Madam Speaker, I yield myself such time as I may consume. Madam Speaker, I rise in opposition to H.J. Res. 98, a Congressional Review Act resolution to repeal the National Labor Relations Board's…
Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, I rise in opposition to H.J. Res. 98, a Congressional Review Act resolution to repeal the National Labor Relations Board's joint employer rule, which the Board finalized last October.
Through their unions, workers should be able to negotiate for higher pay, better benefits, and safer workplaces. However, that is not the case for millions of Americans, including janitors, housekeepers, cooks, and many others who are employed through subcontracts or temporary agencies.
The rise of what is called ``fissured workplace,'' where firms increasingly use overlapping arrangements of contracting, subcontracting, and temping, has weakened workers' bargaining power and allowed large corporations to evade bargaining obligations and liabilities.
For example, if employees of a subcontractor were to unionize, the subcontractor could refuse to bargain over pay, hours, workplace safety, or other issues because its contract with the prime contractor essentially sets the wages for the employees. Whoever is setting the wages ought to be the one at the bargaining table.
If the workplace employer is essentially setting the wages, but you have to negotiate with the temp agency, and they say, ``That is all we can pay, so talk to somebody else,'' we need the somebody else at the table to be bargaining.
Likewise, a temp agency may be restrained on what it can pay because of the contract with the owner of the workplace.
Additionally, by evading bargaining obligations, the prime contractor who is actually setting the wages can shift liability for an unfair labor practice onto the subcontractor or the temp agency.
The NLRB rule fixes this problem by ensuring workers can negotiate with all entities controlling their working conditions. This protects small businesses from being held liable for labor violations that are the result of other employers' actions.
By repealing the NLRB's rule, H.J. Res. 98 would undermine workers' ability to exercise their rights and reinstate the deficient Trump-era rule that narrowed the joint employer standard. Under the Trump-era standard, employers who control the working conditions could easily evade their obligations to collectively bargain with employees.
We should not go backward. The Biden-Harris administration's joint
employer rule empowers workers and protects small businesses.
My colleagues have just claimed that there is a problem with franchisees and the franchising model. These claims are unfounded, as there is no credible evidence showing that the rule would adversely affect the franchise model.
In fact, if a problem arises, a strong joint employer standard will protect franchisees by ensuring the franchisors don't control the franchisees' labor relations and then leave the franchisees on the hook for the liabilities.
I want to highlight that the American Association of Franchisees and Dealers wrote in support of both the Protecting the Right to Organize Act--that is, the PRO Act--joint employer standard and the Biden-Harris joint employer rule that we are talking about today.
It is also important to point out that the NLRB has never found a franchisor to be a joint employer of a franchisee's employees.
The joint employer rule reflects the best interests of the American people and our economy.
Madam Speaker, I hoped that we would be standing with the workers and small business owners and not repeal a rule that protects them. I oppose the resolution, and I reserve the balance of my time.
Madam Speaker, I yield 2 minutes to the gentlewoman from Oregon (Ms. Bonamici), who is a senior member of our committee and the ranking member of the Subcommittee on Early Childhood, Elementary, and Secondary Education.
Madam Speaker, I reserve the balance of my time.
Madam Speaker, I yield 4 minutes to the gentleman from California (Mr. Takano), a senior of our committee, and the ranking member of the Veterans' Affairs Committee.
Madam Speaker, I yield an additional 30 seconds to the gentleman from California.
Madam Speaker, I yield 3 minutes to the gentleman from California (Mr. DeSaulnier), the ranking member of the Subcommittee on Health, Employment, Labor, and Pensions.
Madam Speaker, I yield back the balance of my time.
Madam Speaker, I yield 2 minutes to the gentlewoman from Oregon (Ms. Hoyle).
Madam Speaker, may I inquire how much time is remaining on both sides.
Madam Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. Sorensen).
Madam Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Casar).
