On July 27, 2017, House Republicans unveiled a bill, entitled the Save Local Business Act, that would amend two labor and employment statutes to clarify when an entity can be deemed a “joint employer.” At a press conference debuting the legislation, several of its sponsors, along with supporters from the business community, spoke about the need for the legislation.
Sponsored by Representatives Bradley Byrne (R-AL) and Henry Cuellar (D-TX), among others, the bill seeks to overturn the National Labor Relations Board’s decision in Browning-Ferris Industries of California, Inc. In that 2015 ruling, the Board broadened the test for determining joint employment and assessing liability under the National Labor Relations Act (NLRA). The standard shifted from one where the purported joint employer exercised “direct and immediate” control over the other entity’s employees, to a much looser “indirect” control standard.
The Browning-Ferris holding, currently on appeal, upended decades of long-standing precedent. Moreover, it created uncertainty—particularly in the small business community—concerning an entity’s potential liability for alleged violations brought by workers not traditionally considered the entity’s “employees.” At a hearing earlier this month before the U.S. House Committee on Education and the Workforce, chaired by Representative Virginia Foxx (R-NC), numerous witnesses testified how the confusion over the joint employer standard has stifled the plans of small business owners hoping to expand. According to those witnesses as well as small business owners speaking at today’s press conference, the expanded joint employer standard forces businesses to rein in their franchising plans, for example, not only because they are not sure how to proceed in balancing those relationships without violating the law, but also because of the legal costs associated with figuring it out.
In response to these constituent concerns, the Save Local Business Act would amend the definitions of the term “employer” as used in the NLRA and the Fair Labor Standards Act (FLSA). The bill is “short and to the point,” as Chairwoman Foxx described. Less than two pages, it states simply that a person may constitute a joint employer as to an employee “only if such person directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over the essential terms and conditions of employment.” Such significant control would include “hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions, and tasks, and administering employee discipline.” The bill emphasizes that minimal, routine supervision is insufficient to render joint employment. The Save Local Business Act purports to return the joint employer analysis to the standard used for decades prior to the Browning-Ferris decision.1
Proponents tout the Save Local Business Act as a commonsense, permanent solution to the problems associated with the Browning-Ferris standard. They contend that addressing the confusion via legislation is critical to prevent future uncertainty, as it takes this issue out of the hands of federal regulators whose priorities may shift with each administration.
Chairwoman Foxx anticipates significant bipartisan support for the bill in the House. And while the proposal’s sponsors are confident that President Trump would sign the bill should it reach the White House, it remains unclear what the Senate might do with it if it clears the House.
We will continue to monitor the progress of the bill through the House and will report on significant developments.