
You discussed in your testimony how small local businesses
are negatively impacted by the expanded joint employer rule,
and that without having the resources of larger companies
resulting in higher home prices for consumers.
Can you explain how the housing market would be negatively
impacted by the expanded joint employer mandate?
Mr. MacDonald. Absolutely. And thank you for the question.
It is exactly where you were headed there, that we have small
companies, small companies don't have the access to in-house
lawyers, to in-house H.R. personnel, and all that it takes to
be in business. So we have to rely upon what we can glean from
the street or what we have to do in the way of hiring outside
counsel on our own.
And frankly, and all due respect to Mr. Rubin, he's the
first attorney that I've heard that's willing to opine as to
what's going to happen in labor law after Browning-Ferris. I
can't find an attorney who says, ``you need to do this, this
and this.''
The attorneys that I have consulted have said, ``I can't
answer the question yet until there's more case law.'' We all
know that case law means much more legal expense, many more
problems for small business owners.
So who's going to succeed here? It's only going to be the
big builders, the larger people who have larger volume and can
afford to have staffs of attorneys to deal with these issues.
The smaller subcontractors, the smaller contractors are
just not prepared. And can't be.
Mr. Wilson. And final, again, home builders are great
citizens and corporate citizens and business leaders of our
America. We appreciate the home builders association. Thank
you.
Mr. MacDonald. Thank you, sir.
Mr. Byrne. Thank you, Mr. Wilson.
The Chair now recognizes the gentleman from New Jersey, Mr.
Norcross, for five minutes.
Mr. Norcross. Thank you, Chairman.
Common law to 1935 when the NLRA was passed. From 1935 to
1984, 46 years working off the same decision, getting decisions
from the Board, clarifying where it was. Then we had 1984 to
2015, only 31 years. And here we are from 2015 to 2017, or as I
call it, ``back to the future.'' Because what has happened is
we went back to where we were for 46 years of decisions, 46
years. 800,000 franchisees, not one has been considered a joint
employer.
So I listened to the testimony and I'm trying to make sense
how is it that we can work together to address the issues that
we're here hearing from you.
And the first thing that comes to mind is, Mr. MacDonald,
you mentioned that the franchisees or -- excuse me -- the joint
employer decision is hurting the construction industry.
How would you reflect on that in the last two years,
companies have grown, those who are starting? There's an
increase of construction companies. Isn't that the exact
opposite of what you suggested?
Mr. MacDonald. Well, it's the indecision that's going to
put an end to it. We're only seeing an --
Mr. Norcross. Well, you mentioned that this would keep
people from going into business.
Mr. MacDonald. Yes, sir. And it will keep people --
Mr. Norcross. But it increased.
Mr. MacDonald. Would you like for me to answer the
question?
Mr. Norcross. No, but you --
Mr. MacDonald. The answer to the question is that we went
through an extreme period of negative growth in the
construction industry in 2008, 2009, and 2010 and we've seen a
rebirth of housing starts. Housing starts have almost doubled
in that period of time, and that's what -- it is a simple
supply and demand issue.
I will also say that the protection of workers and labor in
our industry is really based on supply and demand. I will tell
you right now --
Mr. Norcross. Well, thank you. I don't --
Mr. MacDonald. -- because of the shortage of labor that
we're having --
Mr. Norcross. I want to keep --
Mr. MacDonald. -- nobody wants to treat an employee poorly.
Mr. Norcross. Excuse me. My time. I would like to keep a
narrow focus of what I was asking you, because the employee is
not going to be impacted by the joint decision whether or not
he is going to go to work for somebody, and that's the problem
that we're having.
The fact of the matter is, particularly in construction,
the job site safety, it's everybody working together. You're
not going to throw that on another employee. That's where all
the liability comes in. And that's, quite frankly, the reason
why the deaths on the job has been decreasing, because
everybody works together.
I just want to make sure that when we looked at what's
going on here, instead of going back to the decisions of 46
years, we're going all the way back beyond what it used to be.
So the idea of having precedents and predictability, you're
going beyond that.
And I just want to follow-up with my last question. When I
looked at AT&T now, the retail stores, almost 60 percent of
their stores are operated by one of two very, very large
subcontractors. Completely contradicting what you're telling us
today.
Mr. Rubin, I was wondering if you could talk about, in a
broad sense, the different tactics that are used to erode the
employer's obligations to employees and how they might vary
depending on the industry.
Mr. Rubin. Varies depending on the industry and the
creativity of the dominant company. There are lots of ways to
do it. The AT&T example is one. We know through the
Communication Workers how they're able to structure the
relationships so that they maintain their control.
Mr. Norcross. Because in the construction industry, the
fact of the matter is joint employers is not happening all that
often.
Mr. Rubin. Very rarely. Of the 9,036 cases identified by
Mr. Fasman that were filed under the FLSA in that one year, I
bet no more than two or three included a joint employer
allegation. It is a rarely advanced theory but a critically
important theory, which is why we need to preserve it.
It's not just that the law went through a 46-year period.
Under the Fair Labor Standards Act this would change law going
back 81 years since the FLSA was enacted. Even with the NLRA,
this notion of direct and immediate didn't come into play until
2002 in the Airborne Express footnote. So in fact, it's not
even 1984.
The standard that was rejected in Browning-Ferris was, in
fact, the 2002 standard, it's a period of only 13 years.
Mr. Norcross. Thank you.
We need to sit down and work together because these facts
are completely opposite of each other. We don't need to go all
the way back. We need to sit down and have a reasonable
discussion and work this out. I yield back.
Mr. Byrne. Thank you, Mr. Norcross.
The Chair now recognizes the gentleman from Tennessee, Dr.
Roe, for five minutes.
Mr. Roe. Thank you, Mr. Chairman. And I want to thank the
minority staff for their well wishes and flowers you sent me
during my recent surgery and continued recovery. So thank you
for that. I appreciate that very much.
