CEI Leads Coalition Letter Supporting Save Local Business Act (H.R. 3441)

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Dear Member of Congress:

The undersigned organizations write in strong support of legislation, the Save Local Business Act (H.R. 3441), sponsored by Rep. Bradley Byrne (R-Ala.). This bill would restore and harmonize National Labor Relations Act and Fair Labor Standards Act standards on when two or more businesses are deemed to be joint employers. Congressional action is urgent and necessary to fix a problem—caused by the National Labor Relations Board (NLRB)—that is negatively impacting countless small businesses and their employees nationwide.

Prior to August 2015, the standard used by the NLRB made it easy to understand who is and is not a joint employer. A joint employer relationship existed when one company exercised “direct and immediate” control over another company’s workforce. But under the NLRB’s new definition, as stated in the case Browning Ferris Industries, joint employer liability could be triggered by a company exercising vaguely defined indirect control or unexercised potential control. Even a code of corporate social responsibility for business partners could be found to establish joint employer status.

H.R. 3441 would reinstate the longstanding definition of what constitutes a joint employer. For decades, that standard and legal framework helped foster the creation of thousands of beneficial business relationships. It allowed entrepreneurs to launch franchise businesses and for contractors to thrive.

A policy that makes businesses liable for the practices of their contractors and will cause companies to make changes that leave people worse off, such as ending those relationships with smaller businesses. That means fewer job opportunities, fewer opportunities for entrepreneurs, and fewer chances for American businesses to grow and create jobs.

Employers that have contractual arrangements with franchisees and other small businesses could be forced to take greater control of their operations to mitigate the nearly unlimited liability to which the new joint employer standard could expose them. Many independent small businesspeople value the autonomy and flexibility of being their own boss. Many of these job creators have expressed fears about how they will lose autonomy that made them want to start a business.

Those fears are well founded. Research from the American Action Forum suggests failing to revert to the “direct and immediate” control standard could inflict devastating impact on the economy. They estimated that the NLRB’s new joint employer standard could result in 1.7 million fewer jobs.

Congress should restore the traditional joint employer standard that has served all stakeholders—workers, consumers, and employers—well for decades. Government policies should promote, not harm, innovation, flexible work arrangements, and entrepreneurship.

For these reasons, we urge you to vote Yes on Rep. Byrne’s H. R. 3441. Thank you for considering our views.

Iain Murray, Vice President for Strategy

Competitive Enterprise Institute

Phil Kerpen, President

American Commitment

Lisa B. Nelson, CEO

ALEC Action

Dee Stewart, President

Americans for a Balanced Budget

Rick Manning, President

Americans for Limited Government

Chrissy Harbin, Vice President of External Affairs

Americans for Prosperity

Grover Norquist, President

Americans for Tax Reform

Norman Singleton, President

Campaign for Liberty

Steven J. Allen, Vice President & Chief Investigative Officer

Capital Research Center

Steve Buckstein, Founder

Cascade Policy Institute

Ginvera Joyce Meyers,

Executive Director

Center for Innovation and Free Enterprise

Timothy Lee, Senior Vice President for Legal and Public Affairs

Center for Individual Freedom

Matt Patterson, Executive Director

Center for Worker Freedom

Andrew F. Quinlan, President

Center for Freedom and Prosperity

Matthew Kandrach, President

Consumer Action for a Strong Economy

Robert Roper, President

Ethan Allen Institute

Jason Pye, Vice President of Legislative Affairs

FreedomWorks

David Barnes, Policy Director

Generation Opportunity

Andresen Blom, Executive Director

Grassroot Hawaii Action

Michael A. Needham, CEO

Heritage Action for America

Mario H. Lopez, President

Hispanic Leadership Fund

Heather R. Higgins, President and CEO

Independent Women’s Voice

Andrew Langer, President

Institute for Liberty

Sal J. Nuzzo, Vice President of Policy

The James Madison Institute

Pete Sepp, President

National Taxpayers Union

Karen Kerrigan, President & CEO

Small Business & Entrepreneurship Council

David Williams, President

Taxpayers Protection Alliance

Judson Phillips, Founder

Tea Party Nation

Susan W. Gore, Founder

Wyoming Liberty Group