Madam Speaker, I include in the Record three letters in opposition to H.J. Res. 98. The first is signed by the AFL- CIO, SEIU, and Teamsters. The second is signed by the United Steelworkers. The third is signed by a diverse group of organizations, including the National Organization for Women, the National Partnership for Women and Families, The Leadership Conference on Civil and Human Rights, and many more.
November 2, 2023.
Dear Representative: On behalf of the 12.5 million workers
represented by the AFL-CIO, the 2 million workers represented
by SEIU, and the 1.2 million workers represented by the
International Brotherhood of Teamsters. we write to urge you
to support the National Labor Relations Board's (``NLRB'' or
``the Board'') recent final rule addressing joint-employer
status under the National Labor Relations Act (``NLRA'' or
``the Act''). This important rule will ensure that workers
have a real voice at the bargaining table when multiple
companies control their working conditions. Accordingly, the
undersigned unions strongly oppose any effort to nullify or
weaken the rule, whether by legislation or resolution under
the Congressional Review Act.
The rule, published on October 27, 2023, rescinds the Trump
NLRB's 2020 joint-employer rule and replaces it with an
updated standard that is based on well-established common-law
principles and consistent with recent D.C. Circuit decisions
identifying critical flaws in the Trump NLRB's approach to
this issue. The Board's updated rule is welcome and necessary
because the Trump rule was harmful to workers' organizing
efforts, inconsistent with the governing legal principles,
and against the policies of the Act.
The crux of this issue is simple--when workers seek to
bargain collectively over their wages, hours and working
conditions, every entity with control over those issues must
be at the bargaining table. The Act protects and encourages
collective bargaining as a means of resolving labor disputes.
Collective bargaining cannot serve that purpose if companies
with control over the issues in dispute are absent from the
bargaining table. The Trump rule offered companies a roadmap
to retain ultimate control over key aspects of workers'
lives--like wages and working conditions--while avoiding
their duty to bargain. This standard left workers stranded at
the bargaining table and unable to negotiate with the people
who could actually implement proposed improvements.
Companies are adopting business structures specifically
designed to maintain control over the workers who keep their
businesses running while simultaneously disclaiming any
responsibility for those workers under labor and employment
laws. Such businesses often insert second and third-level
intermediaries between themselves and their workers. These
companies seek to have it both ways--to control the workplace
like an employer but dodge the legal responsibilities of an
employer. This phenomenon is often called workplace
``fissuring.''
Fissured workplaces, sometimes involving staffing firms,
temp agencies, or subcontractors, often leave workers unable
to raise concerns, or collectively bargain with, the entity
that actually controls their workplace. In such arrangements,
multiple entities may share control over a worker's terms of
employment. For example, if employees of a subcontractor were
to unionize and bargain only with the subcontractor, it might
simply refuse to bargain over certain issues because its
contract with the prime contractor governs those aspects of
the work (e.g., pay, hours, safety, etc.). This harms workers
because the entity that effectively determines workplace
policy is not at the bargaining table, placing workers'
desired improvements out of reach.
The way to ensure that workers can actually bargain with
each entity that controls their work is to readily identify
such entities as ``joint employers.'' The Act requires joint
employers to collectively bargain with employees over working
conditions that they control. But the Trump NLRB's joint
employer rule was designed to help companies with such
control escape bargaining. The rule's standard for finding a
joint employment relationship was unrealistic and overly
narrow. It conditioned a company's joint employer status on
proof that it actually exercised substantial direct and
immediate control, discounting its reserved or indirect power
to control a small list of working conditions. This conflicts
with the governing common law principles, which make clear
that a company's power to control working conditions must
bear on its employer status (and thus its bargaining
responsibilities under the Act) regardless of whether it has
formally exercised that power. The new final rule correctly
rescinded the Trump rule.
Critics of the new rule claim that its joint employer
standard will outright destroy certain business models or
dramatically change operations. Opponents claim, for example,
that companies will be required to bargain over issues they
have no control over, or will be automatically liable for
another entity's unfair labor practices. This is simply
untrue and a further attempt to leave workers with no
opportunity to bargain with controlling entities. The final
rule makes it clear that a joint employer's bargaining
obligations extend only to those terms and conditions within
its control. And current Board law--unchanged by the rule--
only extends unfair labor practice liability to a joint
employer if it knew or should have known of another
employer's illegal action, had the power to stop it, and
chose not to.
