[Congressional Record Volume 161, Number 21 (Monday, February 9, 2015)]
[Senate]
[Pages S853-S854]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    WHO'S THE BOSS? THE ``JOINT EMPLOYER'' STANDARD, AMERICAN SMALL 
                    BUSINESSES AND EMPLOYMENT GROWTH

  Mr. ALEXANDER. Mr. President, I ask unanimous consent that a copy of 
my remarks at the Senate Health, Education, Labor and Pensions 
Committee hearing last week be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

    Who's the Boss? The ``Joint Employer'' Standard, American Small 
                    Businesses and Employment Growth

       This morning we are having a hearing about who qualifies as 
     a joint employer in the National Labor Relations Board's 
     view.
       This hearing this morning is about a pending National Labor 
     Relations Board decision that could destroy a small business 
     opportunity for more than 700,000 Americans. These men and 
     women are franchisees. They operate health clubs, barber 
     shops, auto parts shops, child care centers, neighborhood 
     restaurants, music stores, cleaning services, and much more. 
     They use the brand name of companies like Planet Fitness, 
     Merry Maids or Panera Bread. They may work 12 hours a day 
     serving customers, meeting a payroll, dealing with government 
     regulations, paying taxes, and trying to make a profit.
       We live at a time when Democrats and Republicans bemoan the 
     fact that it's getting harder and harder to climb the 
     economic ladder of success in our country. Successfully 
     operating a franchise business is today one of the most 
     important ways to do that. Why would the pending decision by 
     the National Labor Relations Board threaten this very 
     American way of life, knocking the ladder out from under 
     hundreds of thousands of Americans? The board and its General 
     Counsel are pursuing a change to what is called the ``joint 
     employer'' standard. This standard, or test, has since 1984 
     required that for a business to be considered a joint 
     employer, it must hold direct control over the terms and 
     conditions of a worker's employment--to decide that, the NLRB 
     looks at who hires and fires, sets work hours, picks 
     uniforms, issues directions to employees, determines 
     compensation, handles day to day supervision, and conducts 
     recordkeeping.
       Under the changes the NLRB is now considering, it would 
     take just indirect control over the employees' terms and 
     conditions of employment, or even unexercised potential to 
     control working conditions, or where ``industrial realities'' 
     otherwise made it essential to meaningful collective 
     bargaining.
       So what could this mean for these more than 700,000 
     franchisees and employers? These franchise companies will 
     find it much more practical to own all their stores and 
     restaurants and day care centers themselves. There will be 
     many more company-owned outposts, rather than franchisee-
     owned small businesses.
       Franchisees tell me they expect ``franchisors would be 
     compelled to try to establish control over staffing decisions 
     and daily operations. . . . franchisees would lose their 
     independence and become de facto employees of the 
     franchisor.''
       This case doesn't just affect franchisees, it will affect 
     every business that uses a subcontractor or contracts out for 
     any service.

[[Page S854]]

     That includes most of the 5.7 million businesses under NLRB 
     jurisdiction in America--because most businesses contract for 
     some service.
       Consider a local bicycle shop that contracts out its 
     cleaning service under a cost plus provision, in which the 
     cleaner is paid for all of its expenses to a certain limit, 
     plus a profit. If this arrangement is interpreted to create 
     ``indirect control'' or have ``unexercised potential'' over 
     working conditions--they could trigger joint employer 
     obligations. Same thing with a local restaurant that 
     outsources all of its baked goods under a contract that 
     includes penalties for being late or delivering substandard 
     goods--it could be considered a joint employer of the bakery 
     employees.
       What does it mean to be a joint employer?
       First, you are required to engage in collective bargaining, 
     and are on the hook for all of the agreements made in 
     collective bargaining, such as salaries, healthcare coverage, 
     and pension obligations. It often takes weeks or months of an 
     employer's time and hefty legal costs to negotiate 
     agreements.
       Being considered a joint employer also eliminates 
     protection from what are called ``secondary boycotts.'' 
     Current law does not allow a union to boycott companies that 
     do business with their employer in an attempt to apply to 
     pressure to their employer. If the secondary company is 
     instead deemed a joint employer, the union will be able to 
     picket and boycott.
       Imagine being an employer and having these legal, financial 
     and time burdens placed upon you by a union representing 
     employees you have no real control over.
       Let me give another example--we have several large auto 
     manufacturing plants in my home state of Tennessee. Let's say 
     one of those plants has a few thousand employees, but 
     thousands of other workers come in and out of the plant's 
     gates every day to provide goods and services the facility 
     needs to operate.
       These workers are employed and directly controlled by 
     subcontractors that provide security, supply auto parts, and 
     staff the company lunch room. If the NLRB goes down this 
     road, the plant owner could be forced to sit at dozens of 
     different collective bargaining tables--and be responsible 
     for another employer's obligations.
       So the manufacturer would likely take as much ``in house'' 
     as it can--and if that move comes at the cost of efficiency 
     and innovation the plant could be relocated elsewhere. This 
     example is especially concerning to me because more than 
     100,000 Tennesseans are employed in the auto manufacturing 
     industry.
       As for the subcontractors, they would be losing huge 
     clients, which would in turn jeopardize more jobs and 
     threaten these businesses' futures.
       Most business owners are people who wanted to run their own 
     business, be their own boss, and live their dream of 
     providing a much-needed service in their community.
       This pending decision would ruin that dream for many.

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