On Tuesday, the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) held a hearing to address the NLRB’s revised “joint employer” standard as detailed in its August 27 decision in Browning-Ferris Industries. The Board indicated that “indirect, potential, or ultimate” control over another employer’s workers could be enough to trigger a finding of joint employment, a change from the previous standard requiring direct and immediate control over terms and conditions of employment. The committee is also considering a legislative solution – Chairman Lamar Alexander (R-TN) introduced legislation last month, the Protecting Local Business Opportunity Act, to restore the decades-old definition of joint employer.
Among the panel of witnesses was Ciara Stockeland, Owner and Founder of MODE, a fashion retail franchise based in Fargo, ND. MODE is a small franchisor with 12 locations, and plans to expand to 75 by 2024. “The uncertainty introduced by the NLRB’s BFI decision jeopardizes the expansion of my business,” Ms. Stockeland testified. “As a small business owner who meets countless public and private demands and competes against massive corporations each day, I find it terribly frustrating to have regulators harming my business and the careers of so many others in our system.”
Despite the NLRB’s ongoing litigation against franchise companies alleging joint employer liability, some Senators insisted that a new joint employment standard will not present a problem for franchise businesses, pointing to the NLRB General Counsel’s advice memorandum in the Freshii case declaring that a single franchisor was not a joint employer with its franchisees. In response, Ms. Stockeland testified that the Freshii memo “is simply a distraction,” noting that the memo does not hold the force of law and has not been fully litigated like the Browning-Ferris Industries case was. She also pushed back on the Senators’ arguments that Browning-Ferris does not impact franchise companies since it was a ruling on contracting relationships, saying that “every franchisor-franchisee relationship is based on a contractual franchise agreement. Franchising is contracting.”
Ms. Stockeland also attended yesterday’s White House Summit on Worker Voice, an event designed to bring together leaders from the labor, employer, and advocate communities to explore ways to collaborate to improve jobs and the economy. However, the event has been criticized as being biased towards labor unions, with very few representatives from the employer community invited to participate. “I think from what I have heard, I am in the minority there,” she told The Daily Caller News Foundation in an interview on Tuesday. “But I am excited to tell my story.”
Chairman Alexander’s bill, S. 2015, continues to gain momentum in the Senate and currently has 60 co-sponsors. Identical legislation in the House of Representatives, H.R. 3459, is sponsored by Rep. John Kline (R-MN), Chairman of the House Committee on Education and the Workforce, and has 44 co-sponsors.
To watch video of Tuesday’s hearing, click here. To send a letter to your legislators urging them to support the Protecting Local Business Opportunity Act, click here.