You know, uncertainty, when you have an uncertainty, that
creates a situation where people react. And Ms. Kennedy pointed
out clearly that the uncertainty of this particular definition
of the NLRB, what is the joint employer status, created a chain
of effect where she then had to go and create her own book,
which cost $9,000 and a continuing recurring cost. That cost
could go in -- that money could go into expanding your
franchise, increasing wages, growing your business where it is,
de novo where it is. So the uncertainty is done. And the fact
that something hadn't happened doesn't mean it won't.
And so I know exactly -- in my business -- I'm a small
business person. And I know I've reacted when ERISA law
changed. We would do certain things. The fact that it hadn't
happened didn't mean that it wouldn't happen.
So I'd like to ask you, Ms. Kennedy -- and thank you all,
all of you, for being here -- how much involvement does your
franchisor have in your daily affairs of your business and
employees? For example, does your franchisor sign the paychecks
or hire employees or decide what hourly -- what hours someone
would work?
Ms. Kennedy. They do not have any involvement in any of the
day-to-day interactions with my employees.
Mr. Roe. And yet this uncertainty has caused them to change
the relationship they had with you. Am I correct on that?
Ms. Kennedy. I believe you are correct.
Mr. Roe. And that change created, what, an added expense
for both you and the franchisor?
Ms. Kennedy. Absolutely.
Mr. Roe. Am I correct on that?
Ms. Kennedy. You are.
Mr. Roe. I think the uncertainty is important. And, look,
this is great for employment of attorneys who have differences
of opinion. And everything is arguable, I've found out. Not
matter how it's said.
So, Mr. Fasman, we've seen an age of e-commerce and the
importance of an expedited delivery. What limitations does the
new joint employer standard put on companies who may be
exploring innovative delivery services or new partnerships with
other businesses to satisfy growing consumer demand for rapid
product delivery?
Mr. Fasman. Well, that's a very good question. And I think
it goes back to exactly what you were, what you were saying,
Congressman, and that is, that it's very difficult to
understand exactly what a contractor can do and cannot do under
this standard because it's not based upon the facts of the
relationship. It's based upon potential or indirect control
that's a question that's only answered in retrospect. That is,
I don't know what potential control could be. And as you said,
Mr. Rubin and I can argue about potential control in any
relationship. And that's properly how we made our living for a
long period of time.
But I mean, those things are not, they're just not clear.
And structuring a relationship, a commercial relationship is
vital in the areas that you've spoken about. And that's why
basically saying, ``let's go by the facts, let's not go by
potential and unreserved or unexercised control'' is so
important.
Mr. Roe. I want to thank Mr. Byrne for this, to try to put
some clarity to this.
I had -- not a franchise business, but I was in my business
myself the entire time before I came to Congress, over 30
years. And we contracted -- a medical practice. And we
contracted cleaning services. And we didn't do that ourselves.
We contracted that. I expected certain standards to be met in
cleaning the office so it would be presentable the next day. I
didn't exercise direct control over that. If we had been a
franchise I would have been caught in that uncertainty. What do
I do.
And I think that uncertainty is clear and it's costing
millions, if not billions of dollars to comply with this
uncertainty. And if you've got that many people, 700 and
something thousand franchises, 9 million employees, it is a
gigantic number.
Mr. Rubin, just a question. Yes or no. Was that $22.7
million dollar settlement a class action lawsuit or just not?
Mr. Rubin. It was a class and collective action under state
and Federal law.
Mr. Roe. So what was your fee out of that $22.7 million?
How much of that did the workers not get?
Mr. Rubin. The workers got up to $80 thousand --
Mr. Roe. No, I didn't ask that.
Mr. Rubin. -- based on the amount of --
Mr. Roe. I said what percent of that $22.7 million went to
you and your firm, not to the affected workers.
Mr. Rubin. In order to litigate that -- I don't know
exactly how much our firm made but there were 5 different --
Mr. Roe. Twenty-five percent?
Mr. Rubin. -- there were five different firms who had to
work on it, who put in more time than we were paid, if you do
it on an hourly basis.
Mr. Roe. Twenty to thirty percent? Forty percent? How much?
Mr. Rubin. No, no, no, no, no. I think it was probably in
the low 20's. But we were paid less than our hourly -- had we
been billing on an hourly rate, our fee would have been more
than twice the amount we ultimately received.
Mr. Roe. I yield back.
Mr. Byrne. Thank you, Dr. Roe.
The Chair now calls on the gentlewoman from Ohio, Ms.
Fudge, for questioning for five minutes.
Ms. Fudge. Thank you very much, Mr. Chairman.
Thank you all for being here today.
Mr. Rubin, before I give you the balance of my time to
respond to Mr. MacDonald, who just shared with us a
communication between he and his lawyers that has now said that
you're an outlier in your thought process, and to address the
question that was just asked by my colleague: Of course, we
know lawyers get paid. I mean, this is ridiculous. But let me
just make a couple of comments and then I'm going to turn over
my time to you, sir.
First, we have heard ad nauseam about the decision in
Browning-Ferris. As my colleague said, we've had 35 hearings
about this. It is interesting that every time my colleagues
across the aisle don't like a law, they call it uncertain,
ambiguous, unsustainable. Just because you don't like it
doesn't mean you don't understand it. And they clearly
understand it.
And I just want to remind our Chairwoman Foxx that intent
is a standard that has been accepted in American jurisprudence
for generations. It did not start here.
And lastly, I just have to say this: I am trying to figure
out for the life of me what Tim Scott has to do with what we
are talking about today. So he worked at Chick-fil-a. So what?
I mean, did he bring it up because he's black? Did he bring it
up because he thinks Tim Scott might support his position?
I take great offense to using a U.S. Senator, who happens
to be my friend, in something so ridiculous.
My time is now yours, Mr. Rubin.
Mr. Rubin. Thank you. In response to the questions about
uncertainty, first a bit of background.