Similarly, critics claim that the new standard imposes
blanket joint employer status on parties to certain business
models like franchises, temp agencies, subcontractors, or
staffing firms. This is also untrue. The rule does not
proclaim that all franchisors are now joint employers with
their franchisees, or that any company using workers from a
temp agency is automatically their employer. The particular
business model used by parties in any case is not
determinative. Instead, the Board looks at every case
individually, and grants companies a full and fair
opportunity to explain the underlying business relationship
and dispute whether they control the relevant workers'
essential terms and conditions of employment. The Board
conducts a fact-specific, case-by-case analysis that
considers whether the putative joint employer controls
essential terms and conditions of employment.
Make no mistake, the Board's rule may well result in the
employees of a staffing firm, for example, being treated also
as employees of the firm's client, but only if the client
controls the employees' terms and conditions of employment.
That is the only way workers can meaningfully bargain at
work. But even in that situation, the workers are deemed
employees only for purposes of the NLRA and collective
bargaining, and the client would be obligated to bargain only
about the terms it controls. It would still be up to workers
to choose whether they want to organize a union and
collectively bargain with their employer or employers.
Nothing in the NLRB's rule alters employers' responsibilities
under any other state or federal law (e.g., tax laws, wage
and hour laws, or workplace safety laws) or requires any
changes to business structures. But it does make clear their
responsibility under the NLRA to show up at the bargaining
table.
The new rule is clear and commonsense: there is no
bargaining obligation for an entity that cannot control
workplace policies or working conditions. And for good
reason--their presence at the bargaining table would be
pointless. Workers have no interest in bargaining with a
company that lacks the power to implement the workplace
improvements they seek.
This rule simply invokes a more realistic joint employer
standard on par with the standard enforced during the Obama
administration, allowing a company's indirect or reserved
control over working conditions to be sufficient for finding
joint employer status. Workers' right to collectively bargain
cannot be realized if the entity that has the power to change
terms and conditions of employment is absent from the
bargaining table.
For the reasons explained above, the undersigned unions
oppose any effort to nullify the Board's rule. In particular,
we urge Congress to oppose efforts to nullify the rule under
the Congressional Review Act (``CRA''). Here, a successful
CRA disapproval resolution would be particularly harmful: it
would revert the NLRB's joint employer standard to the Trump
Board's 2020 rule, which stymies workers at the bargaining
table. And further, as explained above, at least one federal
appeals court has strongly suggested that provisions of the
2020 rule are inconsistent with the NLRA, so litigation would
likely invalidate that rule as well. This would create
confusion for the workers, unions, and employers regulated by
the NLRB. Not only could the two standards be nullified,
leaving the Board's joint employer analysis in limbo, but the
NLRB's ability to address that limbo would be unclear due to
CRA limitations.
The CRA provides that once a disapproval resolution is
passed, the underlying agency cannot issue a subsequent rule
in ``substantially the same form'' as the disapproved rule
unless it is specifically authorized by a subsequent law.
Thus, if the Board's new rule is nullified under the CRA, and
the prior Trump rule is invalidated by federal courts, the
NLRB would be limited in issuing a clarifying rule. To avoid
confusion and ensure stability for workers, unions, and
employers, Congress must steer clear of using the CRA to
address the joint employer standard.
For these reasons, we ask that you support the NLRB's joint
employer rule and oppose any effort to weaken or nullify the
clarified standard.
Sincerely,
Madam Speaker, I yield 2 minutes to the gentlewoman from Texas (Ms. Jackson Lee).
Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, just very briefly, the joint employer rule would only weaken the critical protections for workers that congressional Democrats and President Biden have fought so hard to enact. This rule only requires that those who can control the conditions of work actually be at the bargaining table when the conditions of work are being negotiated. Without this kind of rule, employees would be stuck trying to negotiate wages with a temp agency that has no control over the wages.
