[House Report 118-338]
[From the U.S. Government Publishing Office]


118th Congress }                                          { REPORT 
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                          { 118-338

======================================================================
 
  PROVIDING FOR CONGRESSIONAL DISAPPROVAL UNDER CHAPTER 8 OF TITLE 5, 
    UNITED STATES CODE, OF THE RULE SUBMITTED BY THE NATIONAL LABOR 
 RELATIONS BOARD RELATING TO ``STANDARD FOR DETERMINING JOINT EMPLOYER 
                                STATUS''

                                _______
                                

January 3, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Ms. Foxx, from the Committee on Education and the Workforce, submitted 
                             the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                      [To accompany H.J. Res. 98]

    The Committee on Education and the Workforce, to whom was 
referred the joint resolution (H.J. Res. 98) providing for 
congressional disapproval under chapter 8 of title 5, United 
States Code, of the rule submitted by the National Labor 
Relations Board relating to ``Standard for Determining Joint 
Employer Status'', having considered the same, reports 
favorably thereon without amendment and recommends that the 
joint resolution do pass.

                                PURPOSE

    The purpose of H.J. Res. 98 is to disapprove of the rule 
related to ``Standard for Determining Joint Employer Status'' 
that was first announced on September 7, 2022, and published as 
a final rule in the Federal Register on October 27, 2023.

                            COMMITTEE ACTION

                             113TH CONGRESS

Second Session--Hearings

    On June 24, 2014, the Subcommittee on Health, Employment, 
Labor, and Pensions (HELP) held a National Labor Relations 
Board (NLRB or Board) oversight hearing titled ``What Should 
Workers and Employers Expect Next from the National Labor 
Relations Board?'' Witnesses were Mr. Andrew F. Puzder, CEO, 
CKE Restaurants Holdings, Inc., Carpinteria, CA; Mr. Seth H. 
Borden, Partner, McKenna Long & Aldridge, New York, NY; Mr. 
James B. Coppess, Associate General Counsel, AFL--CIO, 
Washington, D.C.; and Mr. G. Roger King, Of Counsel, Jones Day, 
Columbus, OH. Witnesses discussed upcoming NLRB cases and 
policy and cited changes to the joint employer standard as one 
of the most significant and controversial issues before the 
Board at that time.
    On September 9, 2014, the HELP Subcommittee held a hearing 
on potential changes to the NLRB's joint employer standard 
titled ``Expanding Joint Employer Status: What Does It Mean for 
Workers and Job Creators?'' Witnesses were Mr. Todd Duffield, 
Shareholder, Ogletree, Deakins, Nash, Smoak and Stewart, 
Atlanta, GA; Mr. Clint Ehlers, President, FASTSIGNS of 
Lancaster and Willow Grove, Lancaster and Willow Grove, PA, 
testifying on behalf of the International Franchise 
Association; Mr. Harris Freeman, Professor, Western New England 
University School of Law, Springfield, MAs; Ms. Catherine 
Monson, Chief Executive Officer, FASTSIGNS International, Inc., 
Carrollton, TX, testifying on behalf of the International 
Franchise Association; and Mrs. Jagruti Panwala, owner of 
multiple hotel franchises in the northeastern United States, 
Bensalem, PA. Witnesses spoke about how an expanded joint 
employer standard would negatively impact franchises and other 
small businesses.

                             114TH CONGRESS

First Session--Hearings

    On August 25, 2015, the HELP Subcommittee held a field 
hearing titled ``Redefining `Employer' and the Impact on 
Alabama's Workers and Small Business Owners'' in Mobile, 
Alabama, in anticipation of the NLRB creating a new joint 
employer standard. Witnesses were Mr. Marcel Debruge, Burr and 
Forman LLP, Birmingham, AL; Mr. Chris Holmes, CEO, CLH 
Development Holdings, Tallahassee, L; and Col. Steve Carey, 
USAF, Ret., Owner and Operator, CertaPro Painters of Mobile and 
Baldwin Counties, Daphne, AL, testifying on behalf of the 
Coalition to Save Local Businesses and the International 
Franchise Association. Witnesses testified that the new joint 
employer standard would threaten the independence of small 
businesses and deter franchisors from licensing new 
franchisees.
    On August 27, 2015, the HELP Subcommittee held a field 
hearing titled ``Redefining `Employer' and the Impact on 
Georgia's Workers and Small Business Owners'' in Savannah, 
Georgia, regarding the NLRB's joint employer standard. 
Witnesses were Mr. Jeffrey M. Mintz, Shareholder, Littler 
Mendelson, P.C., Atlanta, GA; Mr. Kalpesh ``Kal'' Patel, 
President and COO, Image Hotels, Inc., Pooler, GA; Mr. Alex 
Salguerio, Savannah Restaurants Corp., Savannah, GA; and Mr. 
Fred Weir, President, Meadowbrook Restaurant Company Inc., 
Cumming, GA, testifying on behalf of the Coalition to Save 
Local Businesses and the International Franchise Association. 
Witnesses testified the new joint employer standard would hurt 
small business growth in Georgia and create barriers to entry 
for potential franchise owners.
    On September 29, 2015, the HELP Subcommittee held a 
legislative hearing on H.R. 3459, the Protecting Local Business 
Opportunity Act. Witnesses at the hearing were Mr. Ed Braddy, 
President, Winlee Foods, LLC, Timonium, MD, testifying on 
behalf of himself and the National Franchisee Association; Mr. 
Kevin Cole, CEO, Enniss Electric Company, Manassas, VA, 
testifying on behalf of the Independent Electrical Contractors; 
Mr. Charles Cohen, former Member of the NLRB and Senior 
Counsel, Morgan, Lewis & Bockius, LLP, Washington, D.C.; Ms. 
Mara Fortin, President and CEO, Nothing Bundt Cakes, San Diego, 
CA, testifying on behalf of herself and the Coalition to Save 
Local Businesses; Mr. Michael Harper, Professor, Boston 
University School of Law, Boston, MA; and Dr. Anne Lofaso, 
Professor, West Virginia University College of Law, Morgantown, 
WV. Witnesses testified that H.R. 3459 would restore the joint 
employer standard that had worked well for workers and business 
owners for decades and would protect opportunities for small 
business growth.

First Session--Legislative Action

    On September 9, 2015, then-Committee on Education and the 
Workforce (Committee) Chairman John Kline (R-MN) introduced the 
Protecting Local Business Opportunity Act (H.R. 3459, 114th 
Congress). Recognizing the threat to small businesses posed by 
the NLRB's August 2015 decision in Browning-Ferris Industries 
of California, Inc. (Browning-Ferris),\1\ the legislation 
amended the NLRA to restore the long-held standard that two or 
more employers can only be considered joint employers for 
purposes of the Act if each shares and exercises control over 
essential terms and conditions of employment and such control 
over these matters is actual, direct and immediate.
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    \1\362 NLRB No. 186 (2015).
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    On October 28, 2015, the Committee considered and marked up 
H.R. 3459, the Protecting Local Business Opportunity Act. 
Representative Buddy Carter (R-GA) offered an amendment in the 
nature of a substitute, making a technical change to clarify 
the Act. The Committee voted to adopt the amendment in the 
nature of a substitute by voice vote. The Committee then 
favorably reported H.R. 3459, as amended, to the House of 
Representatives by a vote of 21 to 15.

