WASHINGTON – U.S. Senator Jerry Moran (R-Kan.) this week sponsored the Protecting Local Business Opportunity Act (S. 2015). The legislation, introduced by U.S. Senator Lamar Alexander (R-Tenn.), would roll back the National Labor Relations Board’s (NLRB) “joint employer” decision, which could negatively impact small businesses in Kansas and across the country.

“Federal policy should foster an environment that facilitates a growing economy and higher wages, not burdensome intrusions from big government,” Sen. Moran said. “Passing this bill to correct the NLRB’s flawed joint-employer changes would spare businesses from unnecessary costs that threaten the push for better employment opportunities and upward mobility in America.”

For nearly 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 (NLRB) in a case involving Browning Ferris Industries (BFI), a 3-2 partisan majority stated “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 like pay, hours and leave time with their direct supervisor, because those decisions will now be made between the larger employer and the union.

The Protecting Local Business Opportunity Act would reaffirm that an employer must have “actual, direct and immediate” control over an employee to be considered a joint employer – the same standard that was in place decades before the board’s BFI decision.

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