I try to be well versed in the law. Before I started
practicing I was a clerk for a Supreme Court justice. I try to
be well versed in the facts because my job as a litigator is to
discover and know the facts and apply the facts. And I try to
understand cases like the Browning-Ferris decision and the
Freshii advice memorandum by actually looking to see what's
written in those opinions, what standards are applied.
You start with the Browning-Ferris decision. It actually
simply reiterates the standard that I quoted before about
sharing the essential terms and control over the terms and
conditions. The standard itself is not objectionable.
What people seem to be complaining about, Mr. MacDonald and
others, Ms. Kennedy, is that they have been advised that
there's some uncertainty. But in each of the instances they've
described to me there's no way a litigator would pursue their
case on a joint employer basis, which is why of the 9,000 FLSA
cases only a handful were ever pursued under joint employer
basis.
What were the facts in BFI? We have to focus on them. BFI
owned the plant. It set the shifts. It told the employees where
to work. It capped their wages. It decided when they would have
to work overtime. It decided how many workers would be working
overtime. It decided when to stop the assembly line for breaks.
It controlled the line speed. It had the right to veto any wage
hike or wage change the lead point offered. It trained the
workers. It had the power to fire and, in fact, it did
terminate two workers that it didn't want, and it had the power
to fire the entire work force.
Those are the facts of Browning-Ferris. And any lawyer
looking objectively at those facts under the standard that has
been part of the National Labor Relations Act would conclude
that party should participate in collective bargaining,
Browning-Ferris that is, because it had the right to affect
terms and conditions of employment.
And certainly we haven't talked a whole lot about the Fair
Labor Standards Act, but the Fair Labor Standards Act --
Ms. Fudge. Mr. Rubin, if I could just interrupt you one
moment. I really would like to yield the last of my time to our
ranking member, if you would allow me to do that, sir.
Mr. Scott. Thank you. Mr. Rubin, I think you can finish up
that statement, but include in that, if you have a Fair Labor
Standards Acts violation and somebody comes in and says, ``I'm
not an employer under this definition,'' and then the other guy
comes in and says, ``I'm not an employer under this definition
either,'' is it possible that nobody is responsible?
Mr. Rubin. Wow. In fact, as I look at the language of the
Act, that is possible.
Imagine this circumstance: Company A is in charge of
hiring. Company A and B share responsibility for firing. And
company B also sets wages. The worker says, who is my employer
under this definition? Well, does either company, A or B,
control the essential terms, which are then listed? There are
nine of them in the conjunctive? No.
So in that case there may be no employer.
Mr. Scott. So if there's a finding that I wasn't paid
overtime, nobody owes it?
Mr. Rubin. Neither company is a joint employer and arguably
neither is an employer at all. The uncertainty, this language
explodes uncertainty to the point where every single case,
where any element, any term or condition of employment is
shared, there's going to be litigation over whether either
company could be --
Mr. Byrne. Mr. Rubin, you're going to have to wrap up
again.
Mr. Rubin. I think I've answered the question.
Mr. Byrne. Okay good. Thank you. Thank you.
All right. The Chair now recognizes for questions, for five
minutes, the gentlewoman from New York, Ms. Stefanik.
Ms. Stefanik. Thank you, Mr. Chairman.
Mr. Fasman, in the amicus brief submitted by Microsoft in
the Browning-Ferris case, Microsoft argued that the NLRB's new
standard will discourage companies from implementing policies
and initiatives that go above and beyond their legal
requirements.
For example, market leaders with complex supply chains will
be penalized simply for implementing policies on responsible
product sourcing or human rights, as well as labor and
environmental standards.
In this Congress, I've worked on the Millennial Task Force,
which I chair with my colleague, Mr. Messer, who also sits on
this committee, and we have explored how today's companies are
changing business models to attract and retain the largest
segment of our work force, millenials. What companies such as
PriceWaterhouseCoopers, Uber, and Google are telling us is that
millennials are looking for companies that have a purpose
larger than the business. Corporate citizenship is now more
than ever a key factor in millennials interest in a job.
So how does this new joint employer standard actually chill
positive corporate policies by American companies, specifically
large companies with complex supply chains?
Mr. Fasman. I think that that's a very good point. And the
answer is that large companies with supply chains and with
innovative programs, under the standard that the labor board
has created, have to be extremely careful about the control
that they exercise. It is implementing policies from the top
down. That seems to me to be a very doubtful enterprise if in
fact this is the standard, because the more control you retain,
the more you say you should do this, this is how we want to do
this, the more likely it is that you're going to be considered
a joint employer.
Ms. Stefanik. Is there any more specific example you can
provide?
Mr. Fasman. I can't think of any sitting here right now.
Ms. Stefanik. Okay. Thank you very much.
I yield back.
Mr. Byrne. The gentlewoman yields back.
The Chair now recognizes the gentlewoman from Oregon, Ms.
Bonamici, for five minutes.
Ms. Bonamici. Thank you very much, Mr. Chairman. And thanks
to each of the witnesses for being here today.
We've had this conversation many times. I am one of the
people here on the committee who used to practice law as well.
I represented franchisees in disputes with franchisors, and I
certainly know and appreciate the franchise model and the
opportunities that it creates.
Before that, though, before law school, I worked at my
mom's small business. And I look at the title of this Save
Local Business Act and, you know, we all want local businesses
to thrive and succeed. This bill is not the way to do it.
You know, and as we've heard multiple times, this BFI case
that we've talked about so much does not upend the franchise
model. And as we've heard again this morning, that was made
clear in the Freshii case, a franchisor is not a joint employer
if they act like a franchisor by protecting brand standards.
And yes, a franchisor can provide guidance. And there was an
advice memo from the NLRB on that. Employee handbooks, payroll
services. Those things, as long as they're optional, do not
make a franchisor a joint employer.
And you know, that, if they're going to act like a joint
employer, they should be treated as a joint employer.