                             115TH CONGRESS

First Session--Hearings

    On February 14, 2017, the HELP Subcommittee held a hearing 
titled ``Restoring Balance and Fairness to the National Labor 
Relations Board.'' Witnesses decried the extreme, partisan 
decisions of the NLRB during the Obama administration, 
including the expanded joint employer standard. Witnesses were 
Ms. Reem Aloul, BrightStar Care of Arlington, Arlington, VA, 
testifying on behalf of the Coalition to Save Local Businesses; 
Ms. Susan Davis, Partner, Cohen, Weiss and Simon, LLP, New 
York, NY; Mr. Raymond J. LaJeunesse, Jr., Vice President, 
National Right to Work Legal Defense and Education Foundation, 
Springfield, VA; and, Mr. Kurt G. Larkin, Partner, Hunton & 
Williams LLP, Richmond, VA.
    On July 12, 2017, the Committee held a hearing titled 
``Redefining Joint Employer Standards: Barriers to Job Creation 
and Entrepreneurship'' to examine the impact of expanding joint 
employer standards across federal labor laws, including the 
NLRA and the Fair Labor Standards Act (FLSA). Witnesses were 
Mr. Michael Harper, Professor, Boston University School of Law, 
Boston, MA; Mr. Richard Heiser, Vice President, FedEx Ground 
Package System, Inc., Chicago, IL; Mr. G. Roger King, Senior 
Labor and Employment Counsel, HR Policy Association, 
Washington, D.C.; Mr. Jerry Reese II, Director of Franchise 
Development, Dat Dog, New Orleans, LA, testifying on behalf of 
the Coalition to Save Local Businesses; Ms. Catherine K. 
Ruckelhaus, General Counsel, National Employment Law Project, 
New York, NY; and Ms. Mary Kennedy Thompson, Chief Operating 
Officer of Franchise Brands, Dwyer Group, Waco, TX, testifying 
on behalf of the International Franchise Association. Witnesses 
testified about the importance of reigning in expanding joint 
employer standards.
    On September 13, 2017, the HELP and Workforce Protections 
Subcommittees held a joint legislative hearing on H.R. 3441. 
Witnesses were Mr. Zachary D. Fasman, Partner, Proskauer Rose 
LLP, New York, NY; Ms. Tamara Kennedy, President, Twin Cities 
T.J.'s Inc., Roseville, MN, testifying on behalf of the 
Coalition to Save Local Businesses; Mr. Granger MacDonald, 
Chief Executive Officer, The MacDonald Companies, Kerrville, 
TX, testifying on behalf of the National Association of Home 
Builders; and Mr. Michael Rubin, Partner, Altshuler Berzon LLP, 
San Francisco, CA. Witnesses testified that H.R. 3441 clarifies 
the joint employer standard used under both the NLRA and FLSA 
and benefits workers and business owners.

First Session--Legislative Action

    On July 27, 2017, then-Subcommittee on Workforce 
Protections Chairman Bradley Byrne (R-AL) introduced the Save 
Local Business Act (H.R. 3441, 115th Congress). In response to 
expanding joint employer standards under the NLRA and FLSA, the 
bill amends both laws to provide that two or more employers can 
only be considered joint employers if each shares and exercises 
control over essential terms and conditions of employment and 
if such control over those matters is actual, direct, and 
immediate.
    On October 4, 2017, the Committee considered and marked up 
H.R. 3441. Then-Subcommittee on Workforce Protections Chairman 
Byrne offered an amendment in the nature of a substitute, 
making technical changes.\2\ The Committee voted to adopt the 
amendment in the nature of a substitute by voice vote. The 
Committee then favorably reported H.R. 3441, as amended, to the 
House of Representatives by a vote of 23 to 17. On November 7, 
2017, H.R. 3441 passed the House by a vote of 242 to 181.
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    \2\The amendment in the nature of a substitute clarified that a 
list of terms and conditions of employment included in the act are 
examples of what can be considered in a joint employer analysis, but 
not a comprehensive list, and control of every term and condition is 
not required for joint employment to be found.
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                             116TH CONGRESS

First Session--Hearings

    On May 8, 2019, the HELP Subcommittee held a hearing titled 
``Protecting the Right to Organize Act: Deterring Unfair Labor 
Practices.'' Witnesses were Mr. Roger King, Senior Labor and 
Employment Counsel, HR Policy Association, Arlington, VA; Mr. 
Josue Alvarez, Truck Driver, XPO Logistics, Bell Gardens, CA; 
Ms. Charlotte Garden, Associate Professor, Seattle University 
School of Law, Seattle, WA; and Mr. Richard Griffin, Of 
Counsel, Bredhoff and Kaiser, P.L.L.C, Washington, D.C. 
Republican Members and Mr. King criticized the Protecting the 
Right to Organize Act's potential harmful impact on workers and 
businesses, including its expanded joint employer standard.
    On July 25, 2019, the HELP Subcommittee held a hearing 
titled ``Protecting the Right to Organize Act: Modernizing 
America's Labor Laws.'' Witnesses were Mr. Richard Trumka, 
President, AFL-CIO, Washington, D.C.; Mr. Jim Status, Former 
University of Pittsburgh Medical Center Employee, Pittsburgh, 
PA; Mr. Phillip Miscimarra, Senior Fellow, The Wharton School, 
University of Pennsylvania, Philadelphia, PA; and Mr. Mark 
Gaston, Former Chairman, NLRB, Washington, D.C. Republican 
Members and Mr. Miscimarra criticized the Protecting the Right 
to Organize Act's expanded joint employer standard, among other 
provisions.

                             118TH CONGRESS

First Session--Hearings

    On March 28, 2023, the Committee held a hearing titled 
``Unleashing America's Opportunities for Hiring and 
Employment.'' Witnesses were Chris Spear, President, American 
Trucking Association, Washington, D.C.; Mr. Jerry Akers, 
Franchisee/Owner, Sharpness, Inc. DBA Great Clips and the Joint 
Chiropractic, Palo, IA; Dr. Heidi Shirholz, President, Economic 
Policy Institute, Washington, D.C.; and Mr. Stephen Moore, 
Senior Fellow in Economics, Heritage Foundation, Washington, 
D.C. Witnesses discussed how Biden administration policies, 
including the NLRB's joint employer proposed rule, were making 
it harder to create jobs and overcome inflation.

First Session--Legislative Action

    On November 9, 2023, Representative John James (R-MI) 
introduced H.J. Res 98, Providing for congressional disapproval 
under chapter 8 of title 5, United States Code, of the rule 
submitted by the National Labor Relations Board relating to 
``Standard for Determining Joint Employer Status'' with 
Chairwoman Virginia Foxx (R-NC) and Representatives Mike 
Johnson (R-LA), Jim Banks (R-IN), Aaron Bean (R-FL), Earl L. 
``Buddy'' Carter (R-GA), Tom Cole (R-OK), James Comer (R-KY), 
Eric A. ``Rick'' Crawford (R-AR), Jeff Duncan (R-SC), Scott 
Fitzgerald (R-WI), Bob Good (R-VA), Lance Gooden (R-TX), Diana 
Harshbarger (R-TN), Clay Higgins (R-LA), Ashley Hinson (R-IA), 
Erin Houchin (R-IN), Jake LaTurner (R-OK), Julia Letlow (R-LA), 
Lisa McClain (R-MI), John R. Moolenaar (R-MI), Alexander X. 
Mooney (R-WV), Greg Pence (R-IN), John W. Rose (R-TN), Adrian 
Smith (R-NE), Michelle Steel (R-CA), Glenn Thompson (R-PA), Tim 
Walberg (R-MI), Elise Stefanik (R-NY), and David G. Valadao (R-
CA). The resolution was referred to the Committee on Education 
and the Workforce.
    On December 12, 2023, the Committee considered H.J. Res. 98 
in legislative session and reported it favorably to the House 
of Representatives by a recorded vote of 25-20.

