[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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