And Mr. Rubin, you've talked a little bit about why a fact-
specific standard is important. And I really appreciated also
your response to ranking member Scott's question, because as I
read this language with the ``and,'' all of those have to be
met to be a joint employer.
Why is it important that there be a fact-specific standard
when assessing joint employment?
Mr. Rubin. Under any standard, the current standard under
the FLSA, the NLRA, state law, other federal statutes, it all
depends on the actual relationship between the parties. There's
so many ways franchisors, franchisees, lead companies, supplier
companies can structure their relationship. That's a good
thing. We welcome flexibility in how companies operate and how
they interact with each other --
Ms. Bonamici. And those are typically spelled out in the
franchise agreement, correct?
Mr. Rubin. Yes. And it's set forth in as clear language as
they can set it forth. And the courts must look at the specific
factors and see what happens, both as a matter of contract, and
then on the ground in terms of the actual exercise of control.
That's why it's fact-specific.
You can't just say, because you have a relationship of
user/supplier or franchisor/franchisee, you are or are not a
joint employer. You have to look at the facts on the ground and
the legal relationship by contract under the law in the
jurisdiction under the particular statute. That's how you
analyze cases.
Ms. Bonamici. Well, I certainly agree that the language in
this bill would make it much more confusing and create much
more uncertainty about who is a joint employer, what entity is
a joint employer.
Mr. Rubin, we're sitting here in 2017 and there's still a
pay gap between women and men. It's difficult for individuals
to prevail in Equal Pay Act claims. Congress did pass the Lilly
Ledbetter Fair Pay Act in 2009. There's also the Paycheck
Fairness Act, which I support that would further strengthen the
right of pay equity.
If this bill, the Save Local Business Act, were to pass,
would it make it more difficult for a worker to succeed in an
Equal Pay Act claim? If so, how?
Mr. Rubin. It probably would. That's another great
uncertainty with the way this bill is written. The Equal Pay
Act is incorporated into the FLSA.
Ms. Bonamici. Right.
Mr. Rubin. As a result it adopts the standards set forth in
the FLSA. It depends on Congress' intent at the time, and
that's why there's going to be litigation over it. But
certainly if this bill changes the definition from what it's
been going back to the early 1930's to what is proposed here,
it will affect the Equal Pay Act, make it far more difficult,
in fact, I think impossible, to prove joint employer
relationships.
Same thing will happen under the Family Medical Leave Act
and certainly under the Migrant and Seasonal Agricultural
Worker Protection Act, which also borrows the FLSA definitions.
So we are going to have an explosion of litigation, more
uncertainty, more expense for franchisors, franchisees,
contractors and the like, if this bill were enacted.
Ms. Bonamici. And I know it's been asked before, but just
to clarify, how many cases are you aware of where a franchisor
has been found to be a joint employer with its franchisees
under the Fair Labor Standards Act?
Mr. Rubin. Zero.
Ms. Bonamici. Thank you.
I yield back the balance of my time.
Mr. Byrne. The gentlewoman yields back.
The Chair now recognizes the gentleman from Georgia, Mr.
Allen, for five minutes.
Mr. Allen. Thank you, Mr. Chairman, and thank you witnesses
for enduring this.
As you can, see there's a very, varied difference of
opinion. I will tell you, Mr. MacDonald and Ms. Kennedy, I'm
not going to warn you of the risk of running your business. I'm
a small business person and I, for years, and it's a
construction business, and I pretty well understood the risk.
And I'm not going to try to tell you how to run your business.
I think that's the great thing about this country. Is you
decide what's best for you and your employees. And we need to
keep it that way, in my opinion.
As far as this law is concerned, obviously we've had two
lawyers who can't agree here today. Ain't America, a great
place to live, we're all trying to figure out what is best for,
you know, the people and the citizens, the great citizens of
this country.
But it is pretty dynamic right now, this economy, and the
innovation is very dynamic. And frankly, you know, the five-
year business plans are a thing of the past. You know, one-year
business plan, maybe six months, I don't know, maybe 30 days is
what we have to deal with in the business world because your
competition is getting, you know, it's just difficult out
there. And but that's good. That's good for the customers. And
we haven't talked much about customers here today but that's
who we, that's who we work for.
But going back to these models and what we're trying to
clean up here, as far as trying to make at least the lawyers
understand, you know, again we've got the lawyers disagreeing
on, ``well, there's going to be more litigation after this
law,'' versus, you know, ``well, we've got to have this to
decrease litigation.''
You know, Mr. MacDonald, as far as your relationship with
your subcontractors -- and also Texas is a right-to-work state.
Mr. MacDonald. That's true, actually.
Mr. Allen. Yeah. Yeah. In fact, going back, Mr. Fasman, as
far as, you know, you've got states in this country that are
right-to-work states, and you've got states that are not right-
to-work.
This Browning-Ferris case, obviously this was in
California. Georgia is a right-to-work state. Texas is a right-
to-work state. How is that, I mean, how do you deal with that?
Mr. Fasman. Well, I think it's a different -- so is
Michigan, by the way.
Mr. Allen. Yeah.
Mr. Fasman. And I think the real question in any of these
situations is who the employer is. And I don't think that
that's necessarily directly related to the right-to-work issue
at all. But I would like to, Congressman, I would like to utter
some words that haven't been said during this hearing. Because
everybody has talked about, there's never been a franchisor who
has been found to be a joint employer.
There's been 145 days of hearing in the McDonalds'
litigation on just that point. General counsel Griffin is using
the Browning-Ferris decision to prosecute McDonalds and all of
its franchisees across the country.
There's an air of unreality here in the questions that have
been asked. I mean, to say there hasn't been a franchisor who
has ever been found to be a joint employer, I mean, tell that
to McDonalds who's spent the last 145 days, and continuing, in
hearings on this point.
And I find it unbelievable that nobody has mentioned that.
I just did.
Mr. Allen. Yeah, and I am glad you brought that up. I was
going to get to that as well.