                            COMMITTEE VIEWS

                              INTRODUCTION

    Small businesses are still recovering from the pandemic, 
and owners are not optimistic about the current economic 
environment.\3\ Survey after survey finds inflation is the top 
challenge for small businesses.\4\ ``Bidenomics'' and the 
current administration's policies have led to skyrocketing 
inflation and high prices for American households and 
employers. Consumer sentiment is equally pessimistic, falling 
for the fourth straight month, according to the University of 
Michigan Survey of Consumers.\5\
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    \3\https://www.nfib.com/content/press-release/economy/nfib-
celebrates-50-years-of-small-business-economic-data-with-october-
survey/.
    \4\https://www.uschamber.com/sbindex/quarterly-spotlight.
    \5\http://www.sca.isr.umich.edu/.
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    Instead of changing course in light of economic conditions, 
the Biden administration has continued to issue costly 
regulations that harm workers, small businesses, and consumers. 
In total, the Biden administration has finalized 724 
regulations, costing $434.8 billion and imposing 223,725,800 
paperwork burden hours on the public.\6\ Such rapid 
accumulation of rules slows economic growth\7\ while imposing 
more significant costs on small businesses.\8\ The NLRB's 
``Standard for Determining Joint Employer Status'' 
significantly adds to existing regulatory burdens and will 
cause devastating economic consequences for small businesses, 
workers, consumers, and the economy.\9\
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    \6\https://www.regrodeo.com/
?year%5B0%5D=2023&year%5B1%5D=2022&year%5B2%5D=2021.
    \7\https://www.mercatus.org/research/policy-briefs/regulatory-
accumulation
-and-its-costs#::text=By%20distorting%20the%20investment%
20choices,rate%20of%20the%20US%20GDP.
    \8\https://ldr.lafayette.edu/concern/publications/6q182k69n.
    \9\Standard for Determining Joint-Employer Status, 88 Fed. Reg. 
53,946 (Oct. 27, 2023).
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Background on joint employer status under the National Labor Relations 
        Act

