Bill of the Month — April 2023: Save Local Business Act

The Taxpayers Protection Alliance’s (TPA) Bill of the Month for April 2023 is the Save Local Business Act, introduced in by Sen. Roger Marshall (R-Kan.) and Rep. Rep. James Comer (R-Ky.). This legislation would bring franchise businesses and staffing agencies regulatory certainty by clarifying the definition of joint employers under the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA).

Background:

During the Obama, Trump, and now Biden administrations, rulemaking through the National Labor Relations Board (NLRB) has continuously left Main Street businesses in flux regarding the determination of employment relationships between employers and contractors. In 2015, the NLRB issued the Browning-Ferris decision, which upended the decades-old understanding of responsibilities for contractors, replacing it with a new, confusing standard. Before Browning-Ferris, two employers were found to be joined only if they had direct control over the same employees, such that they co-determined the essential terms and conditions of employment. However, under the 2015 decision, two entities could be considered joint employers if there is direct or indirect control over the employee. This new standard vastly increases labor law liabilities for employers using staffing agencies. In 2020, under the Trump administration, the NLRB reversed the Browning-Ferris decision, returning the standard for joint employer status back to requiring direct and immediate control over employees.

In September 2022, the NLRB issued a notice of proposed rulemaking that would replace the 2020 rule by returning and expanding the Browning-Ferris decision. The International Franchise Association found that an expanded joint employer rule could cost franchise businesses upwards of $33 billion per year, cut off 376,000 jobs and result in 93 percent more labor law violation lawsuits.

Save Local Business Act:

In 2022, America’s nearly 800,000 franchises generated 8.5 million jobs, more than $826 billion in economic output and contributed 3 percent of U.S. GDP. The frivolous rulemaking at the NLRB undermines these contributions and their impact on the economy. This critical legislation amends the NLRA and the FLSA to codify the 2020 joint employer rule, requiring entities to have “actual, direct, and immediate” control over employees to be considered joint employers. The Save Local Business Act would protect employers and employees, ensure regulatory certainty for businesses, and help them avoid confusing standards that lead to numerous lawsuits.

It is for these reasons, among others, that TPA is proud to make the Save Local Business Act, introduced by Sen. Roger Marshall and Rep. James Comer, its bill of the month for April 2023.