We have heard a lot about the franchisee situation. Mr. Speaker, I include in the Record a comment letter from the American Association of Franchisees and Dealers that points out that franchisors should be at the bargaining table if they are, in fact, controlling the conditions, as this rule provides and as the resolution would overturn.
American Association of
Franchisees & Dealers,
Palm Desert, CA, December 7, 2022.
Re AAFD Comments on Proposed Joint Employer Rule (87 Fed.
Reg. 54641).
Lauren McFerran,
Chairman, National Labor Relations Board,
Washington, DC.
Roxanne L. Rothschild,
Executive Secretary, National Labor Relations Board,
Washington, DC.
Dear Chairman McFerran and Ms. Rothschild: On behalf of the
American Association of Franchisees and Dealers (``AAFD'')
and its franchisee members, we respectfully offer our views
and perspective on the September 7, 2022 National Labor
Relations Board proposed rule that would expand the joint
employer definition under the National Labor Relations Act.
The joint employer debate is critical to the long-term equity
ownership question of the franchised businesses.
AAFD is the oldest and largest national not for profit
trade association advocating the rights and interests of
franchisees and independent dealer networks. The AAFD
supports more than 60 independent franchisee associations and
trademark specific chapters, representing thousands of
franchisee operated business outlets. Since our establishment
in 1992, the AAFD has focused on its mission to define,
identify and promote collaborative franchise cultures that
respect the legitimate interests of both
franchisers and franchisees, cultures we describe as
embracing our vision of Total Quality Franchising. The AAFD
came into existence in response to a franchising community
that has been evolving towards increasingly one-sided and
controlling franchise agreements and cultures whereby
franchisee equity and business ownership has been continually
eroding such that many modern franchise systems have lost all
vestiges of business ownership. Interestingly, instructively
and importantly, we make special note that the very issues
that inspired the formation of the AAFD have also given rise
to the Joint Employer doctrine.
For the reasons set forth below, AAFD urges the NLRB to
adopt a joint employer standard that respects NRLB's decision
in Browning-Ferris Industries of California, Inc., d/b/a BFI
Newby Island Recyclery, 362 NLRB No. 186 (2015), and
reaffirmed by the Court of Appeals for the DC Circuit, yet
takes into account the unique relationships between the
franchisees and franchisor needed to protect the brand.
Franchisor Community Misdirection Regarding the Definition and
Foundation of Joint Employment Status
Franchisees respect a franchisor's ownership and control of
its brand and a legitimate right to enforce system standards
to protect the brand, and franchisees depend and rely on the
list of benefits and support services from their franchisor.
We do not believe that the many services franchisors
historically provide to franchisees, and which have been
disingenuously withdrawn under the `guise' of the joint
employer threat are, or should be, the focus of the joint
employment standard.
Rather, the `test' of joint employer status should be
determined based upon the amount of economic control a
franchisor directly or indirectly exerts by use of the
franchise agreement, operations manual, or other means, over
its franchisees and which negatively impact and eviscerate a
franchisee's equity ownership in the franchised business.
We have specifically been asked to comment on the added
economic burden placed on franchisees when their franchisor
backs away from services in order to avoid Joint Employer
attribution. It should be no surprise from our firm
contention that franchisors unduly focus their arguments on
matters of control on their legitimate interests (and we
contend duties) to control and protect brand standards. As
part of the franchisor's playbook to insulate itself from
joint employer classification is to withdraw franchisee
support of human resource services, placing an added economic
burden on its franchisees. The AAFD contends that a
franchisor's withdrawal of such services is a canard, indeed
an integral part of the strategy to misdirect attention from
the real issues and is intended to secure franchisee
opposition to the joint employer doctrine. Stated simply, in
the franchising context, a franchisor's provision of human
resources to its franchisees should play a negligible role in
determining whether the joint employer doctrine should apply
to a franchisor's undue control over its franchisee's equity.
