[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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