House Passes Bill to Roll Back Joint-employer Ruling
The U.S. House on Tuesday passed legislation aimed at overturning the National Labor Relations Board’s joint employer ruling that made companies—including franchisors—potentially liable for labor law violations committed by their subcontractors or franchisees.
The Save Local Business Act, sponsored by Rep. Bradley Byrne (R-Ala.), passed by a vote of 242-181. No Republicans opposed the bill, and they were joined by eight Democrats: Reps. Ami Bera, Lou Correa, Jim Costa, Henry Cuellar, Stephanie Murphy, Scott Peters, Colin Peterson, and Kurt Schrader.
The bill counters the National Labor Relations Board’s August 2015 ruling in the Browning-Ferris Industries case that adopted a broad joint employer standard based on “indirect” or “potential control” of employees, meaning franchisors can be held liable for a franchisee’s employees. Introduced in July, the Save Local Business Act aims to define what it means to be a “joint employer,” stating the employer must “directly, actually and immediately” exercise significant control over the primary elements of employment to be so considered and thus liable for violations of workers’ rights.
Robert Cresanti, president and CEO of the International Franchise Association, praised Tuesday’s vote and in a statement called it “the first step in re-establishing a business environment where American entrepreneurs can hire new employees, train existing ones, and unlock the full economic potential of their communities.”
“The franchise model has made the dream of small business ownership a reality for thousands of hard-working families, affording them the opportunity to go into business for themselves, but not by themselves,” Cresanti continued. “The Save Local Business Act is the most important legislation for franchising in a generation—a commonsense bill with bipartisan support that protects business relationships and promotes economic growth. The NLRB-created joint employer definition is far too broad and poses an existential threat to the franchise and small business community.”
The IFA said the franchise community sent more than 113,000 emails to federally elected officials, and since 2015, 28 small business owners and brand executives have testified before Congressional committees on the impacts of the joint employer definition.
The legislation faces an uncertain future in the Senate, which has yet to introduce its own version of the bill.