We contend that the human resources services traditionally
provided by a franchisor are appropriate for the protection
of any brand's important standards of service, products and
reputation that are properly a part of brand standards. That
said, we recognize that the joint employer doctrine is built
upon the traditional evaluation of master/servant and
employer/employee characteristics that we believe distract
from the real issues of control to subvert and diminish
franchisee equity interests. We believe that much of the
franchisor community is engaging in the art of misdirection
in its arguments, tending to avert attention from the real
economic basis for its opposition to the Browning-Ferris
joint employer standard which is a bedrock of the traditional
common law standard which incorporates both reserved and
exercised control. The real concerns are the right to assert
economic control, not the enforcement of legitimate brand
standards, and include:
1. The claim that all the goodwill of the franchised
business belongs to the franchisor, without any recognition
of equity ownership by the franchisee whose capital and sweat
equity are a major component of a franchise unit's existence
and success.
2. Control over the ownership of the franchise location
whereby the franchisor owns or controls the real estate which
is leased or sublet to the franchisee impacting the
franchisee's ownership of the business.
3. Abusive control or ownership of the assets of the
business, such that a franchisee is little more than a
sharecropper running the business for the benefit of the
franchisor. Indeed, regarding McDonalds, it should be noted
that McDonalds no longer refers to `franchisees' in its
agreements. In full claim of ownership, a McDonald's licensee
is referred to legally as an `operator' of a business that
McDonald's fully owns.
4. The exercise of abusive control over the suppliers and
supply chain of the of the operation. Far and beyond the
enforcement of necessary system standards, many franchisors
dictate sole sources of supply for the purpose of marking up
the goods and services being purchased by franchisees, and
regardless of the connection to the brand or brand standards.
Franchisors now dictate where to buy insurance, process and
control customer payments, and even business supplies, as
well as dictating the source of brand related commodities--
all of which could be potentially purchased at lower cost
from competitive sources.
5. Control over the cost of labor by setting hours of
operation that are not realistic for a particular franchise
unit.
The Solution to the Joint Employer Dilemma
We join the industry in urging the NLRB to recognize the
legitimacy of protecting brand standards, and to place its
definition of joint employment on the real matter of `who
owns the franchised business equity.' The debate around joint
employer is critical because it includes the broader debate
beyond the impact of labor practices and also includes the
question on who has control over the day-to-day business
practices and who owns the equity in the business. We
recognize that to refocus the inquiry of joint employer
attribution in franchising may require some legislative
revisions to the definition of `control' to the control of
equity (which is not a question in the typical master servant
discussion). However, we believe that our solution to provide
a franchisor exemption is completely consistent with the
premise of the NLRA, and within the authority of the NLRB.
In establishing its test for Joint Employment, and
advocating for the Browning-Ferris joint employer standard,
we urge the NLRB to focus on minimum equity concerns:
1. The right to grow the business and manage its costs of
operations, including the management and control of labor,
goods, products and services purchased for operations.
2. The right to stay in business, to sell the business, or
to transfer the business to heirs.
3. The right to manage the business finances, especially
the right of the franchisor to pull funds from the
franchisee's bank accounts, or whether the franchisee has the
power over its own checkbook.
4. The very important, albeit sensitive, right to control
the cost of supplies and suppliers. A significant promise of
franchising is the power of volume purchasing, but the
ability of a franchisor to dictate suppliers is fraught with
the potential for abuse. A key inquiry to determine whether a
franchisor has crossed the line of control over the business
is whether the franchisee's interests are respected and
protected where a franchisor reserves significant control
over the franchisee's source of supplies.
5. Similarly, the control over the marketing budget is
critical to a successful franchise system. A franchisor may
control most of the marketing fund, but a line is crossed
when a franchisee retains no ability to influence and direct
its marketing dollars.
Quite simply, the solution to the joint employer `threat'
for franchise systems is to recognize franchisee equity
ownership to franchisees in a sufficient amount that the
franchisee is deemed to be the `owner' rather than a mere
`operator' of the franchised business.