    Predictability and transparency are crucial to upholding 
the rule of law. Regulated parties deserve clear rules and 
standards that make it obvious what is proscribed or permitted 
by law. Without a clear understanding of the rules, it is 
extremely difficult for the regulated community to plan for the 
future or know how to act in order to comply with the rules. 
H.J. Res. 98 will bring the necessary certainty to the joint 
employer standard under the National Labor Relations Act 
(NLRA).
    From 1984 to August 2015, the NLRB's joint employer 
standard provided such certainty and clarity. It examined 
whether two or more employers shared control over or co-
determined the essential terms and conditions of employment to 
determine whether two separate entities should be considered 
``joint employers'' under the NLRA.\10\ Essential terms and 
conditions of employment included hiring, firing, discipline, 
supervision, and direction of employees. Under this standard, 
the joint employers' control over these employment matters must 
have been actual, direct, and immediate.\11\ This predictable 
and clear standard ensured employers would not be saddled with 
collective bargaining obligations or with liability of a 
company they do not control.
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    \10\TLI, Inc., 271 NLRB 798 (1984), overruled by Browning-Ferris 
Indus. of Calif., Inc., 362 NLRB No. 186 (2015).
    \11\See Airborne Express, 338 NLRB 597, 597 n.1 (2002) (``[The] 
essential element in [joint employer] analysis is whether a putative 
joint employer's control over employment matters is direct and 
immediate.''); AM Prop. Holding Corp., 350 NLRB 998, 1000 (2007) (``In 
assessing whether a joint employer relationship exists, the Board . . . 
looks to the actual practice of the parties.'').
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    In 2015, the Obama NLRB issued a decision in Browning-
Ferris Industries of California (Browning-Ferris) that upended 
decades of Board precedent by dramatically expanding the 
definition of joint employer under the NLRA.\12\ Under this 
standard, two entities were deemed joint employers based on the 
mere existence of reserved control, indirect control, or 
control that was limited and routine. As a result, Browning-
Ferris greatly increased the universe of potential joint 
employers.
---------------------------------------------------------------------------
    \12\Browning-Ferris Industries of California, Inc., 362 NLRB No. 
186 (2015).
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    In 2018, the U.S. Court of Appeals for the District of 
Columbia Circuit upheld portions of Browning-Ferris.\13\ While 
the D.C. Circuit ruled that evidence of reserved or indirect 
control could be appropriate factors in determining joint 
employer status, the court also ruled that the Board applied 
the concept of ``indirect control'' too broadly.\14\ The D.C. 
Circuit returned the case to the Board, directing that it 
reevaluate the case by considering ``indirect control'' of only 
those factors directly related to the terms and conditions of 
employment of the relevant employees.\15\ The court noted that 
by ``failing to distinguish evidence of indirect control that 
bears on workers'' essential terms and conditions from evidence 
that simply documents the routine parameters of company-to-
company contracting,'' the Board had exceeded its authority and 
``overshot the common-law mark.''\16\ Moreover, the court held, 
```global oversight' is a routine feature of independent 
contracts'' which should not be a factor relevant to the 
analysis of a joint-employment relationship.\17\
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    \13\Browning-Ferris Indus. of Calif., Inc. v. NLRB, 911 F.3d 1195 
(D.C. Cir. 2018).
    \14\Id. at 1216.
    \15\Id. at 1223-1224.
    \16\Id. at 1216.
    \17\Id. at 1220.
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    On February 25, 2020, the Trump NLRB issued a final rule 
restoring the traditional joint employer standard, where joint 
employer status is found only when a company exercises 
``substantial direct and immediate control'' over the essential 
terms and conditions of another company's employees.\18\ On 
October 27, 2023, the Biden NLRB issued a final rule 
establishing a new standard for determining joint-employer 
status under the NLRA,\19\ largely reviving the Obama NLRB's 
joint employer standard from the 2015 decision in the Browning-
Ferris case.\20\ The rule rescinds and replaces the Trump 
NLRB's joint employer final rule.
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    \18\Joint Employer Status Under the National Labor Relations Act, 
85 Fed. Reg. 11,184 (Feb. 26, 2020).
    \19\Standard for Determining Joint-Employer Status, 88 Fed. Reg. 
53,946 (Oct. 27, 2023).
    \20\Browning-Ferris Industries of California, Inc., 362 NLRB No. 
186 (2015).
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    Under the new rule, a joint employer relationship is 
established when employers share and codetermine, whether 
directly or indirectly, employees' essential terms and 
conditions of employment. The Board may also determine that 
joint employer status exists when two or more employers 
exercise or possess the power to control, whether directly or 
indirectly, employees' essential terms and conditions of 
employment. Under this standard, what is considered an 
essential term and condition of employment is greatly expanded.

     CONSEQUENCES OF AN EXPANDED AND VAGUE JOINT EMPLOYER STANDARD

    The damaging consequences of the Biden NLRB's joint 
employer standard are well understood because it largely 
revives the Obama NLRB's Browning-Ferris decision. The Board's 
new joint employer rule is similarly broad and vague like the 
Browning-Ferris standard that created immense uncertainty and 
imposed massive costs on thousands of businesses nationwide.
    A report published in 2016 by the franchising industry 
consultancy FranData when the Browing-Ferris decision was in 
effect found that ``40,000 businesses operating in 75,000 
franchise locations are at risk of failure because of the NLRB 
ruling and its resulting egregiously high labor and operating 
costs.''\21\ In addition, the increased risk of business 
failures and potential decline in the formation of new 
franchise businesses could mean that ``600,000 jobs may be lost 
or not created.''
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    \21\Frandata Key Findings and Survey Results: 2015 National Labor 
Relations Board-Joint Employer Ruling (Feb. 10, 2016), https://
www.frandata.com/wp- content/uploads/2016/03/
FRANdata_Joint_Employer_Impact_Study.pdf.
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    Another economic analysis of the Browning-Ferris decision 
found that it significantly harmed both franchisors and 
franchisees, stifling the creation of business ownership. 
According to the study, the Browning-Ferris decision cost the 
``franchising sector as much as $33.3 billion annually and has 
resulted in as many as 376,000 lost job opportunities.''\22\ 
The losses for small franchisees were significant, with the 
average franchisee experiencing an annual revenue loss of 
$142,000 per year.\23\ Furthermore, the Browning-Ferris joint 
employer standard led to a 93 percent increase in NLRB unfair 
labor practice charges and petitions alleging joint employment 
in the franchise sector, significantly increasing litigation 
costs for businesses that contract with other companies.\24\
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    \22\Ronald Bird, Statement Regarding the Economic Impact of the 
Prospective NLRB Public Policy Decision Regarding the Definition of 
Joint Employer 2 (Jan. 28, 2019), https://www.franchise.org/sites/
default/files/2019-05/JE%20Econ%20Impact%200128.pdf.
    \23\Id.
    \24\Id.
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    Franchisors and franchisee independent local businesses 
have expressed concerns that harm done by a joint employer 
standard, including indirect and reserved control, will block 
entrepreneurs from starting new businesses. In a hearing on 
joint employment during the 115th Congress, Tamara Kennedy, 
President of Twin City T.J.'s, Inc., explained how important 
the franchise business model was in her road to business 
ownership and how unlimited joint employment liability could 
have stifled her aspirations:
          I am very involved in protecting our life's work and 
        ensuring that this [franchise] industry, that has 
        provided so much to me, can continue to do the same for 
        every rising entrepreneur. . . . Countless people in 
        the franchise industry start out in administrative 
        roles like mine--or as busboys, line cooks or 
        cashiers--and move up to become multi-unit owners. 
        Stories like ours are celebrated as some of the 
        greatest American success stories there are, and the 
        franchise structure is, in large part, responsible. It 
        has provided each of us with so many opportunities to 
        succeed, and I am hopeful that it will remain intact so 
        that it can continue to afford other hard-working 
        employees similar paths to success. . . . After two 
        years operating under the expanded joint employer 
        standard, the impact on my business is clear: joint 
        employer means I must pay more to run my business, and 
        earn less in return, all while worrying if the unclear 
        joint employment liability rules will continue to erode 
        my autonomy to run my business.\25\
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    \25\The Save Local Business Act: Hearing on H.R. 3441, Save Local 
Business Act, Before the Subcomm. on Health, Emp't, Lab. & Pensions & 
the Subcomm. on Workforce Protections of the H. Comm. on Educ. & the 
Workforce, 115th Cong. 25-26 (2017) (statement of Tamra Kennedy, 
President, Twin City T.J.'s, Inc.).
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    The broad, vague, and confusing standard in the Biden 
NLRB's joint employer rule mirrors the Obama-era Browning-
Ferris standard. Jerry Reese, Director of Franchise Development 
at Dat Dog Franchise, testified before the Committee how the 
