WASHINGTON, D.C. – Today, U.S. Representative James Comer (KY-1) and U.S. Senator Roger Marshall, M.D. (KS) introduced the Save Local Business Act (H.R. 3185), which clarifies the joint employer standard to provide clarity and certainty for small business owners and workers. The actions of unelected bureaucrats on the National Labor Relations Board (NLRB) in recent years has resulted in a dramatic expansion in the definition of a “joint employer,” creating confusing regulations for small businesses across the country. 

As a result, employers have seen increases in operational and legal costs, less compliance assistance, and fewer opportunities to create jobs. 54 members of the House of Representatives have signed onto Comer’s bill, which will empower job creators to prosper by reducing regulatory headaches.

“In addition to promoting policies that encourage workforce participation, unchaining small businesses from harmful regulations is the key to guiding our economy out of the COVID-19 pandemic,” said Congressman Comer. “The Save Local Business Act would reverse anti-private sector overreach from unelected bureaucrats by adding some common sense to the definition of a joint employer – creating more certainty and opportunity for both workers and employers. Our bill will protect the franchise business model, empower small businesses to prosper, and create fewer bureaucratic headaches for American job creators at a time when our economy desperately needs a lift.”

“The current definition of a joint employer is obscure and broad, and is a clear example of federal overreach,” said Senator Marshall. “Under this definition, business owners from construction companies, manufacturers to franchisees are faced confusing rules and uncertainty about their legal liabilities. Small businesses have always been economic drivers, and as the economy continues to recover from COVID-19 we need to be empowering job growth and creation, not stifling it with harmful regulations and ambiguous standards.”

The legislation is supported by numerous groups advocating for small businesses, as a way to ensure economic stability and a swift recovery from COVID-19.

“Returning to a ‘direct-control’ joint employer standard will provide small business owners with the certainty they have historically enjoyed. This standard will make it clear to small employers when they may be liable for the actions of a subcontractor,” said Jeff Brabant, Senior Manager of Federal Government Relations, National Federation of Independent Businesses. “NFIB thanks Senator Marshall and Congressman Comer for leading on this issue and being champions of small business.”  

“Efforts by Democrats in Congress and the White House to redefine and expand the joint employer standard under the dangerous PRO Act (S. 420/H.R. 842) would disrupt hundreds of thousands of business operations throughout the country and threaten the ability of America’s workers to achieve the American dream of owning their own business. ABC thanks Senator Marshall and Rep. Comer for introducing this critical legislation to ensure stability in the economy and help contractors and subcontractors across the country recover from the COVID-19 pandemic. We support the Save Local Business Act and urge Congress to act swiftly to pass it,” said Kristen Swearingen, Vice President of Legislative & Political Affairs, Associated Builders and Contractors.

Over 65 industry groups signed a letter of support regarding this legislation. Additionally, the National Small Business Association and the National Retail Federation released letters of support for the legislation. 

Background:

In 2015, the National Labor Relations Board (NLRB) placed itself squarely in the middle of the employer-employee relationship, changing it in a way that hurt working families and small businesses but empowered union interests. Important matters such as hiring, work schedules, and pay increases were no longer simply between an employer and an employee. This prompted a similar expansion of the joint employer standard under the Fair Labor Standards Act (FLSA). With these actions, the Obama administration and the NLRB discarded settled labor policy and blurred the lines of responsibility for decisions affecting the daily operations of local businesses across the country. Two or more employers can be considered joint employers for making a business agreement that “indirectly” or “potentially” impacts their employees’ day-to-day responsibilities and working environment. According to the American Action Forum, the joint employer scheme could result in 1.7 million fewer jobs. 

The Save Local Business Act amends 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. This piece of legislation:

• Rolls back a convoluted joint employer scheme that threatens job creation and undermines the American Dream.
• Restores a commonsense definition of employer to provide certainty and stability for workers and employers.
• Protects workers and local employers from future overreach by unelected bureaucrats and activist judges.