As far as the right to work situation, Mr. MacDonald, I
know, you know, one of the questions is whether you work in
union or open shop. And at least in a right-to-work state you
can have two gates and you can work, work both union and open
shop subcontractors.
Do you have any subcontractors who work under those, under
that scenario?
Mr. MacDonald. Yes, sir, we certainly do.
Mr. Allen. You do?
Mr. MacDonald. The people that provide our elevator
services Thyssen Krupp are union, and even their maintenance
personnel are as well. And we work hand in hand with them.
Mr. Allen. Right. So we don't have any issues there that --
these were some concerns that were brought up about, and I know
-- and I'm not sure in a state that's a not right-to-work
state, you don't have that option. Is that correct?
Mr. Fasman. I think that that's correct. I think that you
don't have that option.
Mr. MacDonald. And it's a state-by-state situation. And you
bring up a wonderful point that a lot of state law is going to
be trampled as we try and unravel all the litigation around
this, that is pending and it's working quite well, and it's
working well in Texas.
Mr. Allen. Well, obviously, you know, we're here to try to
dismantle regulatory involvement in the process. We think
that's the most innovative, productive way for this country to
grow and to get people to work.
Thank you for your testimony.
Mr. Byrne. The gentleman yields back.
The Chair now recognizes the gentlewoman from North
Carolina, Ms. Adams, for five minutes.
Ms. Adams. Thank you, Mr. Chairman.
Ranking member, thank you as well. And thank you to the
witnesses today.
You know, what's interesting to me is that the very people
that my colleagues claim to be advocating for with the support
of H.R. 3441 are those who will suffer the most if this bill is
enacted.
The focus on the harm the joint employer standard does to
franchisees is a red herring because the National Labor
Relations Board has really never found the franchisor to be a
joint employer.
So it seems that all this bill does is create a scheme that
would give franchisors the power to scourge labor and
employment laws while leaving franchisees increasingly exposed
to lawsuits.
So I have a couple of questions. Mr. Rubin, my colleagues
claim that H.R. 3441 creates certainty for franchisees and the
joint employment context, so could you explain why this may not
necessarily be the case and what uncertainty might arise from
narrowing the standard in this way?
Mr. Rubin. The only certainty created by the bill is, as
Representative Scott was pointing out, it is certain that no
franchisor or other large company could be held liable as a
joint employer. It creates uncertainty because there are still
lots of other federal statutes and lots of state statutes that
have a range of different standards.
The standards proposed here still have to be applied on a
fact-by-fact basis.
There is no way, no court, at any time, since the Supreme
Court in the Rutherford in 1947, has ever tried to analyze a
joint employer case without looking at the facts.
There is always uncertainty until the facts are developed,
a well-counselled franchisee, small business, large business,
franchisor will know how to avoid responsibility by delegating
all control to the other business or to take on responsibility,
as it should, if in fact it does control the workers.
Ms. Adams. Okay. So, Mr. Rubin, Ms. Kennedy is concerned
about the impacts that the common law joint employee standard
may have on her business, and believes that common law standard
limits her autonomy as a franchisee and increases cost. Well,
what's your view?
Mr. Rubin. The common law standard has been in effect for
well over a hundred years.
As the board in Browning-Ferris emphasized -- looking at
the restatement of the law of agency which sets out the common
law principle, it is a fair and appropriate way to determine
when one company is acting on behalf of another. That's what
agency is all about.
Where the franchisor directs the franchisee to do certain
things, and that's indirect control, it is responsible for what
it has directed the franchisee to do. It's as simple as that.
Common law was developed, initially, the principle, for when a
company is responsible for its employees wrongful acts against
someone else. There was strict liability imposed on the master
for the acts of a servant.
The statutes have been adopted in order to protect the
employees of the master so the master doesn't deprive those
workers of their rights. And that's all the joint employer
doctrine is about, ensuring that the responsible parties are
held liable and responsible for bargaining for, and making
whole, employees who are deprived of fundamental statutory
rights because of a larger company's own actions.
Ms. Adams. All right. Thank you very much.
And, Mr. Chair, I yield back.
Mr. Byrne. The gentlewoman yields back.
The Chair now recognizes the gentlewoman from Georgia, Mrs.
Handle, for five minutes.
Mrs. Handle. Thank you, Mr. Chairman.
Thank you to all the witnesses here today. I appreciate the
insightful testimony.
For Mr. MacDonald, with the aftermath of Hurricane Harvey
and now with Hurricane Irma through Florida and into Georgia
and South Carolina, how important will it be for builders to be
able to find subcontractors to work with the rebuilding effort?
And does the expansion of the joint employer standard impact
that it in any negative way?
Mr. MacDonald. It will impact it in a negative way because
we can't do anything that impedes our ability to get more folks
to come to work. We were having problems getting people to come
to work before the storms in these areas because we have an
economic rebirth since the 2008 crash. And so now it's just
being exacerbated by the fact that we're not only trying to
produce new housing but we're trying to repair the damaged
housing and get people back in their homes.
Mrs. Handle. Okay. Great. Thank you very much.
Ms. Kennedy, like you, I also am not an attorney. In fact,
we actually share a common history in that I, too, started out
as a secretary and worked my way up. One may have an opinion
about the direction of my career since then. But I want to say
that I have tremendous respect for lawyers both on this panel
and across the country. At the same time having the view points
of people who are actually on the ground, having to implement
these types of regulations that come through and giving us a
very practical real-world impact of what you're trying to deal
with, as well as Mr. MacDonald, is incredibly important. And so
I appreciate that you're here.
One question for you: You spoke about owning stores in Iowa
and Minnesota. If you were thinking to expand into Wisconsin or
Illinois, as you know there will be different definitions
there, as a result is it possible that a different test for
joint employer liability under FLSA would apply?
As a business owner, would it be helpful, more helpful or
less helpful to ensure that we have a uniform national standard
such as the one created in this -- bipartisan, I would like to
add -- the Save Local Business Act, and how important is that
consistency and uniformity to you.
