Providing for Congressional Disapproval Under the Rule Submitted By the National Labor Relations Board Relating to ``Standard for Determining Joint Employer Status''

Floor Speech

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. 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.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. 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.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Madam Speaker, I reserve the balance of my time.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. 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.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Madam Speaker, I yield an additional 30 seconds to the gentleman from California.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Madam Speaker, I reserve the balance of my time.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. 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.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Madam Speaker, I yield back the balance of my time.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Madam Speaker, I yield 2 minutes to the gentlewoman from Oregon (Ms. Hoyle).

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Madam Speaker, may I inquire how much time is remaining on both sides.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Madam Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. Sorensen).

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Madam Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Casar).

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. 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, AFL-CIO, America's Unions. United Steelworkers, Pittsburgh, PA, November 14, 2023. Re United Steelworkers urges a NO vote on H.J. Res. 98, which would invalidate the National Labor Relations Board's new Standard for Determining Joint Employer Status. House of Representatives, Washington, DC.

Dear Representative: On behalf of the 850,000 active members of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW), I write to oppose a misguided and short-sighted Congressional Review Act (CRA) resolution--H.J. Res 98. If this resolution passes, American workers will increasingly face a fractured workplace and lose access to federally protected collective bargaining rights.

Updating the NLRB joint employer standard is necessary as employers are increasingly using ``fissured'' workplace models to keep the parent company from having to bargain with workers employed by the smaller contracted companies. The continued contracting out and increased usage of temporary workers leads to terrible outcomes for the most vulnerable, precisely because these workers lack the ability to meaningfully organize and collectively bargain with their appropriate employer(s).

For example, a 2014 National Employment Law Project report found that workers at subcontracted firms receive wages from 7-40 percent lower than their non-contracted out peers. That same study also showed that workers in subcontracted firms suffer higher rates of wage theft and unpaid overtime. Analysis from ProPublica has also shown that temp workers are at an increased risk of workplace injury. Lastly, and perhaps most chillingly, child workers have been found in meatpacking plants, while auto-supply chains in the South have had children as young as 14 years old working for subcontracted firms--sometimes with deadly consequences. If this resolution passes, Congress will have made it easier for corporations to shirk responsibility of their employment oversight, and make it harder for the American labor movement to stop labor abuses such as wage theft, unpaid overtime, workplace injuries, and child labor.

The NLRB had to act as the result of a partisan rulemaking process during the Trump administration. Prior to 2020, the NLRB's assessment of a joint employer standard had been guided by common law for over 50 years. The NLRB, as a quasi- judicial body, would use case decisions to substantiate its joint employer standard.

The Trump administration's NLRB dramatically broke with precedent and created a regulatory rulemaking process to establish a new joint employer standard. Through this final rule, the previous NLRB added non-statutory and non-common law requirements to the NLRB joint employer assessment-- notably, the requirement that an employer must ``possess and exercise . . . substantial direct and immediate control'' over a worker's ``essential terms and conditions of employment'' to be considered joint employers.

The problem with this Trump era rule is that it significantly constrained the NLRB's ability to exercise jurisdiction over cases, and limited the scope of the joint employer standard on when the NLRB can weigh in. With such a weak standard, employers were able to simultaneously influence a worker's wages, hours, and working conditions-- all while being inoculated from having to bargain over those issues with their workers.

By returning to common-law principles in this new standard, the NLRB provides ``a practical approach to ensuring that the entities effectively exercising control over workers' critical terms of employment respect their bargaining obligations under the NLRA''.

Unfortunately, Representative James John (R-MI-10), along with 29 other Republicans, introduced a Congressional Review Act resolution to repeal the NLRB's return to past precedent. USW strongly opposes the use of a CRA to undermine the NLRB. If a CRA were to be successfully used, it would prevent the federal agency from ever issuing a substantially similar rule, freezing in perpetuity a process that was designed to evolve with employment practices.

