SBE Council Urges NLRB to Withdraw their EXPANDED and COSTLY “Joint Employer” Proposal

By SBE Council at 7 December, 2022, 7:31 pm

NEWS

For Immediate Release

Washington, D.C. – In comments filed with the National Labor Relations Board (NLRB) today, the Small Business & Entrepreneurship Council (SBE Council) urged the Board to pull their proposed joint employer standard from consideration and “allow a 2020 rule to stand.” In her comments, SBE Council president & CEO Karen Kerrigan noted the “ambiguous and broad” new standard for determining the conditions under which two employers can be held jointly responsible for National Labor Relations Act violations and unionization.

“Without clarity, certainty and a reasonable standard, small business growth and opportunity will be restricted. And this costly and unclear standard comes during a very challenging economic period for small businesses – as inflation, a downturn in sales for many, labor shortages, supply chain issues, and a possible recession threaten business competitiveness and survival,” wrote Kerrigan in the comments.

Following court action that denied enforcement of an Obama-era expanded standard drawn up in 2015, the NLRB restored and improved the previous joint employer standard in 2020. At its heart, this “direct and immediate control” joint employer standard is one that the NLRB had used for more than three decades in determining joint-employer status. That changed in 2015 when the standard was expanded to include “indirect control.” Now, the NLRB is pushing a rework of the “indirect control” standard, which means higher costs, more litigation, fewer private sector and government contracting and project opportunities for small businesses, and the evisceration of the successful franchise model.

Kerrigan added:

“Small businesses are disproportionately challenged to operate under such an unbalanced and confusing framework. Under a rule with such broad and economy-wide impact as the one NLRB proposes, small business growth and opportunity will be undermined. Opportunities for small businesses to contract with other businesses – and across industries, such as construction, staffing, hospitals and health care, retail, hospitality, restaurants…to name just a few of the many affected – will be diminished. Moreover, the franchise model is greatly threatened, which means entrepreneurs who wish to pursue this path to business ownership would be denied this wealth building opportunity. Local communities would be denied good paying jobs and tax revenue.”

Kerrigan concludes by noting that the NLRB has not made the case for an expanded joint employer standard and urged the board “to withdraw the proposed standard and allow the 2020 rule to stand.”

Bipartisan Alarm

A bipartisan group of U.S. Senators also urged the NLRB to reconsider their rule. In a letter to Board Chairman Lauren M. McFerran, Senators Mike Braun (R-Ind.), Joe Manchin (D-WV), Angus King (I-Maine), James Lankford (R-OK), Kyrsten Sinema (D-AZ), and Susan Collins (R-Maine) highlighted the impact on workers and businesses, and notably the negative impact on the franchise industry:

“As Members of Congress, we have sought to protect the franchise model through legislation due to the opportunity franchises provide workers and entrepreneurs…We fear that the proposed rule would do the opposite, leading to an increase litigation and therefore putting the franchise model at risk. Businesses should not be liable for entities they do not control.”

Today is the final day for comments, and it is expected that the NLRB will move quickly on the rulemaking. According to Kerrigan, the organization will continue to work with allies in the business community to determine next steps depending upon NLRB final rulemaking.

CONTACT:

Karen Kerrigan, kkerrigan@sbecouncil.org

Raymond Keating, rkeating@sbecouncil.org

 SBE Council is a nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For 28 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth. Visit www.sbecouncil.org for additional information. Twitter: @SBECouncil

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