Ms. Kennedy. Thank you very much. It would be very helpful
to have one clear definition of what joint employer means
across any state line. Working in two states right now, it's
difficult, challenging. I learn fast and often. When things
change from one -- I mean, we share a border, that's about it,
from Iowa to Minnesota. If I do want to expand -- and I hope to
-- in other states besides the two that I'm in, it would be
very helpful to have one specifically clear set of languages
that help guide us in how we look at joint employer and, in
fact, any other type of regulation as we run our businesses.
Mrs. Handle. Right. Thank you very much.
Mr. Chairman, I yield back.
Mr. Byrne. The gentlewoman yields back.
The Chair now recognizes the gentleman from California, Mr.
DeSaulnier, for five minutes.
Mr. DeSaulnier. Thank you, Mr. Chairman. I would like to
maybe make just some macro comments. I'm not an attorney. And
this is, maybe, in the context, Mr. Chairman, I hope you don't
take any offense, it might have been easier on everyone, but
not as good for attorneys, if we just went back to the more
traditional employer/employee relationship.
I know that the Obama administration and the Department of
Labor had been working on a study that showed that up to 70
million Americans no longer have a traditional employer/
employee relationship. So in that context we have this debate.
Having worked at fast food restaurants -- and I'm going to
date myself -- when I was in college in the 1970's, it was a
traditional employer/employee relationship. Having owned
restaurants for 35 years -- Ms. Kennedy, I understand the
pressure you're under -- but they were independent restaurants,
and I wonder about this rule and the impact it might have in
the real world, as some of my colleagues like to say, having
worked in what their definition of the real world is, on
independent restaurants.
Because with all due respect to McDonalds, I never felt
like, even though I was in fine dining, they wanted me to stay
in the business any longer if they could get my business aside.
So, Mr. Rubin, in the context, the larger context, I'm just
worried about this erosion of worker protection. I wish it
could be clearer. I share that with the majority party.
I know that former Secretary of Labor, Secretary Reich,
likes to argue that we should make it simpler just by saying
employee/employer relationship is if you've received 80 percent
of your compensation, you are employed by that employer. It
strikes me that for everybody that would be easier, knowing
that we have to have something for these unique franchise
relationships. But maybe you could just expand on sort of more,
in your world, what happens with other employers as they try to
compete in the world where you've got this disadvantage, in my
mind's eye, when I'm trying to compete with somebody who pays
less in terms of wages and benefits because they're contracting
out.
Mr. Rubin. Right. That's an interesting perspective and one
we haven't addressed.
I, too, started my career as a secretary, my first job out
of college, and spent a lot of time in a small business, Rubin
Hardware and Son, in Dorchester, Massachusetts, founded by my
grandfather in 1922. I understand the impacts on small
businesses, and I particularly understand the impacts on small
businesses that try to follow the law.
And that's the problem we have here. The - we'll call them
high-road businesses. That's a nomenclature, they shouldn't be
called that. They're simple law-abiding business, as every
business should strive to be and the overwhelming majority do.
The problem they face is competition from companies that don't
follow the law --
Mr. DeSaulnier. Right.
Mr. Rubin. -- who are able to save labor costs, by what has
been called wage theft. By taking money, sometimes in small
amounts, but in the aggregate large amounts, from workers not
in compliance with the FLSA and other statutes.
And what the joint employer doctrine does, and actually, we
see it more often in the agricultural context, more than half
of the cases that have actually been litigated and found joint
employer, have involved farm workers who have been ripped off
by farm labor contractors. But we see it in a range of
industries where labor is a significant element of the
employer's cost, and where the reason the company is cheating
its workers is because the squeeze is on from the higher-up-
the-ladder company.
So the contract doesn't provide the small business enough
profits. Yet demands that it acts in a certain way, certain
productivity quotas that can't be done legally. That's when
that company caught in the middle, that small business has to,
find sometimes violating the law, and that adversely affects
every other small business.
So it's not just the small businesses that themselves are
in a joint employer relationship that would be affected by this
bill. Every small business that faces the competitive squeeze
from other small businesses that aren't legally compliant
because of their relationships with other companies are going
to be harmed by this bill.
Mr. DeSaulnier. And I just -- one other aspect to that, Ms.
Kennedy, one of the pressures I felt as I went longer in my
restaurant career was disposable income. So this dynamic, and
this race to the bottom, gives workers, consumers, less
disposable income. So I always looked at the trade magazines to
look at that in terms of housing costs, transportation,
healthcare costs, because there's less money for them to spend
in the marketplace.
And, Mr. Chairman, just in conclusion, maybe Mr. Rubin can
add some comments to this. I did want to note that McDonald's
is still pending and was brought under the 1984 joint employee
standard which was pre-BFI, if I'm correct. Mr. Rubin, you have
any comments about that?
Mr. Rubin. Yes. And the facts of the case are very
McDonald's specific, as are the facts of other cases against
McDonald's. But, yes, it's based on the old tried-and-true
standard.
Mr. DeSaulnier. Thank you.
Thank you, Mr. Chairman.
Chairman Byrne. Thank you, Mr. DeSaulnier.
The chair now recognizes the gentleman from Wisconsin, Mr.
Grothman, for 5 minutes.
Mr. Grothman. Yes I'll start with, Mr. Fasman. It's kind of
a difficult topic because you normally think small business is
the backbone of America. And, of course, government, for a long
time, has been waging a war on small business, trying to drive
them out of business, just punish them. They hate them. But
could you just -- in general, a lot of small businesses today
are franchisees.
Could you give me, in general, your opinion of what will
happen to small businesses as this goes into effect? Will more
of them be driven into becoming carpet stores and more
employees be forced to work for large corporations? Will that
be something that will happen in the long run?
Mr. Fasman. That is, of course, where this ultimately goes.