USW opposes H.J. Res 98 in the strongest terms and will educate union membership on any floor vote outcome. The NLRB's released joint employer standard returns the country to prior precedent, and strengthens the legal right of millions of workers across this country to collectively bargain with their appropriate employer(s). Again, I urge you to support this new standard and oppose H.J. Res. 98. Sincerely, David McCall, International President. ____ November 20, 2023. Re NLRB Joint Employer Rule CRA. Hon. Charles Schumer, Hon. Mitch McConnell, Hon. Bernie Sanders, Hon. Bill Cassidy, U.S. Senate, Washington, DC. Hon. Mike Johnson, Hon. Hakeem Jeffries, Hon. Virginia Foxx, Hon. Robert ``Bobby'' C. Scott, House of Representatives, Washington, DC.

Dear Members of Congress: The undersigned organizations write to share our opposition to the Congressional Review Act (CRA) challenge to the National Labor Relations Board's 2023 Joint Employer Rule.

Millions of workers in precarious and subcontracted work depend on the joint-employer doctrine to protect their right to organize under the NLRA. In labor-intensive and underpaid industries like retail, hospitality, fast food, janitorial, construction, and delivery, workers hired through intermediary subcontractors like staffing agencies and specialized contract firms are effectively deprived of their labor rights because the law fails to recognize who their employers are. They provide work central to the hotels, retail operators, fast food chains, construction contractors, delivery companies, and other corporations that rely on their labor, but are unable to hold those employers accountable when their labor rights are violated. While this harms a broad range of workers, it has particularly damaging impacts for women, Black workers, immigrants, people of color, and people with disabilities who disproportionately hold precarious, low-paid jobs.

The Board's new rule reaffirms that, under the NLRA, a worker may be jointly-employed when more than one entity shares or co-determines the essential terms and conditions of their work. What matters is not the corporate structure or what the companies call the work relationship; what matters is who has the power to control the essential terms of employment, like pay, discipline, and health & safety on the job.

Now, large corporations and industry trade groups are pushing Congress to vote for a CRA resolution to overturn the rule. Despite the claims made by these self-interested groups, the joint employer rule is a simple and necessary course correction that:

Rescinds the misguided 2020 rule, which improperly narrowed the NLRA's coverage and unmoored the legal standard from the common law, by requiring workers to show that a business had ``substantial direct and immediate control'' over the essential terms of employment;

Grounds the legal analysis in the common law, building on the Obama-era Browning-Ferris decision that the 2020 Trump rule overrode;

Affirms that companies are liable for committing unfair labor practices (such as terminating workers for exercising their right to organize) and required to bargain with their workers as joint employers, where they control the essential terms and conditions of employment;

Accounts for forms of control that are ``indirect'' and ``reserved,'' as well as direct and actually exercised, in determining whether or not there is an employment relationship; and

Recognizes that the ``essential terms and conditions of employment'' include workplace health and safety, and direction as to how to complete the work, as well as control over pay and discipline.

This rule is a major step toward safeguarding the labor rights of millions of workers in subcontracted employment, ensuring that corporations cannot skirt the law simply by outsourcing responsibility for their workers. Should a CRA to overturn this rule be brought to the floor, we strongly urge all Members of Congress to vote No. Sincerely,

A Better Balance; AFL-CIO; American Federation of State, County, and Municipal Employees (AFSCME); APALA; Asian American Pacific Islander Civic Engagement Collaborative of New Virginia Majority; Bruckner Burch PLLC; Care in Action; Caring Across Generations; Center for Economic and Policy Research; Center for Law and Social Policy; Cincinnati Interfaith Workers Center; Clearinghouse on Women's Issues; Communications Workers of America (CWA); Community Legal Services, Philadelphia; Congregation of Our Lady of Charity of the Good Shepherd, U.S. Provinces.

CRLA Foundation; Demand Progress; Demos; Economic Policy Institute; Endangered Species Coalition; Equal Rights Advocates; Feminist Majority Foundation; Impact Fund; International Brotherhood of Teamsters; Japanese American Citizens League (JACL); Jobs to Move America; Jobs With Justice; Justice & Accountability Center of Louisiana; Justice at Work; Justice in Motion.

