428A Russell Senate Office Building, Washington, DC 11:00am EST
Chairman David Vitter
Good morning and thank you for joining me today for the Senate Committee on Small Business and Entrepreneurship Hearing to examine the impact the National Labor Relations Board’s new joint-employer standard will have on small businesses across the country.
We are going to hear from a diverse panel of experts and entrepreneurs on this issue. I want to thank all of our witnesses for being here today.
This committee has held numerous hearings this year to highlight the need for regulatory reform in light of how federal agencies have issued new rules and regulations that cause undue burden on small businesses. Most recently, we examined the Obama Administration’s misguided “overtime rule” and listened to testimony from small businesses and non-profit organizations on the severe negative effects the “white collar” rule would have in the workplace.
This joint-employer issue is yet another controversial example of the Obama Administration’s push for misguided labor policies that will not only hurt small business, but also have severe economic consequences. The Board’s decision to change a proven, successful model of business threatens our economy and ultimately puts millions of jobs at risk.
In a landmark decision last August, the NLRB ruled that merely “indirect control” or even “unexercised potential” to control working conditions will now make two separate employers a joint-employer. This means that multiple employers will now have to jointly negotiate working conditions with unions and share liability for labor law violations.
Additionally, the outcome of ongoing litigation between McDonald’s and the NLRB over a joint-employer labor dispute is certain to have huge ramifications for many small businesses that operate as franchises. Like many of you here today, I am following this case closely due to its potential significant impact on the small business community.
Small businesses are the biggest source of jobs in many of the states represented on this committee, and it is easy to see that American entrepreneurs are under attack from an agenda-driven NLRB and special interest groups. It is time the administration worked to implement common sense policies that support, not undermine, American job creators.
For over thirty years, contractors, franchisors, and franchisees benefitted from a proven model of business that allowed successful small business owners to help other like-minded entrepreneurs to achieve the American Dream. By sharing trademarks, ideas, job training, marketing plans, and other helpful tools for success, a franchisee can benefit from the franchisor’s experience developing a successful business plan. These entrepreneurs are given the keys to success to run their own business and successfully create jobs in their local communities.
Despite the fact that franchisors are not responsible for hiring employees or even overseeing their day-to-day operations, they are still responsible for protecting the franchisee’s workers from any labor violations under the new standard that is being aggressively litigated by the NLRB’s General Counsel.
I hope to hear from our witnesses today on how business owners and entrepreneurs are expected to enter the marketplace and make long-term strategic decisions about their businesses given the high level of uncertainty created by the NLRB’s decisions.
In an effort to allow businesses to return to the traditional joint-employer standard, Senators Alexander and Isakson authored S.2686 the Protecting Local Business Opportunity Act.
Many members of this committee are cosponsors, and I strongly support efforts to move forward with this bill and want to commend their work on this important issue.
Along with the House Small Business Committee, the HELP Committee, and many Members of Congress from the House and Senate, I raised my concerns about the NLRB’s actions and will continue to fight against policies that make it harder to grow and operate small businesses. It is time the Obama Administration makes helping small businesses a priority.
Now, let’s get today’s conversation started. Again, I’d like to thank everyone for being here today and look forward to our discussion.