If you are a large franchisor, and you're found to be a joint
employer with franchisees across the country, you may have
thousands of collective bargaining agreements that you have to
negotiate. And that's untenable. So what do you do under those
circumstances? Well, there are certain things you could do. But
one of them is you could say, well, we won't have franchise --
we won't --
Mr. Grothman. Become all carpet stores.
Mr. Fasman. Yeah.
Mr. Grothman. Just like we do in so many other industries -
-
Mr. Fasman. Correct.
Mr. Grothman. -- the government will -- their hatred for
the small businessman will be such they want everybody to have
to work for a large corporation. That's what's going to happen.
Right?
Mr. Fasman. Yes. I mean, that's the logical thing to do is
to say, look, we can't do this, we can't negotiate, you know,
3,000 franchise labor contracts. It's just an impossibility.
Mr. Grothman. Not to mention you don't want to be
personally on the hook for what's going on with somebody who
you're not supervising yourself.
Mr. Fasman. Well, that is absolutely right. And that really
is. That really goes back to what we're talking about here.
It's hard for a business that has a contractual relationship
with another business and says, look, you run all of these
things, we don't want -- as is the case with Ms. Kennedy -- you
hire, you fire, you pay, and you're responsible for this, to be
told after the fact by a Federal agency, oh, but, by the way,
you're a joint employer because you have the potential to
control that relationship. I mean, that just is -- that just
makes no sense.
The parties do this. And, you know, with all due respect to
what I've heard today, companies do this not to evade the law.
They do this because this is a legitimate and important
business model in generating jobs throughout the United States.
It's not a nefarious way to get around paying employees what
they're entitled to under the law.
Mr. Grothman. Well, Ms. Kennedy, I'll ask you. I guess you
now own several Taco John's. But you just probably started out
with one?
Ms. Kennedy. Actually, I bought the company in 1999, and we
started out with more restaurants than I have today. I started
with 14. I'm down to nine.
Mr. Grothman. Oh, okay.
Ms. Kennedy. Yeah.
Mr. Grothman. I'll ask you, though, as somebody who is a
franchisee. Would you feel you were a small business woman if,
I guess, you lost control of the employer/employer relationship
in which more and more of the employer/employer relationship --
assuming Taco John's would allow you to continue to exist,
would be directed from the corporate level?
Ms. Kennedy. In effect, it would make me a manager for
them. If they are going to be responsible for employees that
are technically my employees and my business, why would they
want to carry all of that risk if they couldn't direct every
single action of those employees? And that's really what is at
odds here today, is that uncertainty over whether or not --
could they? Is it possible that they could take over control of
my employees? Because they might be held responsible in the end
for what they do.
Mr. Grothman. Now we're looking at joint employer role
today, Ms. Kennedy. But we sit on other committees. We deal
with other sort of businesses. And this idea of hating small
business, and forcing them into a position in which they
ultimately have to get bought out by the big corporation, is
something that we see in other areas, not just in the
restaurant business. Do you know why the government hates small
business? Could you take -- tries to drive them out of
business? Could you maybe speculate as to why that is, why
there are politicians who would be in favor of this rule?
Ms. Kennedy. I guess I can't. I won't speak for or to that.
I can tell you from my perspective, though, that it's easier to
control the larger.
Mr. Grothman. Easier to control. Yeah.
Ms. Kennedy. Yeah. Yeah.
Mr. Grothman. Control the big business. Control the little
guy.
Ms. Kennedy. Yeah.
Mr. Grothman. You know, you lose touch, of course, with the
local community. I'm sure you give money to the local charities
and participate in those events. And, you know, once big Mr. --
nothing against Taco John's, but big Mr. Taco John's gets out
there they're not going to be helping out with the local float
at the local parade or whatever. It's a shame that so many
people are trying to drive people like you out of business.
It's kind of a shame that the government is doing that. I guess
my time is up.
Chairman Byrne. The time is up. Gentleman yields back.
I now recognize myself for five minutes for questions.
Mr. Fasman, we've heard today that there have been
virtually no findings of joint liability for franchisors. And
yet, there are press stories of investigations and cases
regarding a number of brand name franchisors. And you mention
the McDonald's case. Is it accurate to say that franchisors and
franchisees have no reason to worry under this BFI standard?
Mr. Fasman. Absolutely not. It is inaccurate to say that.
And the reason to worry, of course, are the things that we've
been talking about today when we've actually talked about the
bill. The Browning-Ferris decision is, as I said, completely
allows the labor board to come in and say, after the fact,
you're a joint employer based upon evidence that was not there,
not on the way that you've run your business. So I would be
remiss in not saying that this is a standard that all
businesses, not only franchisors, but all businesses, should
care about.
And, Mr. Chairman, you've made it very clear, and said,
that, you know, all you have to do is look at the McDonald's
prosecution on this, on this theory. And I don't agree that the
McDonald's -- the McDonald's prosecution was brought before
Browning-Ferris. But I can virtually guarantee that the general
counsel will argue that Browning-Ferris should apply under that
ruling or in that case. So I don't agree with the proposition
that this has nothing to do with it.
Chairman Byrne. It seems to me that the game here is to get
a favorable decision in the McDonald's case and then use that
as precedent to go after franchisor/franchisee relationships
throughout the country, large, medium, and small. Would you
agree?
Mr. Fasman. I agree with that. I think that that's why it's
being brought.
Chairman Byrne. So would you agree with this assertion,
that prior to Browning-Ferris that there was certainty under
the National Labor Relations Act about who is and who is not a
joint employer?
Mr. Fasman. Well, I think that there -- yes. I think that
there was certainty in the sense that there was 30 years of
history. All of these cases, as Mr. Rubin rightly points out,
are fact-specific. But we at least knew what the standard was.
I do not agree, by the way, that there was a common law
standard for 46 years before that period of time that was
applied under the National Labor Relations Act. I think -- I've
read all those cases.
And if one can figure out what the standard was, you're
better than I am, and a better lawyer than I am. Those cases
were all over the place. And even the board said about its
prior decisions that it was somewhat amorphous what test we
used.
