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Chairwoman Foxx Statement: Hearing on “Redefining Joint Employer Standards: Barriers to Job Creation and Entrepreneurship”

Small businesses are the driving force behind the American economy. They employ millions of Americans, bring communities together, and provide services we rely on each and every day.

So many individuals have achieved the American Dream by owning a small business. One of the reasons we’re the greatest, most prosperous nation in the history of the world is because of the opportunity for people to take a risk, start a small business, and achieve a lifetime of success.

As a former small business owner, I understand the many challenges small companies face. It can be very difficult — and costly — for small businesses to get up and running. And once they do, they constantly face tough decisions as they try to hire workers, make a payroll, and keep their doors open.

Through hard work and determination, many entrepreneurs have found their path to success through franchising, which often involves lower start-up costs. Opportunities through franchising, as well as contracting, have empowered countless Americans to climb the economic ladder and obtain a better quality of life for their families. Today, there are 733,000 franchise establishments nationwide that support more than 7.6 million jobs.

The entrepreneurial spirit of small businesses, when combined with the resources, infrastructure, and potential of America’s most notable brands, has brought untold innovation and horsepower to the American economy and desperately-needed jobs to communities across this country.

Sadly, unelected bureaucrats who have never owned a business or made a payroll launched an unprecedented attack on these successful business models that so many rely on. It began when the National Labor Relations Board issued an extreme joint employer decision, which distorted the definition of what it means to be an employer. Then, the Obama administration took this radical new policy a step further, spreading it to other areas of federal labor law.

The previous joint employer standard made sense. For two or more employers to be considered joint employers, they had to share direct control over the terms and conditions of employment, including hiring decisions, for example. This clear, straight-forward test provided stability and certainty for job creators for decades.

But now, local employers face a complicated, confusing, and vague new standard that has threatened their independence and created an enormous amount of uncertainty. Two completely separate employers can be considered joint employers simply because they made a business agreement that “indirectly” or “potentially” impacts their employees’ day-to-day responsibilities and working environment.

For small franchisees, it means they could lose control over their business to larger companies. We’ve heard from many small business owners over the years who are concerned they could lose everything they’ve worked hard to build for themselves and their families.

One Florida small business owner once warned this committee, “Instead of being a small businessman, I would virtually overnight become a manager for a large company … I now find myself in the position that an unelected board in Washington, DC can just unilaterally determine that my American Dream is over.”

Who could possibly gain from this attack on the American Dream? We know it won’t be America’s workers. According to the American Action Forum, the joint employer scheme could result in 1.7 million fewer jobs.

Powerful special interest groups are the ones who stand to benefit. Desperate to reverse decades of decline in union membership, union bosses now have a new tool that makes it easier to unionize. For years, they’ve been trying to unionize multiple small businesses together in one organizing drive, and the joint employer scheme helps them do just that.

It’s time to put an end to this extreme and partisan policy that does nothing to help American workers and makes it harder for entrepreneurs to pursue their dreams. This committee has previously advanced legislation to protect small businesses and their employees by restoring the commonsense definition of what it means to be an employer. With a new Congress and new administration, we have an opportunity to get the job done.

Already, the Trump administration has taken steps to provide regulatory certainty where they can. And it is my hope that hearing firsthand accounts today of the job-crushing impact of the expanded joint employer standard will build new momentum here in Congress to find the solution Americans need.


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