Kentucky Equal Justice Center; KIWA; Lawyers' Committee for Civil Rights Under Law; Legal Aid at Work; Long Beach Alliance for Clean Energy; National Advocacy Center of the Good Shepherd; National Center for Law and Economic Justice; National Council for Occupational Safety and Health; National Domestic Workers Alliance; National Education Association; National Employment Lawyers Association; National Employment Law Project (NELP); National Institute for Workers' Rights; National Organization for Women; National Partnership for Women & Families.

National Resource Center on Domestic Violence; National Women's Law Center; New Jersey Association on Correction; North Carolina Justice Center; Northwest Workers' Justice Project; Public Justice Center; Restaurant Opportunities Centers United; Santa Clara County Wage Theft Coalition; Service Employees International Union; Shriver Center on Poverty Law; TechEquity Collaborative; The Leadership Conference on Civil and Human Rights; The Legal Aid Society; The Women's Employment Rights Clinic (WERC) at Golden Gate University (GGU); Transport Workers Union of America.

UAW; United Brotherhood of Carpenters and Joiners of America; United Food and Commercial Workers International Union (UFCW); Women Employed; Worker Justice Center of New York; Worker Power Coalition; Workers Defense Action Fund; Workplace Fairness; Workplace Justice Lab at Rutgers University; Workplace Justice Project at Loyola Law Clinic; Worksafe; Young Invincibles.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Madam Speaker, I reserve the balance of my time.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Madam Speaker, I yield 2 minutes to the gentlewoman from Texas (Ms. Jackson Lee).

Ms. JACKSON LEE. Madam Speaker, I want to answer the question: Can't we all get along?

There is no doubt of Democrats' promotion and support of small businesses. They are in my district. We work every day to make sure they have access to credit and that they are able to pay their workers and benefit from programs like the PPP during COVID.

I don't know how many small businesses stop me to say we were a lifeline, the Democrats who passed the American Rescue Act and many other ways of helping.

Today, we rise to oppose what is not bringing people together; it is dividing people.

H.J. Res. 98 is another extreme attack on workers, and it undercuts the NLRB's ability to address workplace conditions in a fair and equitable manner. As we know, on October 27, 2023, the NLRB published a final rule addressing the standard for determining joint employer status. It is important to highlight the following facts in support of this rule.

The rule is not to be against businesses, small businesses, or workers. It is, in fact, to be able to ensure good quality of work. Employees need to be able to collectively bargain with both joint employers to ensure the parties calling the shots are at the table.

This requirement is particularly important for employees of subcontractors and staffing agencies, such as janitors, housekeepers, cooks, and many others. They work on behalf of a company that directs their work but does not sign their paycheck.

I can assure you this can be a win-win situation, a good quality of life for our employees, great income for our small businesses, and a reasonable response to people's hard work.

Mr. Speaker, I rise to oppose H.J. Res. 98 because I stand for small businesses and for the workers. That is what Democrats do.

Mr. Speaker, I rise today in strong opposition to H.J. Res. 98, a joint resolution to disapprove the National Labor Relations Board's rule relating to a ``Standard for Determining Joint Employer Status''.

H.J. Res. 98 is yet another extreme attack on workers and undercuts the National Labor Relations Board's (NLRB) ability to address workplace conditions in a fair and equitable manner.

As we know, on October 27, 2023, the NLRB published a final rule addressing the Standard for Determining Joint-Employer Status.

It is important to highlight the following facts in support of this final 2023 rule:

The 2023 rule establishes that, under the National Labor Relations Act, two or more entities may be considered joint employers of a group of employees if each entity has an employment relationship with the employees, and if the entities share or codetermine one or more of the employees' essential terms and conditions of employment.

This 2023 rule rescinds and replaces the 2020 final rule that was promulgated by the prior Board and which took effect on April 27, 2020.