So this standard in 1984 brought clarity, brought
certainty, balanced the rights of employees, employers, and
labor unions, in an appropriate fashion.
Chairman Byrne. And what did the Browning-Ferris standard
do to that clarity and that certainty?
Mr. Fasman. Well, it destroyed it. It destroyed it by
introducing this after-the-fact, nonfactual, contrafactual
possibilities about potential control and indirect control. It
just threw everything into uncertainty. And it will literally
take -- if this standard continues, it will literally take
another 30 years to figure out what it means.
Chairman Byrne. As opposed to going back to the old
standard under the bill that we're talking about today and
having that clarity and certainty that we had before.
Mr. Fasman. Yes. I agree, Mr. Chairman.
Chairman Byrne. Ms. Kennedy, the American Action Forum,
Washington think tank, just released a study citing a downtrend
in growth in the hotel industry, which is heavily reliant on
franchises. This could be attributed to expanding the joint
employer standards. Do you think a similar downturn could occur
in the franchise restaurant industry based on expansion of the
joint employer standards?
Ms. Kennedy. I do. I sit here today with that exact
position. I am waiting before I start construction on another
site. I just finished building one, got it open successfully in
January, and now I'm on hold.
I want to make sure that what I build is mine under all of
the laws. And all of the history that I have, 33 years as a
franchisee, or an employee of a franchisee, everything seemed
like we were together in this idea of franchising. And now,
with this, the question is out there: Will they be able to take
over, in essence, my business, because they might be
responsible for my employees?
I'd like to point out, too -- and I'm reminded -- that
there are hundreds of charges against franchises pending at the
NLRB waiting on the McDonald's decision. So it might be fair to
say that there aren't any today. That probably isn't going to
be the case once that decision is made.
Chairman Byrne. Thank you.
And that comes to the conclusion of our question and
answer. I would like to thank our witnesses for taking the time
to testify before our subcommittee today. It was excellent
testimony, got great information out there.
I would ask unanimous consent to submit for the record a
statement from the House Committee on Small Business, Chairman
Chabot in support of H.R. 3441. Without objection, it will be
entered in the record.
[The information follows:]
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Chairman Byrne. Mr. Takano, do you have any closing
remarks?
Mr. Takano. I do, Mr. Chairman.
I would like to thank the witnesses for their testimony
today. And particularly I want to thank Mr. Rubin from my home
State of California for clarifying some things for us.
And I just want to say that too many Americans can't afford
to buy a house, send their children to college, or save for
retirement. It really should not be this way. American workers'
productivity has led to tremendous economic growth.
But, unfortunately, the rules are written so that the
economy delivers only for those at the very top. Here in
Congress, we have the power to fix that. Unfortunately, we seem
to have our priorities mixed up. We have held numerous hearings
on how to undermine our nation's unions and fundamental labor
protections. If we spent the same amount of time, in this
committee, working towards building up our nation's workforce
as we have spent on destroying unions, I believe we could have
come together on a bill to dramatically scale up investments in
our nation's workforce through registered apprenticeship
programs.
H.R. 3441 is not a good deal for small business owners or
small franchises. And it's an even worse bill for workers. I
hope we can work together to refocus our priorities, to support
and strengthen the rights of our working people in our modern
economy.
Mr. Chairman, at this time I would like to ask unanimous
consent to insert into the record the slides that Mr. Norcross
and I referenced in our opening statements.
Chairman Byrne. Without objection, so ordered.
[The information follows:]
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Mr. Takano. And I'd also like to ask unanimous consent to
insert two letters opposing H.R. 3441 from the AFL-CIO, and the
other, collectively, from the Teamsters, SEIU, UAW, UFW, UFCW,
and the USW.
Chairman Byrne. Without objection, so ordered.
[The information follows:]
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Mr. Takano. Thank you, Mr. Chairman. And that concludes my
closing statement.
Chairman Byrne. Thank you, Mr. Takano.
Well, this has been very useful and helpful, I think, both
to the committee and to the House as we consider this
particular piece of legislation.
What's really going on here is this is a game. I think we
all understand what the game is here. You just heard the two
letters that were entered into the record from the largest
labor unions in America. It's an effort by the labor unions to
try to organize where they haven't been able to organize
before. And it's a very calculated game. It started with the
Browning-Ferris decision, but certainly the Browning-Ferris
decision is going to be used, is being used today in the
McDonanld's case to try to get precedent to use to come in and
interfere with the employment relationship of small businesses.
Let me make this very clear. This is going to hurt small
businesses. I don't hear from big businesses about this. Big
businesses have lawyers, and accountants, and all those people
to take care of them.
I hear from people like Mr. MacDonald and Ms. Kennedy from
my district and all over America. And they know that this is
going to hurt them. More importantly, they know what's going to
hurt their employees. This is not about the employees of small
businesses or the small businesses in America. This is about
the big labor unions in America trying to find a way to try to
claw themselves back into the position they were in years ago.
Labor unions have continued to lose their percentage of
American workers that they represent even after 8 years of a
very favorable administration. And this is one more effort
that's their attempt to try to get back into some sort of
position of strength in America.
I would assert the only way they can get back in strength
is by changing their model, not by interrupting or interfering
with a model that's worked for small businesses and the
employees of small businesses throughout America.
So I think, if anything, the testimony we've heard today
has underscored the need for this piece of legislation. I will
say to my colleagues that I have open ears and open minds. If
they have some suggestions they want to make to me about
changes they think that would improve it, I'm happy to listen.
But based upon what I've heard today, it simply has
underscored what I've been hearing for months now, which is
that we desperately need to pass this law, get certainty and
clarity back into that employment relationship, and help small
businesses throughout America.
There being no further business, the subcommittees stand
adjourned.
[Additional submission by Mr. Takano follows:]
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[Whereupon, at 12:20 p.m., the subcommittees were
adjourned.]
[all]