confusion from such unclear standards harms businesses:
          The most important part of our business's success 
        rests in the hands of our wonderful and competent 
        people. They are the faces of our restaurants at each 
        location, and we rely on them each day. . . . [T]he 
        most important aspect of my position as the director of 
        franchise development is in training future franchise 
        owners, so that they can hire their own wonderful and 
        competent employees.
          But employee training is a great example of the 
        confusion that lies within the very real threat to 
        local businesses from a joint employer standard based 
        on direct, indirect and reserved control. Franchise 
        companies naturally want to pass along their expertise 
        and experience to as many people as possible within 
        their system. But now franchise brands are limited by 
        only being able to train franchise employees if the 
        training is deemed necessary to ensuring brand 
        standards. While no business can afford to have a 
        poorly trained work force, locally owned businesses are 
        now faced with the question of how to train employees 
        in your system to uphold brand standards with the all-
        too-real threat of joint employment liability looming 
        over all of us.
          [T]hanks to the mess created by the National Labor 
        Relations Board, franchising is caught in an unworkable 
        Catch-22. On one hand, franchisors must impose a series 
        of operational standards upon franchisees to maintain 
        brand standards and consistency. But on the other hand, 
        these fundamental operational standards have served as 
        the basis for regulators to name franchisors as joint 
        employers of their franchisees' employees.\26\
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    \26\Redefining Joint Employer Standards: Barriers to Job Creation 
and Entrepreneurship: Hearing Before the H. Comm. on Educ. & the 
Workforce, 115th Cong. (2017) (statement of Jerry Reese, II, Dir. of 
Franchise Development, Dat Dogs Franchise, LLC, at 4-5), https://
edworkforce.house.gov/uploadedfiles/reese_-_testimony.pdf.
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    Mary Kennedy Thompson of Dwyer Group service brands 
testified before the Committee about the widespread 
consequences of an expanded joint employer standard:
          Franchises are not the only business model threatened 
        by the new standards. Research from the American Action 
        Forum in April 2017 projected that the new joint 
        employer standard could result in 1.7 million fewer 
        jobs in the entire private sector and 500,000 fewer 
        jobs in the leisure and hospitality industry alone. It 
        is imperative that the locally-owned businesses created 
        by the franchise system remain open and continue to 
        operate with the full support of their brand. The 
        system gives entrepreneurs a leg up because they can 
        rely on the proven-to-work tools that we as franchisors 
        give them, and that system is currently in 
        jeopardy.\27\
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    \27\Redefining Joint Employer Standards: Barriers to Job Creation 
and Entrepreneurship: Hearing before the House Comm. on Educ. & the 
Workforce, 115th Cong. (2017) (statement of Mary Kennedy Thompson, 
Chief Operating Officer of Franchise Brands, Dwyer Group, at 5), 
https://edworkforce.house.gov/uploadedfiles/thompson_-_testimony.pdf.
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    Further, in a full Committee hearing this Congress, Jerry 
Akers, a Great Clips franchisee, described the disastrous 
outcomes for the franchise business model if the Protecting the 
Right to Organize Act (PRO Act) is enacted--legislation that 
would codify an expansive joint employer standard which mirrors 
the Biden NLRB's rule:
          This puts franchisors at risk of being sued for 
        things they never did and had no power to stop. 
        Moreover, it risks wiping away the equity that I have 
        spent my life and career building in my businesses and 
        ultimately makes me a middle manager of my brand. . . .
          My deep concern about the proposed PRO Act and its 
        consequences cannot be overstated. The legislation 
        threatens to undermine the very foundation upon which 
        franchise businesses are built, potentially devastating 
        the livelihoods of thousands of franchisees, and 
        jeopardizing the future of our workforce. For 
        franchisees like myself, the impact could be 
        catastrophic, not only affecting our businesses but 
        also the communities we serve and the employees who 
        depend on us for their livelihoods.\28\
---------------------------------------------------------------------------
    \28\Unleashing America's Opportunities for Hiring and Employment: 
Hearing Before the H. Comm. on Educ. & the Workforce, 118th Cong. 37-39 
(2023) (statement of Jerry Akers, Franchisee/Owner, Sharpness, Inc. DBA 
Great Clips & the Joint Chiropractic).
---------------------------------------------------------------------------

Deficient cost analysis

    During the Biden administration, the Small Business 
Administration's (SBA) Office of Advocacy found significant 
noncompliance with the Regulatory Flexibility Act (RFA), which 
requires federal agencies to examine and consider the effects 
of their regulations on small businesses. Under the RFA, when 
an agency publishes a Notice of Proposed Rulemaking (NPRM), it 
must also publish an initial regulatory flexibility analysis 
(IRFA). Furthermore, an agency must also publish a final 
regulatory flexibility analysis (FRFA) when the rule is final. 
An agency can avoid conducting an IRFA or FRFA when the agency 
head certifies that the rule does not ``have a significant 
economic impact on a substantial number of small 
entities.''\29\
---------------------------------------------------------------------------
    \29\5 U.S.C. Sec.  605(b).
---------------------------------------------------------------------------
    Like many federal agencies during the Biden administration, 
the NLRB ignored small businesses' needs in its joint employer 
rulemaking, both in its proposed and final joint employer rule. 
On November 29, 2022, the SBA Office of Advocacy submitted 
public comments on the NLRB's joint employer proposed rule.\30\ 
The letter expressed a number of concerns with the proposed 
rule, including that the new ``joint employer standard is too 
ambiguous and broad, providing no guidance for contracting 
parties on how to comply or avoid liability.''
---------------------------------------------------------------------------
    \30\https://advocacy.sba.gov/wp-content/uploads/2022/11/Comment-
Letter-NLRB Joint-Employer-Rule-508c.pdf.
---------------------------------------------------------------------------
    Furthermore, the SBA Office of Advocacy encouraged the 
Board to reassess the compliance costs of the regulation and 
consider alternatives that would minimize the economic impacts 
to small entities as required by the RFA because the Board 
severely underestimated the costs and burden of the rule for 
small businesses. The SBA Office of Advocacy noted that in the 
IRFA ``the [B]oard only estimates one hour of time for a small 
employer to read and understand the rule, at a cost of under 
$150 per small business.''\31\ The Board also acknowledges that 
companies may choose to alter their business relationships as a 
result of the rule but fails to estimate such compliance costs. 
The SBA Office of Advocacy further noted in its comment letter 
that franchisees, restaurant owners, a general contractor, and 
a construction industry representative expressed concerns that 
the rule would increase compliance and litigation costs, cause 
large businesses to not contract with small businesses, and 
require employers to hire dedicated staff to comply with the 
rule.\32\
---------------------------------------------------------------------------
    \31\Id. at 5.
    \32\Id.
---------------------------------------------------------------------------
    Rather than reassess the costs to small businesses or 
incorporate their concerns, the Board majority erroneously 
asserted that its joint employer final rule will not have a 
significant economic impact on a substantial number of 
entities.\33\ According to the final rule, the ``only direct 
compliance cost for any of the 6.1 million American business 
firms (both large and small) with employees is reading and 
becoming familiar with the text of the new rule''\34\ with only 
$227.98 in familiarization costs to small employers.\35\
---------------------------------------------------------------------------
    \33\See Standard for Determining Joint Employer Status, 88 Fed. 
Reg. 73,946, 74,006 (dissenting view of Member Kaplan).
    \34\Id. at 74,009.
    \35\Id. at 74,016.
---------------------------------------------------------------------------
    However, Board Member Marvin Kaplan, writing in dissent to 
the new joint employer rule, stated the following:
          As the public comments make clear, the majority 
        grossly underestimates the actual costs that small 
        businesses will incur to familiarize themselves with 
        the final rule. It is not clear how a human resources 
        specialist will be able to read the rule, which is 
        nearly 63,000 words in length, in an hour, let alone 
        comprehend the full ramifications of its changed legal 
        standard in this complicated area of the law.\36\
---------------------------------------------------------------------------
    \36\Id. at 74,006 (dissenting view of Member Kaplan).
---------------------------------------------------------------------------
    Certain direct compliance costs to small businesses were 
deemed irrelevant by the Board majority for the purposes of the 
FRFA, such as that many small businesses will be transformed 
into joint employers as a result of the rule, with new 
collective bargaining obligations. Member Kaplan argued this 
would impose direct costs in two ways:
