News Releases

Tuesday, October 6, 2015

Isakson on Labor Board's Joint-Employer Ruling: 'Making the Big Guys Bigger and Putting the Small Guys out of Business'

Says administration should be focusing on creating more opportunities for small businesses to grow

WASHINGTON – U.S. Senator Johnny Isakson, R-Ga., today called the administration’s new harmful definition for the joint-employer standard a “policy created by unelected bureaucrats who are attempting to crush the American dream of owning a business.” 

At a Health, Education, Labor and Pensions Committee hearing entitled “Stealing the American Dream of Business Ownership: The National Labor Relations Board’s (NLRB) Joint Employer Decision,” Isakson argued that the federal labor board’s proposal to change and broaden the definition of “joint-employer” could destroy a well-established business model that has allowed middle class Americans to live the dream of business ownership, including the 700,000 U.S. small businesses supporting more than 17 million jobs. 

“The National Labor Relations Board has bypassed Congress to overturn decades of established law in its joint-employer decision,” said Isakson. “Changing the joint-employer standard will impede franchising by taking away the benefits of a small entrepreneur being able to start a small business and grow it using a brand name that was established by a major corporation. Under the administration’s new standard for who qualifies as a joint employer, it is essentially making the big guys bigger and putting the small guys out of business. Instead, this administration should be focusing on how to create more opportunities for small businesses to grow.” 

As chairman of the subcommittee on Employment and Workplace Safety, Isakson has co-sponsored legislation that would roll back the National Labor Relations Board’s “joint employer” decision that threatens to steal the American dream from owners of the nation’s 780,000 franchise businesses and millions of contractors. 

Watch Isakson’s questioning of witnesses at today’s committee hearing here. 

Background: 

For approximately 40 years, federal labor policies held that two separate employers are “joint employers” if both employers have direct and immediate control over employment terms and working conditions, such as being responsible for tasks like hiring and firing, setting work hours, issuing direction to employees, determining compensation and handling day to day record keeping. 

Under a new standard adopted last month by the National Labor Relations Board in a case involving Browning Ferris Industries, a 3-2 partisan majority of the labor board said that merely “indirect control” or even “unexercised potential” to control working conditions will now make two separate employers joint employers. This new standard will be applied retroactively. 

The new standard means that in many more cases multiple employers will have to jointly negotiate working conditions with unions and share liability for labor law violations. As a result, larger business will exert greater control over the smaller employer who actually owns and operates the business, such as stores, restaurants and day care centers. Additionally, fewer employers will parcel out business to local subcontractors, suppliers or subsidiaries, for fear that they will now be liable for the subcontractor’s employment decisions. Millions of employees will also lose the ability to negotiate things such as pay, hours and leave time with their direct supervisor, because those decisions will now be made between the larger employer and the union. 

Related:

Isakson Defends Middle Class Americans, Small Business Owners against Administration's Overreach

Isakson Introduces Legislation to Roll Back Labor Decision that "Threatens to Steal the American Dream from Owners of the Nation's 780,000 Franchise Businesses and Millions of Contractors" 

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