ALEXANDRIA, VA – In a letter sent today, a coalition of more than two dozen prominent free-market organizations and individuals, led by the Center for Individual Freedom (CFIF), urged Congress to pass the Save Local Business Act (H.R. 3185/S. 1636).

The Save Local Business Act, which is sponsored by Representative James Comer (R-KY) in the U.S. House and Senator Roger Marshall, M.D. (R-KS) in the U.S. Senate, would restore decades of commonsense labor law norms and protect our nation’s employers against a radical redefinition of the nature of employment that creates uncertainty for struggling businesses across the nation and subjects them to unfair and unreasonable legal liability.

Specifically, the legislation would amend the National Labor Relations Act (NLRA) and Fair Labor Standards Act (FLSA) to restore the definition of “Joint Employer” to businesses that “directly, actually, and immediately exercise significant control over the essential terms and conditions of employment.” 

“Extending federal labor liability requirements to businesses that do not hire, fire, set wages or supervise employees is grossly illogical and unfair,” said CFIF President Jeffrey Mazzella. “The legal uncertainty and compliance burdens resulting from a vague and counterproductive definition of ‘Joint Employer’ implemented during the Obama administration jeopardizes thousands of businesses and hundreds of thousands of jobs.” 

The coalition is urging passage of the Save Local Business Act at a time when some in Congress are pushing the controversial Protecting the Right to Organize (PRO) Act, which would, among other things, make permanent the Obama administration’s confusing and unfair Joint Employer standard.   

“Rather than attempt to make permanent the misguided redefinition of 'Joint Employer' to the detriment of American job creators, Congress should promote business and job growth by passing the Save Local Business Act to restore the commonsense definition that stood for decades,” said Timothy Lee, CFIF’s Senior Vice President of Legal and Public Affairs.  “This coalition is strongly in favor of making sure that happens.”

In addition to CFIF, the letter is signed by representatives of the following organizations: Americans for Tax Reform, Alaska Policy Forum, American Consumer Institute, Americans for Prosperity, Center for a Free Economy, Center for Freedom and Prosperity, Competitive Enterprise Institute, Consumer Action for a Strong Economy, Council for Citizens Against Government Waste, FreedomWorks, Frontiers of Freedom, Heritage Action for America, Hispanic Leadership Fund, Independent Women's Voice, Institute for Liberty, Less Government, Market Institute, National Taxpayers Union, Nevada Policy Research Institute, Open Competition Center, Small Business & Entrepreneurship Council, Taxpayers Protection Alliance, The Libre Initiative, 60 Plus Association, and Washington Policy Center.

Read the full letter below or download it here (PDF).

August 26, 2021

Dear Member of Congress,   

On behalf of the undersigned organizations and the millions of members, supporters and activists across America whom we collectively represent, we write to urge your support for the Save Local Business Act (H.R. 3185/S. 1636), which would preserve decades of commonsense labor law norms and protect our nation’s employers against a Biden Administration order that radically redefines the nature of employment to the detriment of struggling businesses across the nation.   

Under longstanding court precedent and National Labor Relations Board (NLRB) interpretation, an "employer" for purposes of applying the nation's labor laws is generally defined to include only those businesses that determine the essential terms and conditions of employment. As a textbook illustration, imagine a franchise arrangement whereby the franchisee determines whom to hire, whom to fire, wages and other everyday working conditions.  The distant franchisor, in contrast, obviously cannot interview every potential franchisee employee, make each individual hiring decision or micromanage its franchisees' working conditions.  

That’s precisely why an appellate court ruled in NLRB v. Browning-Ferris Industries (1982) that the appropriate standard for defining “employer” was established by the U.S. Supreme Court in Boire v. Greyhound Corp. (1964).  Specifically, it held that only businesses exercising control over "those matters governing the essential terms and conditions of employment" were subject to collective bargaining requirements and liabilities.  Two years later, the NLRB formally adopted that standard, ruling in separate cases that "there must be a showing that the employer meaningfully affects matters relating to the employment such as hiring, firing, discipline, supervision and direction."  In other words, an "employer" for purposes of labor law requires direct and immediate control over the terms and conditions of employment.  

That stands to reason, since it makes no sense to impose legal liability upon employers that don't actually control a bargaining unit's employment conditions.   

In August 2015, however, the Obama Administration’s NLRB suddenly and needlessly upended that established legal standard by imposing what's known as the "Joint Employer Doctrine."  The Joint Employer Doctrine means that multiple businesses could now be held legally liable for the same employee.  Under that radical departure from logic and established law, even employers with indirect or even merely potential ability to affect employment terms could suddenly find themselves subject to federal labor law mandates.   

That instantly jeopardized hundreds of thousands of franchise businesses across America and the millions of people they employ, and constituted a gift to union bosses and liberal politicians who receive union campaign donations.  With union membership declining and their ability to influence elections progressively waning, they're desperate for methods to retain power and dollars.  

In 2020, the NLRB formally rejected the Obama Administration attempt to redefine the law.  Today, however, the Biden Administration seeks to reverse field yet again and reimpose the chaotic Joint Employer Rule of the Obama Administration NLRB.   

That's why the Save Local Business Act is of such immediate importance.  It would rightly define “joint employers” as those that “directly, actually, and immediately exercise significant control over the essential terms and conditions of employment.”  Today, hundreds of thousands of franchise enterprises exist in the United States, accounting for nearly 7.6 million jobs.  And according to an American Action Forum study, the Joint Employer Rule could reduce private sector employment by nearly 2 million jobs, including 500,000 in the leisure and hospitality industry alone.  In addition to the direct impact of jobs lost, that also translates to taxpayer pain in the form of more unemployment payments, Medicaid enrollment and other forms of government assistance.   

The Save Local Business Act would spare those employers and employees the Biden NLRB's attempted joint employer redefinition, and preserve established judicial and NLRB precedent by subjecting only actual employers exercising direct and immediate control over the essential terms and conditions of employment to federal collective bargaining liabilities.   

It’s grossly unfair and illogical for the Biden Administration to extend federal labor requirements to businesses that do not hire, fire, set wages or supervise employees, and it jeopardizes thousands of businesses and potentially millions of American jobs. Congress can take an easy and important step toward improving economic and employment conditions by passing the Save Local Business Act.  Accordingly, we urge you to support H.R. 3185 and S. 1636, the Save Local Business Act.   

Thank you very much for your attention to this critical matter.   

Sincerely,