The AAFD's Franchisee Bill of Rights Provides the Appropriate Tests for
Excessive Control
We submit the Franchisee Bill of Rights (attached), as
appropriate criteria to measure and test whether a franchisor
has crossed the line of excessive control. The Franchisee
Bill of Rights provide fourteen indicia of a franchise system
that respects the equity interests of franchisees.
It is instructive to note that the Franchisee Bill of
Rights actually recognize, even require, a franchisor to
provide and support brand standards. Providing the expected
`control' over brand standards should not be the
determinative criteria for joint employer. We urge the focus
on relative equity: the determination of whether the
agreement and relationship fairly recognize that the
franchisee has a significant equity right in the franchised
business.
Proposal to Create a Franchisor Exemption from Joint Employer
attribution for Franchise Systems that Recognize an independent
franchisee association and offer a collectively bargained franchise
agreement
The comparison of franchisee associations to labor unions
is inevitable and appropriate. Owners of franchised small
businesses organize for reasons that are similar to the
reasons that employees form unions: to collectively bargain
the rights and benefits of agreements of their engagement to
provide services to their franchisor or employer. At its
core, the National Labor Relations Act that established the
NLRB was enacted to establish the right of employee groups to
organize, and the NLRA recognizes important exemptions for
companies that recognize unions and have a collectively
bargained employment agreement that is ratified by a majority
of union members and employees.
AAFD urges that a franchisor that has recognized an
independent owners association and has embraced a
collectively bargained franchise agreement that has been
ratified by a majority of franchisees should also be exempt
from the consequences and penalties arising from being
determined to be the `joint employer' of a franchisee's
employees. In this regard, it should be noted that the AAFD
has established an accreditation for franchisors that meet
these tests which we label as our ``Fair Franchising Seal.''
To date, 19 brands have been accredited by the AAFD, all of
which have franchise agreements that recognize franchisee
rights and equity interests while reaffirming the
franchisor's essential interest in protecting
its brand standards. In essence, just as recognized in the
NLRA, where the agreement defining rights and obligations has
been collectively bargained, the reasons behind the purpose
of the law have been met by the marketplace effectively doing
its job!
Cooperation with the Federal Trade Commission
We also urge the NLRB to work closely with the Federal
Trade Commission on defining aspects of the relationship that
exceed normal control in a brand. The franchise industry has
many unique attributes, and the FTC is the federal agency
most engaged with oversight of the industry. Many items, such
as uniforms and training, which are critical to the existence
of the brand, are immaterial to the employment relationship,
and should not create joint employer status.
Conclusion
The AAFD appreciates the concerns of the NLRB, with respect
to creating an appropriate `test' for when a franchise system
has crossed a line and become the `joint employer' of a
franchisee's putative employees. We believe that many
franchisors exercise so much control over the franchised
business that the franchisee retains limited if any equity
ownership, or control over, in the franchised business. In
such circumstances it is appropriate to deem the franchisor
as the joint (and sometimes even the sole) employer of the
franchised business employees. But we also believe that the
establishment, support and enforcement of brand standards are
not the appropriate target of any control test. Rather, the
inquiry should be focused on the economic rights of business
ownership that is promised and expected in a franchise
relationship. Fair and balanced franchise agreements and
relationships that respect the Franchisee Bill of Rights will
provide and meet an appropriate test for determining joint
employer status.
Respectfully submitted,
Robert L. Purvin, Jr,
Chair, Board of Trustees.
Richard E. Stroiney,
Chief Operating Officer and Executive Director.
Keith R. Miller,
Director of Public Policy and Engagement.
Mr. Speaker, instead of advancing H.J. Res. 98, the House should prioritize legislation such as H.R. 20, the Protecting the Right to Organize Act, or the PRO Act, that strengthens workers' abilities to organize and collectively bargain.
This resolution goes in the exact opposite direction. For those reasons, I oppose the resolution and encourage all Members to do the same.
Mr. Speaker, I yield back the balance of my time.