The Republican-controlled House introduced legislation Thursday that proponents say restores a common sense definition for what it means to be an employer.
House members of the Education and the Workforce Committee introduced the “Save Local Business Act” at a press conference on Capitol Hill Thursday morning. If passed, the act would roll back the expanded reach of the joint employer standard set by the National Labor Relations Board (NLRB), under former President Barack Obama.
In its 2015 Browning-Ferris decision, the NLRB drastically changed the standard for determining who is an “employer” under the National Labor Relations Act (NLRA). In the decision, the NLRB replaced its “direct and immediate” control standard for a broader standard based on “indirect” control. The broader standard concerns businesses and entrepreneurs due to confusion and unpredictability.
Up until Browning-Ferris, the NLRB used a “direct and immediate” control standard for determining joint employer status. If two separate businesses had actual authority over terms and conditions of employment and day-to-day supervision, they would be classified as a joint employer.
The shift under Obama was the first time in decades that the NLRB considered indirect control as the main factor in determining whether a joint employment relationship exists.
Obama’s Department of Labor also issued administrative guidance that outlined its interpretation of joint employment under the Fair Labor Standards Act (FLSA). A joint employer is a scenario where two separate businesses share legal responsibilities over the same employee. The guidance, since rescinded by President Donald Trump’s Secretary of Labor Alex Acosta, offered a new analytical framework for evaluating joint employment that many in the business community said would increase litigation against employers. (RELATED: Trump’s Labor Department Resists Obama-Era Employment Rules)
The National Restaurant Association, strong advocates for a return to the pre-2015 definition of a joint employer, released a short video to explain the issue from their perspective.
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The small business community supports the legislation, arguing that the current standard hinders their ability to grow. (RELATED: Congresswoman Serves Up Popcorn To Highlight A Big Threat To Expanding Small Businesses)
“The current standard is vague and negatively impacting small businesses and employees across the country including the restaurant industry,” Cicely Simpson, executive vice president for the National Restaurant Association, said in a press release. “We urge the House to bring the bipartisan Save Local Business Act to the floor as quickly as possible.”
While the bill received bipartisan support with 29 co-sponsors, not everyone agrees with the legislation.
Catherine Ruckelshaus, General Counsel and program director of the National Employment Law Project and staunch defender of the Browning-Ferris decision, asserted that a one-size-fits-all model will not work for the entire business community during a hearing on Capitol Hill July 12.
Michael Harper, a professor of law at Boston University, warned that congressional intervention could lead to additional uncertainty during the same hearing. Harper argued that certain undefined terms would be open to interpretation, saying, “Those words have not been interpreted and what they mean will not be clear.”
The legislation will be sent for markup at a time yet to be determined.
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