          First, to determine whether they would be subject to 
        that duty, small businesses will have to review their 
        existing business contracts and practices to determine 
        whether they possess any reserved authority to control 
        or exercise any indirect control over any essential 
        term and condition of employment of another business's 
        employees, neither of which could alone establish joint 
        employer status under the 2020 Rule but either of which 
        will make an entity a joint employer of another 
        business's employees under the majority's final rule. 
        Second, small businesses whose joint- employer status 
        has been changed by the final rule and that contract 
        with an employer whose employees are unionized will be 
        required to participate in collective bargaining.\37\
---------------------------------------------------------------------------
    \37\Id.
---------------------------------------------------------------------------
    The Board's refusal to acknowledge the real, substantial 
costs of its joint employer rule flouts legal requirements 
regarding cost estimates and is a disservice to the small 
businesses who will have to comply with it.

                               CONCLUSION

    The consequences of the NLRB's vague and broad joint 
employer rule cannot be overstated. Far from clarifying 
employer responsibilities under the NLRA, it creates a 
confusing joint employer standard that will force companies to 
alter contractual relationships while imposing excessive costs 
and burdens on both large and small businesses. As a result, it 
will harm entrepreneurs and job creation without any 
perceivable benefit to workers, employers, or consumers.

                                SUMMARY

                H.J. RES. 98 SECTION-BY-SECTION SUMMARY

    H.J. Resolution 98 resolves that Congress disapproves of 
the rule related to ``Standard for Determining Joint Employer 
Status,'' which was first announced on September 7, 2022, and 
published as a final rule in the Federal Register on October 
27, 2023.

                       EXPLANATION OF AMENDMENTS

    No amendments to the resolution were adopted.

              APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. H.J. Res. 98 provides for congressional disapproval 
under chapter 8 of title 5, United States Code, of the rule 
submitted by the National Labor Relations Board relating to 
``Standard for Determining Joint Employer Status'' and 
therefore would ensure the standard is not applied for the 
legislative branch in a manner similar to other employers.

                       UNFUNDED MANDATE STATEMENT

    Pursuant to Section 423 of the Congressional Budget and 
Impoundment Control Act of 1974, Pub. L. No. 93-344 (as amended 
by Section 101(a)(2) of the Unfunded Mandates Reform Act of 
1995, Pub. L. No. 104-4), the Committee traditionally adopts as 
its own the cost estimate prepared by the Director of the 
Congressional Budget Office (CBO) pursuant to section 402 of 
the Congressional Budget and Impoundment Control Act of 1974. 
The Committee reports that because this cost estimate was not 
timely submitted to the Committee before the filing of this 
report, the Committee is not in a position to make a cost 
estimate for H.J. Res. 98.

                           EARMARK STATEMENT

    H.J. Res. 98 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of House Rule XXI.

                            ROLL CALL VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee Report to include for 
each record vote on a motion to report the measure or matter 
and on any amendments offered to the measure or matter the 
total number of votes for and against and the names of the 
Members voting for and against.


         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    In accordance with clause (3)(c) of House Rule XIII, the 
goal of H.J. Res. 98, is to provide for congressional 
disapproval under chapter 8 of title 5, United States Code, of 
the rule submitted by the National Labor Relations Board 
relating to ``Standard for Determining Joint Employer Status.''

                    DUPLICATION OF FEDERAL PROGRAMS

    No provision of H.J. Res. 98 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

  STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the committee's oversight findings and recommendations are 
reflected in the body of this report.

                       REQUIRED COMMITTEE HEARING

    In compliance with clause 3(c)(6) of rule XIII the 
following hearing held during the 118th Congress was used to 
develop or consider H.J. Res. 98: On March 28, 2023, the 
Committee on Education and the Workforce held a hearing 
entitled, ``Unleashing America's Opportunities for Hiring and 
Employment.''

               NEW BUDGET AUTHORITY AND CBO COST ESTIMATE

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has requested 
but not received a cost estimate for the resolution from the 
Congressional Budget Office. The Chairwoman of the Committee 
shall cause such estimate to be printed in the Congressional 
Record upon its receipt by the Committee.

                        COMMITTEE COST ESTIMATE

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.J. Res. 98. 
However, clause 3(d)(2)(B) of that rule provides that this 
requirement does not apply when, as with the present report, 
the Committee has requested a cost estimate for the bill from 
the Director of the Congressional Budget Office.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    H.J. Res. 98, as reported by the Committee, makes no 
changes in existing law.

                             MINORITY VIEWS

                              INTRODUCTION

    H.J. Res. 98, Providing for congressional disapproval under 
chapter 8 of title 5, United States Code, of the rule submitted 
by the National Labor Relations Board relating to ``Standard 
for Determining Joint Employer Status,'' would nullify the 
National Labor Relations Board's (NLRB's or the Board's) final 
joint employer rule ensuring that workers, who are hired 
through subcontractors, temporary staffing agencies, and other 
intermediaries, can hold all the entities that control their 
working conditions accountable for their right to bargain 
collectively for higher pay, better benefits, and safer 
workplaces. If enacted, H.J. Res. 98 would reinstate the 
deficient Trump-era rule that weakened workers' ability to hold 
their employers accountable by narrowing the joint employer 
standard to only cover entities that directly exercise control 
over workers' terms and conditions of employment. H.J. Res. 98 
is opposed by numerous organizations including: A Better 
Balance, AFL-CIO, American Federation of State, County, and 
Municipal Employees, Center for Economic and Policy Research, 
Center for Law and Social Policy, Communications Workers of 
America, Demos, Economic Policy Institute, International 
Brotherhood of Teamsters, Jobs With Justice, National Center 
for Law and Economic Justice, National Domestic Workers 
Alliance, National Education Association, National Employment 
Law Project, National Organization for Women, National 
Partnership for Women and Families, National Women's Law 
Center, Restaurant Opportunities Centers United, Leadership 
Conference on Civil and Human Rights, Legal Aid Society, 
Transport Workers Union of America, United Auto Workers, United 
Brotherhood of Carpenters and Joiners of America, United Food 
and Commercial Workers International Union, and Young 
Invincibles.

     HISTORY OF JOINT EMPLOYMENT & THE NATIONAL LABOR RELATIONS ACT

    For most of the time since the 1935 enactment of the 
National Labor Relations Act (NLRA),\1\ the NLRB has held that 
an entity may be liable to bargain with the employees of a 
contractor as a joint employer even if its control over terms 
and conditions of employment was indirect, such as exercised 
through an intermediary, or reserved but not yet exercised.\2\ 
This traditional standard is consistent with the U.S. Supreme 
Court's requirement that the NLRB interpret the NLRA's 
definition of employer as consistent with the common law\3\ as 
well as with the legislative history of the NLRA's 1947 
amendments.\4\
---------------------------------------------------------------------------
    \1\29 U.S.C. Sec. Sec. 151-169.
    \2\See, e.g., Greyhound Corp., 153 NLRB 1488, 1495 (1965) (the 
first case in which the Board examined the right to control employees' 
work and their terms and conditions of employment as determinative in 
analyzing whether entities were joint employers of particular 
employees); TLI, Inc., 271 NLRB 798 (1984) (finding that two separate 
entities are joint employers of a single work force if the evidence 
shows that they ``share or codetermine those matters governing the 
essential terms and conditions of employment''); Floyd Epperson, 202 
NLRB 23, 23 (1973) (finding joint employer status where client employer 
had ``some indirect control over [employees'] wages'' and ``some 
control, albeit indirect, over [employee] discipline''), enforced 491 
F.2d 1390 (6th Cir. 1974); Franklin Stores Corp., 199 NLRB 52, 53 
(1972) (finding joint employment where one employer, ``by virtue of the 
lease arrangement with'' the other employer, ``has the right to veto 
the employment of employees by'' the other ``and to insist on the 
discharge of employees by'' the other).
    \3\See NLRB v. United Ins. Co. of America, 390 U.S. 254, 256 (1968) 
(requiring the Board to ``apply general agency principles in 
distinguishing between employees and independent contractors under the 
Act'').
    \4\See House Conf. Rep. No. 510 on H.R. 3020 at 32-33 (1947) 
reprinted in 1 Legislative History of the Labor Management Relations 
Act, 1947, at 536-37 (1948) (explaining the exclusion of independent 
contractors from the definition of employee in order to overturn a 
Supreme Court decision that ``held that ordinary tests of the law of 
agency could be ignored by the Board'' in determining the existence of 
employment relationships).
---------------------------------------------------------------------------
    Without providing any explanation, the NLRB departed from 
this traditional standard in 1984, discounting indirect and 
