Biden's Joint-Employer Rule is Bad for Workers
Washington,
November 3, 2023
This story originally appeared in The Washington Times.
By: Representative Rick W. Allen (GA-12) and Chairman James Comer (KY-01) In today’s evolving economy, certainty in the workplace is a key ingredient to success for employers, job creators, and small businesses nationwide. But unfortunately, the federal government has a tendency to get in the way, muddying the waters and blurring the lines in already difficult economic conditions. In fact, just last week, the Biden Administration handed down a heaping dose of economic obstruction by way of an onerous rulemaking to re-define joint-employment relationships. Last Thursday, radical members of the National Labor Relations Board (NLRB) finalized a broad joint-employer standard that will negatively impact the U.S. economy, workers, and small businesses alike, and to put it plainly, would destroy the franchise system as we know it. The joint-employer rule determines when two or more employers can be held jointly liable for wage and hour violations under the Fair Labor Standards Act. The previous rule, established during the Trump Administration, provided clarity by specifying that a company could only be considered a joint-employer under the National Labor Relations Act if it had “substantial control” over an employee’s terms and conditions of employment. This rule helped reduce legal uncertainty and allowed businesses to operate with clear rules of the road. On the contrary, the NLRB’s final rulemaking introduces ambiguity and potential legal pitfalls for employers. By adopting a more expansive definition of joint employment, the NLRB has opened the door to increased litigation and compliance challenges, which many small businesses simply do not have the resources to handle. This level of uncertainty may discourage businesses from expanding, hiring, or taking on new contracts, which could ultimately lead to reduced job opportunities and economic growth at a time when we have nearly 10 million unfilled jobs across the nation. In particular, the revised rule fails to consider the potential harm it may cause to franchisors and franchisees, who often rely on clear boundaries to operate their businesses independently. In a report released by the International Franchise Association, 74% of franchisees expressed a high level of concern at the prospect of increased franchisor control, and 66% of franchisees expected the new standard to raise barriers to entry into franchising—with underrepresented groups potentially being hit disproportionately. The franchise model has been an essential driver of entrepreneurship and job creation in the United States, allowing entrepreneurs to partner with a known brand but build their own small businesses in their communities. The new Biden-era NLRB joint-employer rule threatens to disrupt this delicate ecosystem that employs millions of Americans. Given this unfortunate reality, it becomes more critical every day for Congress to pass the Employee Rights Act, which represents the Republican vision for the future of the American workforce: A workforce that is empowered by freedom and flexibility, not decimated by one-size-fits-all government regulations and mandates. Included in the Employee Rights Act are the commonsense provisions from the Save Local Business Act, which would provide much-needed clarity in determining joint-employer status and prevent franchise owners from becoming corporate middle-managers. More specifically, the bills amend the National Labor Relations Act and the Fair Labor Standards Act to clarify that two or more employers must have “actual, direct, and immediate” control over employees to be considered joint employers. It rolls back a convoluted joint-employer scheme that threatens job creation and undermines the American Dream, and it restores a commonsense definition of employer to provide certainty and stability for workers and job creators. Simply put, the Employee Rights Act seeks to update our nation’s labor policies to match the needs of the 21st-century worker and workforce. While President Biden and Congressional Democrats bend to the will of union bosses and special interest groups, Republicans will continue to promote policies that foster the entrepreneurial spirit. Despite claims from the White House, “Bidenomics” is failing the American people. Inflation remains high and workers’ wages are struggling to keep up. The time to leave the Biden economy in the past and modernize our outdated labor laws is now. The Employee Rights Act is the answer. Congressman Rick W. Allen (GA-12), the lead sponsor of the Employee Rights Act, and Chairman James Comer (KY-01), the lead sponsor of the Save Local Business Act and Chairman of the House Committee on Oversight and Accountability, are both members of the House Committee on Education and the Workforce. |
