[Congressional Record Volume 161, Number 148 (Thursday, October 8, 2015)]
[Senate]
[Page S7264]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        JOINT EMPLOYER DECISION

  Mr. ALEXANDER. Mr. President, I ask unanimous consent to have printed 
in the Record a copy of my remarks to the Committee on Health, 
Education, Labor, and Pensions at the hearing titled, ``Stealing the 
Dream of Business Ownership: The NLRB's Joint Employer decision.''
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                        Joint Employer Decision

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

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