reserved control from the joint employer analysis in two 
decisions.\5\ In another decision in 2002, the NLRB explicitly 
limited the joint employer standard to only ``direct and 
immediate'' control.\6\ In recent decades, temporary and 
contingent employment arrangements proliferated rapidly, and 
the NLRB's departure from the common law enabled corporations 
to use intermediaries to evade any obligation to bargain 
collectively with workers.\7\
---------------------------------------------------------------------------
    \5\TLI, Inc., 271 NLRB 798, 803 (1984); Laerco Transportation, 269 
NLRB 324, 325-26 (1984).
    \6\Airborne Freight Co., 338 NLRB 597 (2002) (finding the 
``essential element'' to be ``whether a putative joint employer's 
control over employment matters is direct and immediate'').
    \7\Testimony of Catherine K. Ruckelshaus, EDUC. & THE WRKF. COMM. 
DEMS. (July 12, 2017), https://democrats-edworkforce.house.gov/
hearings/redefining-joint-employer-standards-barriers-to-job-creation-
and-entrepreneurship, at 4 (``Between 2005 and 2015, the number of 
contract workers grew by more than half, while the overall workforce 
grew by only five percent.'') (submitted to Redefining Joint Employer 
Standards: Hearing Before the H. Comm. on Educ. & the Wrkf., 115th 
Cong. (Jul. 12, 2017)).
---------------------------------------------------------------------------
    In the 2015 Browning-Ferris decision, the NLRB restored 
earlier precedent considering an entity's reserved and indirect 
control over working conditions.\8\ The NLRB's previous 
Republican majority initiated an attempt to overturn Browning-
Ferris by rulemaking.\9\ While that rulemaking was pending, the 
D.C. Circuit upheld Browning-Ferris ``as fully consistent with 
the common law [because] both reserved authority to control and 
indirect control can be relevant factors in the joint-employer 
analysis.''\10\ Specifically, the court held that consideration 
of a company's right to control ``is an established aspect of 
the common law of agency,'' and that Browning-Ferris was also 
correct that ``an employer's indirect control over employees 
can be a relevant consideration.''\11\ The D.C. Circuit also 
warned that, ``[t]he Board's rulemaking . . . must color within 
the common-law lines identified by the judiciary.''\12\
---------------------------------------------------------------------------
    \8\362 NLRB 1599, 1600 (2015).
    \9\See The Standard for Determining Joint Employer Status, 83 Fed. 
Reg. 46681 (Sept. 14, 2018).
    \10\Browning-Ferris Indus. of Cal. v. NLRB, 911 F.3d 1195, 1222 
(D.C. Cir. 2018).
    \11\Id. at 1209.
    \12\Id.
---------------------------------------------------------------------------
    Rather than adhering to the court's warning, in 2020, the 
NLRB's Republican majority issued a final rule (2020 Rule) that 
narrowed the joint employer standard to only cover entities 
that ``possess and actually exercise substantial direct and 
immediate control over employees'' essential terms and 
conditions of employment.''\13\ To justify sidelining 
consideration of indirect and reserved control, which the D.C. 
Circuit emphasized, the 2020 Rule stated that indirect and 
reserved control may still be considered but could not, 
``without more[,] establish a joint-employer 
relationship.''\14\ In a 2022 decision, the D.C. Circuit 
described this claim as ``dubious,'' emphasizing that it ``took 
great pains to inform the Board that the failure to consider 
reserved or indirect control is inconsistent with the common 
law of agency.''\15\
---------------------------------------------------------------------------
    \13\The Standard for Determining Joint Employer Status, 85 Fed. 
Reg. 11184, 11185 (Feb. 26, 2020) (codified at 29 C.F.R. pt. 103).
    \14\Id. at 11220.
    \15\Sanitary Truck Drivers & Helpers Local 350 v. NLRB, 45 F.4th 
38, 47 (D.C. Cir. 2022) (considering issues in Browning-Ferris that the 
Board addressed after the D.C. Circuit remanded in 2018).
---------------------------------------------------------------------------
    The 2020 Rule eroded workers' rights significantly. For 
example, as Committee Democrats observed, the failure to 
include safety in the list of ``essential terms and conditions 
of employment'' meant that ``if a hospital controls the 
workplace safety standards, but refuses to bargain with the 
temporary agency workers, these workers will lack recourse 
against the party setting working conditions.''\16\ More 
broadly, the 2020 Rule created what the AFL CIO described as 
``a roadmap to retain ultimate control over key aspects of 
workers'' lives--like wages and working conditions--while 
avoiding their duty to bargain'':\17\
---------------------------------------------------------------------------
    \16\H. COMM. ON EDUC. & LAB., CORRUPTION, CONFLICTS, AND CRISIS: 
THE NLRB'S ASSAULT ON WORKERS' RIGHTS UNDER THE TRUMP ADMINISTRATION 3 
(Oct. 2020), https://democrats-edworkforce.house.gov/imo/media/doc/
NLRB%20Report%20(Final).pdf.
    \17\House Letter Supporting NLRB Joint-Employer Rule, AFL-CIO (Nov. 
8, 2023), https://aflcio.org/about/advocacy/legislative-alerts/house-
letter-supporting-nlrb-joint-employer-rule.
---------------------------------------------------------------------------
          Companies are adopting business structures 
        specifically designed to maintain control over the 
        workers who keep their businesses running while 
        simultaneously disclaiming any responsibility for those 
        workers under labor and employment laws. Such 
        businesses often insert second and third-level 
        intermediaries between themselves and their workers. 
        These companies seek to have it both ways--to control 
        the workplace like an employer but dodge the legal 
        responsibilities of an employer. . . .
          For example, if employees of a subcontractor were to 
        unionize and bargain only with the subcontractor, it 
        might simply refuse to bargain over certain issues 
        because its contract with the prime contractor governs 
        those aspects of the work (e.g., pay, hours, safety, 
        etc.). This harms workers because the entity that 
        effectively determines workplace policy is not at the 
        bargaining table, placing workers' desired improvements 
        out of reach.\18\
---------------------------------------------------------------------------
    \18\Id.
---------------------------------------------------------------------------
    The radical change effected by the 2020 Rule ``made it 
impossible for hundreds of thousands of workers to access the 
rights guaranteed them under the NLRA to join a union and 
collectively bargain.''\19\
---------------------------------------------------------------------------
    \19\Celine McNicholas et al., EPI Comments on NLRB's Proposed 
Rulemaking on the Standard for Determining Joint-Employer Status, ECON. 
POL. INST. (Dec. 7, 2022), https://www.epi.org/publication/epi-
comments-on-nlrbs-proposed-rulemaking-on-the-standard-for-determining-
joint-employer-status/.
---------------------------------------------------------------------------
    In light of these consequences of the 2020 Rule, the Biden-
era NLRB issued a notice and invitation in September 2022 to 
file briefs for a proposed rule to update the standard for 
determining joint employer status.\20\ The NLRB issued its new 
joint employer rule in October 2023 (2023 Rule),\21\ which will 
take effect on February 26, 2024.\22\
---------------------------------------------------------------------------
    \20\Standard for Determining Joint-Employer Status, 87 Fed. Reg. 
54641 (Sept. 7, 2022).
    \21\Standard for Determining Joint Employer Status, 88 Fed. Reg. 
73946 (Oct. 27, 2023) [hereinafter 2023 Rule].
    \22\Id. at 74017.
---------------------------------------------------------------------------
    The 2023 Rule rescinded the 2020 Rule and adopted a new 
standard ``grounded in established common-law agency 
principles.''\23\ Specifically, the 2023 Rule restores the 
NLRB's ability to consider evidence of an employer's reserved 
and/or indirect control, along with direct control, whether it 
is exercised or not, if employers share or codetermine one or 
more of the employees' essential terms and conditions of 
employment when determining joint-employer status. Such 
essential terms and conditions are defined as the following:
---------------------------------------------------------------------------
    \23\Press Release, Off. of Pub. Affs. Nat'l Lab. Rel. Bd. Board 
Issues Final Rule on Joint-Employer Status (Oct. 26, 2023), https://
www.nlrb.gov/news-outreach/news-story/board-issues-final-rule-on-joint-
employer-status.
---------------------------------------------------------------------------
          (1) Wages, benefits, and other compensation;
          (2) Hours of work and scheduling;
          (3) The assignment of duties to be performed;
          (4) The supervision of the performance of duties;
          (5) Work rules and directions governing the manner, 
        means, and methods of the performance of duties and the 
        grounds for discipline;
          (6) The tenure of employment, including hiring and 
        discharge; and
          (7) Working conditions related to the safety and 
        health of employees.\24\
---------------------------------------------------------------------------
    \24\2023 Rule, supra note 21, at 74017-74018.
---------------------------------------------------------------------------
    The 2023 Rule aligns with the joint employer provision of 
the Protecting the Right to Organize Act of 2023 (PRO Act),\25\ 
which would require the Board or a court of competent 
jurisdiction to consider as relevant direct control, indirect 
control, reserved authority to control, and control exercised 
in fact.
---------------------------------------------------------------------------
    \25\Protecting the Right to Organize Act of 2023, H.R. 20, 118th 
Cong. (2023).
---------------------------------------------------------------------------

              THE 2023 RULE AND THE ``FISSURED WORKPLACE''

    Joint employment is a flashpoint because of the recent 
trend toward ``fissuring,'' or the disintegration of the firm 
