On November 7, 2017, the U.S. House of Representatives passed H.R. 3441, the Save Local Business Act. The legislation was introduced by Representative Bradley Byrne (R-AL) on July 27, 2017 and had bipartisan support.

The Act amended the National Labor Relations Act and the Fair Labor Standards Act of 1938 to define a joint employer as an employer who has “direct, actual and immediate” control over the essential terms and conditions of employment. Examples include hiring and firing employees, determining individual rates of pay and benefits, day-to-day supervision of employees, and assigning work schedules, among others.

The purpose of the Act was to correct the confusion and harm caused by the National Labor Relations Board’s (NLRB) decision in Browning-Ferris. That 2015 decision expanded the definition of joint employer to include indirect control. The expanded definition means increased liability for companies for the labor violations of their franchises, even if they aren’t involved in the hiring process. For franchises and small businesses, the new definition means less support from the companies, i.e. no payroll software from the company.

Although the Senate has not voted on this bill, worker freedom advocates were hopeful after the NLRB reversed its 2015 decision in Hy-Brand Industrial Contractors, Ltd. And Brandt Construction Co. on December 14, 2017 and reinstated the direct control definition. However, shortly thereafter, Massachusetts Senator Elizabeth Warren (D) and other Democrat lawmakers asked whether NLRB member William Emanuel should have recused himself from this case. Emanuel had worked for Littler Mendelson, the law firm that had represented one of the clients in Browning-Ferris. NLRB Inspector General David Berry released a report on February 9, 2018, saying that Emanuel should have recused himself. 

The NLRB then vacated the decision on February 26, 2018. 

Because the NLRB can overrule its decisions and the expanded definition is so harmful, it is imperative that Congress passes the Save Local Business Act. The best vehicle for passage is the 2018 Omnibus spending bill.

Americans for Tax Reform and the Center for Worker Freedom therefore support including the Save Local Business Act in the 2018 Omnibus spending bill.

In showing our support, we signed on to the Competitive Enterprise Institute’s letter along with 17 other nonprofit organizations supporting its inclusion.