Without Legislation, Pro-Union Ruling Will Impinge on Small Business Contractors, Franchisees

WASHINGTON, D.C. – U.S. Senator Thad Cochran (R-Miss.), chairman of the Senate Appropriations Committee, is cosponsoring legislation to overturn a recent labor relations ruling that would hurt small businesses by putting greater union pressures on subcontractors and franchises.

Cochran is an original cosponsor of the Protecting Local Business Opportunity Act (S.2015), which would reverse the National Labor Relations Board (NLRB) decision to redefine “joint employer” status to extend to businesses that might have an indirect or potential control over working conditions and terms of employment set by subcontractors or franchises.

“This National Labor Relations Board decision will have a chilling effect on the small business sector,” Cochran said. “I am concerned that this ruling will make it much harder to operate franchises and for corporations to subcontract business, undermining a popular path for many entrepreneurs and small business owners in Mississippi and across the country,”

“The decision could increase burdens on small business and franchise owners by compelling big businesses to interject themselves into the day-to-day operations of subcontractors and franchise stores,” he said.

The new “joint employer” standard, adopted by the NLRB on Aug. 27 on a partisan basis, will be applied retroactively. It establishes that merely “indirect control” or even “unexercised potential” to influence working conditions will make two separate employers joint employers. The ruling will also make both employers liable for the labor law violations of the other.

S.2015 would override the NLRB decision and reestablish the previous decades-old policy that said “joint employer” applied only to those businesses that have direct and immediate control over employment terms, working conditions, and compensation.

Provisions to prohibit the NLRB from implementing a new “joint employer” decision are also included in the FY2016 Labor, Health and Human Services, and Education (Labor-HHS) Appropriations Bill approved in June by the Senate Appropriations Committee, which Cochran chairs.

Allowing the new NLRB joint employer decision to stand will increase the likelihood that larger business will be forced to apply more control over associated smaller businesses. It also increase the chance that big businesses might avoid entering into contracts with local subcontractors, suppliers or subsidiaries.

The Senate bill was introduced by Senator Lamar Alexander (R-Tenn.) with 35 cosponsors. It has been referred to the Senate Health, Education, Labor and Pensions Committee, which Alexander chairs. A companion measure has also been introduced in the House of Representatives.