using overlapping arrangements of contracting, subcontracting, 
franchising, and temping.\26\ The trend appears to be growing, 
especially in low-wage work. ``It seems to be spreading like 
wildfire,'' says Nelson Lichtenstein, a Research Professor in 
the Department of History at the University of California, 
Santa Barbara. ``All of these companies, wherever they possibly 
can, want to create a workforce that doesn't work for 
them.''\27\ The most visible fissured relationship is temping: 
approximately 3.1 million workers in America are employed by a 
temporary staffing agency on any given day, performing work on 
behalf of a client company that directs their work but does not 
write their paycheck.\28\ Fissured work arrangements are 
associated with increased incidence of a host of workplace 
violations.\29\
---------------------------------------------------------------------------
    \26\See generally David Weil, The Fissured Workplace: Why Work 
Became So Bad for So Many and What Can Be Done to Improve It (2014).
    \27\Dave Jamieson, Romney Campaign Boxes Itself in on Outsourcing, 
Offshoring Debate, Huff. Post (June 26, 2012), https://
www.huffpost.com/entry/romney-campaign-outsourcing-
offshore_n_1627761.
    \28\Employees on Nonfarm Payrolls by Industry Sector and Selected 
Industry Data, Bur. of Lab. Stats., https://www.bls.gov/news.release/
empsit.t17.htm (last visited Oct. 11, 2023).
    \29\Weil, supra note 26.
---------------------------------------------------------------------------
    The rise of the ``fissured workplace'' can weaken workers' 
bargaining power. Absent an appropriate joint employment 
doctrine, workers hired by an intermediary firm but laboring 
for a larger, more powerful firm with actual control over their 
working conditions and wages will find it difficult to bargain 
meaningfully. In an age of increased workplace fissuring, it is 
imperative that companies not be able to point to another 
entity in order to evade bargaining and liability.
    The 2023 Rule's return to the NLRB's traditional standard 
is necessary to mitigate the fissuring of the workplace, which 
exacerbated in the decades after the NLRB departed from 
considering indirect and reserved control.\30\ If a lead 
business controls any of its subsidiary's workers' terms and 
conditions of employment but is not deemed a joint employer, 
then those workers cannot engage in collective bargaining with 
the lead business to improve their terms and conditions of 
employment that are within the lead business's control.\31\ 
This opens workers to retaliation even when they attempt to 
organize a union with the subsidiary alone.
---------------------------------------------------------------------------
    \30\H. Comm. on Educ. & Lab., The Future of Work: How Congress Can 
Support Workers in the Modern Economy 4-5 (2020), https://democrats-
edworkforce.house.gov/imo/media/doc/
Future%20of%20Work%20Report%20(FINAL).pdf [hereinafter The Future of 
Work]; see also Ruckelshaus Testimony, supra note 7, at 4.
    \31\The Future of Work, supra note 30, at 6.
---------------------------------------------------------------------------
    By holding employers accountable for their bargaining 
obligations when they exercise control, whether direct or 
indirect, organized workers can engage in meaningful 
negotiations and share in the prosperity they have helped 
create. According to the Economic Policy Institute (EPI), the 
Biden-era NLRB's proposed 2023 Rule is estimated to raise 
workers' earnings by $1.06 billion dollars annually.\32\ 
Conversely, the Trump-era NLRB's 2020 Rule would transfer $1.3 
billion each year from workers to their bosses.\33\
---------------------------------------------------------------------------
    \32\McNicholas et al., supra note 19.
    \33\Id.
---------------------------------------------------------------------------

                THE 2023 RULE'S IMPACT ON SMALL BUSINESS

    The 2023 Rule's potential impact on small businesses has 
been thoroughly reviewed. In accordance with the Regulatory 
Flexibility Act of 1980,\34\ the NLRB, prior to finalizing the 
2023 Rule, conducted an Initial Regulatory Flexibility Analysis 
of its impact on small businesses. The analysis concluded that 
``since the only quantifiable impact that [the NLRB] ha[s] 
identified is the $151.51 or $99.64 that may be incurred in 
reviewing and understanding the rule, [the NLRB] do[es] not 
believe, subject to comments, that the proposed rule will have 
a significant economic impact on a substantial number of small 
entities.''\35\
---------------------------------------------------------------------------
    \34\5 U.S.C. Sec. 601 et seq.
    \35\Standard for Determining Joint-Employer Status, 87 Fed. Reg. 
54641, 54662 (Sept. 7, 2022).
---------------------------------------------------------------------------
    To ensure input from small businesses, the NLRB provided a 
briefing on the proposed rule on October 20, 2022\36\--
organized by the Small Business Administration's Office of 
Advocacy (SBA OA)--and extended the public comment period on 
the proposed rule from 30 days to three months. After the SBA 
OA's review of the proposed rule, the NLRB incorporated its 
feedback in the final rule by (1) providing ``an exhaustive 
list of the seven categories of terms and conditions of 
employment that will be considered essential for the joint-
employer inquiry;'' (2) clarifying that an employer must have 
``exercised or unexercised authority to control, or exercise 
the power to control indirectly, such as through an 
intermediary, an essential term or condition of employment''; 
and (3) establishing that ``evidence of an entity's control 
over matters that are immaterial to the existence of an 
employment relationship . . . and that do not bear on the 
employee's essential terms and conditions of employment is not 
relevant'' to joint-employer status.\37\
---------------------------------------------------------------------------
    \36\Off. of Advocacy, Virtual Labor Roundtable--October 20, 2022, 
Sm. Bus. Admin. (Oct. 17, 2022), https://advocacy.sba.gov/2022/10/17/
virtual-labor-roundtable-october-20-2022/.
    \37\2023 Rule, supra note 21, at 74013.
---------------------------------------------------------------------------

         THE 2023 RULE'S IMPACT ON THE FRANCHISE BUSINESS MODEL

    There is no credible evidence to show that the 2023 Rule 
will threaten the franchise business model. The NLRB has never 
issued a final decision finding a franchisor to be a joint 
employer of its franchisee's employees and there is no reason 
to believe it will do so in the future if the franchisor's 
control is limited to the brand and does not extend into the 
franchisee's labor relations. In fact, a strong joint employer 
standard protects franchisees by preventing franchisors from 
dictating franchisees' employee relations while leaving 
franchisees on the hook for liability. For this reason, the 
American Association of Franchisees and Dealers has written 
letters in support of both the PRO Act's joint employer 
standard\38\ and the Biden-era NLRB's proposed joint-employer 
rule.\39\
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    \38\Letter from American Association of Franchisees and Dealers to 
Congress (Feb. 1, 2020), https://logon.salesnexus.com/miscref/aafd/
library/aafd%20comments%20on%20joint%20employer-final.pdf.
    \39\Letter from Robert L. Purvin, Jr., et al., Am. Ass'n Franch. & 
Dealers, to NLRB, AAFD Comments Regarding Proposed Joint Employer Rule 
(Dec. 12, 2022), https://www.aafd.org/wp-content/uploads/2022/12/AAFD-
Comments-on-Joint-Employer-Rule-December-2022-Final.pdf.
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                               CONCLUSION

    When workers organize unions, the NLRA guarantees them the 
right to collectively bargain for better wages and working 
conditions without fear of retaliation. Where multiple entities 
control workers' terms and conditions of employment, this right 
is rendered futile when workers are unable to bargain with all 
entities that control their wages and working conditions. The 
2023 Rule is therefore necessary for holding entities 
accountable even if they reserve control, or exercise control 
indirectly, over employees' working conditions. Committee 
Democrats strongly support the 2023 Rule.
    If enacted, H.J. Res. 98 would reinstate the deficient 2020 
Rule that ``offered companies a roadmap to retain ultimate 
control over key aspects of workers'' lives--like wages and 
working conditions--while avoiding their duty to bargain.''\40\ 
Additionally, if H.J. Res. 98 is enacted, the NLRB would be 
prohibited from issuing a new joint employer rule that is 
``substantially the same'' as the disapproved rule unless 
subsequent law specifically authorizes the reissued rule.\41\
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    \40\Letter from the AFL-CIO, Services Employees International Union 
(SEIU), and International Brotherhood of Teamsters (IBT) letter to 
Congress (Nov. 8, 2023), https://aflcio.org/sites/default/files/2023-
11/House-AFL-
CIO%2C%20SEIU%2C%20IBT%20Letter%20re%20NLRB%20Joint%20Employer%20Rule.pd
f
    \41\5 U.S.C. Sec. 801(b)(2). There is ongoing commentary on what 
this actually means. See Maeve P. Carey, Cong. Res. Serv., IN10996, 
Reissued Labor Department Rule Tests Congressional Review Act Ban on 
Promulgating ``Substantially the Same'' Rules (2019).
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    For the reasons stated above, Committee Democrats 
unanimously opposed H.J. Res. 98 when the Committee considered 
it on December 12, 2023. We urge the House of Representatives 
to do the same.
                                   Robert C. ``Bobby'' Scott,
                                           Ranking Member.
                                   Joe Courtney.
                                   Gregorio Kilili Camacho Sablan.
                                   Suzanne Bonamici.
                                   Mark DeSaulnier.
                                   Donald Norcross.
                                   Pramila Jayapal.
                                   Jahana Hayes.
                                   Jamaal Bowman.

                                  [all]