The 2023 rule more faithfully grounds the joint-employer standard in established common law agency principles.

In particular, the 2023 rule considers the alleged joint employers' authority to control essential terms and conditions of employment, whether or not such control is exercised, and without regard to whether any such exercise of control is direct or indirect.

The common law clearly recognizes that reserved control and indirect control are relevant to the analysis.

And including reserved control is important to account for situations in which an alleged joint employer maintains authority to control essential terms and conditions of employment but has not yet exercised such control.

The reality is that an entity holding such control may step in at any moment to affect essential terms.

Indeed, even when the entity remains on the sidelines, it may cast a shadow over the other employer's decision-making with respect to such terms.

By contrast, the 2020 rule made it easier for actual joint employers to avoid a finding of joint-employer status because it set a higher threshold of ``substantial direct and immediate control'' over essential terms of conditions of employment, which has no foundation in common law.

In the 2023 rule, the joint-employer standard is only implicated if an entity employs the workers at issue and has authority to control at least one of these terms or conditions. Authority over other matters is not sufficient.

With passage of H.J. Res. 98, my colleagues across the aisle are now seeking to invalidate this 2023 rule that replaces the Trump-era regulation in the 2020 rule that was purposefully crafted to restrict workers' rights and undermine their legitimate organizing efforts.

Thus, this resolution seeks to invalidate the 2023 rule and quite simply weaken essential labor protections for working people across the economy.

We cannot roll back necessary protections for our American workers.

We must acknowledge the following harms that would result from the passage of H.J. Res. 98, because it would do the following:

Undermine workers and their collective bargaining. This disapproval resolution would prevent workers from comprehensive collective bargaining with all entities that have control over their employment;

Prohibit employer accountability. Employers should not be able to hide behind subcontractors, staffing agencies or temporary placement services when failing to provide fair wages and safe working conditions; and

Backtrack to Trump's regressive joint employer standard. The new 2023 Joint Employer standard is based on common-law agency principles. However, a disapproval resolution will restore the previous version of this standard issued by the Trump Administration.

Yes, H.J. Res. 98 undermines workers and their collective bargaining.

The National Labor Relations Board finalized a new Standard for Determining Joint-Employer Status that established that two or more entities may be considered joint employers if each has an employment relationship with the employees and has influence over the essential terms and conditions of employment.

Once deemed a joint employer, workers would be able to negotiate with all parties that hold influence over their employment.

With this CRA, House Republicans are undermining workers as they collectively bargain for higher wages, better benefits and safer working conditions.

This Republican-led CRA prohibits employer accountability.

Many employers have shielded themselves from accountability by using subcontractors, staffing agencies or temporary agencies. This new Joint Employer standard will ensure that any company with control over employees is responsible for those employees.

Temporary employment increased by almost 63 percent between April 2020 and July 2022, rapidly outpacing the growth of overall employment.

This has serious implications for workers potentially subject to subpar wages, training and work conditions found in staffing agencies when compared to direct-hire counterparts.

If H.J. Res. 98 were to become law, it would revoke the new standard and return to the previous version issued under the Trump Administration which enabled companies to more easily evade a joint- employer status and had no foundation in common law.

We must not allow extreme agendas to sabotage the tireless work of the National Labor Relations Board to safeguard workers' rights and address unfair labor conditions.

Workers have the right to bargain for fair wages and working conditions with every company that directly or indirectly controls their terms and conditions of employment.

Too often, companies deny workers this right by hiding behind subcontractors, staffing agencies, and temporary agencies.

Reversing this rulemaking will prevent workers from exercising their right to bargain for higher wages, better benefits, and safer working conditions.

Simply put, this legislation would mean lower wages for working families. This is beyond unacceptable and must be rejected.

I therefore urge my colleagues to oppose H.J. Res. 98, a joint resolution to disapprove the National Labor Relations Board's rule relating to a ``Standard for Determining Joint Employer Status''.

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.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. 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.

BREAK IN TRANSCRIPT

Source