U.S. Chamber & IFA Study: Expansive View of Joint Employment Becoming Greater Threat to Small Business

Tuesday, June 21, 2016 - 10:00am

WASHINGTON, D.C. — A new report released today by the U.S. Chamber of Commerce and the International Franchise Association (IFA) examines the threat posed to small business by the spread of the National Labor Relations Board’s (NLRB) joint employer doctrine. Main Street in Jeopardy: The Expanding Joint Employer Threat to Small Businesses outlines how other federal agencies as well as state and local governments have followed the NLRB’s lead in expanding joint employer liability.

“There can be no doubt that other federal agencies and state and local governments are following the NLRB’s lead in attempting to upend well-settled law on what it means to be an employer,” said Glenn Spencer, vice president of the U.S. Chamber’s Workforce Freedom Initiative. “Government bodies across the country are increasingly holding employers responsible for workplaces they don’t control, and workers they don’t employ.”

“What started as an obscure labor law issue has become a small business and jobs issue as federal, state, and local government agencies get in on the act,” said Robert Cresanti, president and CEO of IFA, CFE. “This undermines the independence of local small business franchise owners and creates a significant threat and cost to businesses in numerous industries beyond just franchising.”

Last year, an NLRB ruling overturned its longstanding joint employer standard, used to determine when two separate employers share responsibility and liability for the same employee. Under the new standard, almost any economic or contractual relationship could trigger a finding of joint employer status. A 2015 U.S. Chamber report stated that organized labor pushed for the change as a path to increase union organizing.

Main Street in Jeopardy details how federal agencies like the Occupational Safety and Health Administration and the Wage and Hour Division at the U.S. Department of Labor have indicated their intentions to more broadly impose joint employer liability under their particular statutes.

The report also discusses how several state and local governments have picked up on the concept and begun to apply their own expansive views of joint employment including California; New York; Seattle, Washington; and Cook County, Illinois. Further, it talks about state-level legislative efforts to push back against the trend including in Indiana, Georgia, Michigan, Louisiana, Tennessee, Texas, Utah, and Wisconsin.

“Our report confirms what our members have been telling us all along: ultimately, the new joint employer standard will reduce employer flexibility and competition at a time when the economy continues to experience anemic economic growth,” said Randy Johnson, senior vice president of Labor, Immigration, and Employee Benefits at the U.S. Chamber of Commerce. “Congress can and must act to restore common sense to this part of the law, an idea that has already attracted bipartisan support.”

The NLRB does not operate without oversight. Congress can overrule the agency. Through the power of the purse or authorizing legislation, Congress can send a message to the NLRB that it will protect independent local businesses and the millions of Americans who work for them.