Bills
| 3.23.22

"Save Local Business Act": Changing Federal Employment Regulations of Companies That Have Franchises (H.R. 3441)

Do you support or oppose this bill?

What is H.R. 3441?

(Updated April 24, 2018)

This bill — known as the Save Local Business Act — would amend the National Labor Relations Act to specify that a person can only be considered a “joint employer” if they exercise actual, direct, and immediate control over employees. In effect, the bill would negate a 2015 ruling by the National Labor Relations Board (NLRB) which held that a joint employer relationship could be established when an employer exercises control over employment matters indirectly or if they have reserved such control by contract, such as a parent corporation over its franchisees.

Argument in favor

The NLRB’s recent decision regarding the definition of a “joint employer” for regulatory purposes burdens small businesses and franchisees. This bill would enact a more sensible standard that only considers a person or entity a joint employer if they directly control an employee’s work terms.

Argument opposed

This bill would enable unscrupulous employers to skirt vital legal protections for workers and minimize their liability, while leaving employees with no recourse for the damages. The current joint employer standard should remain in place.

Impact

Employees; joint employers; and the NLRB.

Cost of H.R. 3441

The CBO estimates that enacting this bill would have no impact on federal or state agencies.

Additional Info

In-Depth: Sponsoring Rep. Braley Byrne (R-AL) introduced this bill to rollback the NLRB’s joint employer standard to only apply to employers that exercise significant control over the terms and conditions of workers’ employment:

“Federal labor policies should be focused on benefiting workers and helping small businesses grow instead of creating barriers that limit opportunity. Also important, Congress – not unelected federal bureaucrats – should set our nation’s labor policies through statute instead of executive fiat. Under this bipartisan legislation, workers, and the businesses they work for, will be given much needed clarity and certainty. I am especially pleased our legislation has earned support from both sides of the aisle, and I am committed to continuing to build momentum as the bill moves through the legislative process.”

Lead cosponsor Rep. Henry Cuellar (D-TX) added:

“Owning and maintaining a small business has been part of the American dream for generations. We must ensure that our small businesses and franchises receive fair treatment from the government, and not confusion and arbitrary regulations that harm them. I have heard from small business owners throughout my district and the country, and it is clear that the NLRB’s joint employer decision was a major threat to the life of the franchise industry and the dream of business ownership for millions of Americans. The Save Local Business Act will provide our nation’s small and franchise businesses the certainty necessary to grow and invest in the future. I encourage my colleagues from both parties to support local businesses by supporting this legislation and restore the traditional joint employer standard as the law of the land.”

House Democrats on the House Education and Workforce Committee opposed this bill’s passage in committee on the grounds that it “enables unscrupulous employers to avoid their legal responsibilities… while denying employees recourse for violations of law and inflicting collateral damage to adversely impacted businesses.” They added:

“The Save Local Business Act dismantles longstanding legal protections for employees under the National Labor Relations Act and the Fair Labor Standards Act. It does so by allowing employers who jointly determine working conditions to evade responsibility for collective bargaining, and to avoid liability for wage theft, child labor, and equal pay violations committed by subcontractors and intermediaries over which they exercise control. Despite the bill’s pro-business title, [it] disadvantages franchisees by leaving them on the hook for decisions directed by their franchisors.”

This legislation passed the Education and Workforce Committee on a 23-17 vote and has the support of 123 cosponsors, including 120 Republicans and three Democrats.


Of Note: This bill was introduced in response to the NLRB’s 3-2 decision in  that companies sharing only “indirect” or “potential” control over another’s workforce may be considered joint employers.


Media:

Summary by Eric Revell

(Photo Credit: PeopleImages / iStock)