August 28, 2015
ATLANTA, Aug. 28, 2015 /PRNewswire-USNewswire/ — Today, the Job Creators Network (JCN) is highlighting how the National Labor Relation Board’s (NLRB) joint-employer ruling yesterday in Browning-Ferris threatens the burgeoning sharing economy, the successful franchise system, and the longstanding subcontracting model in this country.
The ruling broadens the definition of employer from those who exercise direct control over wages, benefits, and working conditions to entities that have the mere “right” to exercise “indirect” control over employment terms in an effort to overcome perceived or manufactured bargaining limitations resulting from employer business relationships.
The expansion of joint employer to this new ambiguous standard could increase liability, regulatory burdens, litigation and other expense inside countless business relationships. The new definition throws employees, unions, and employers into positions of legal limbo, uncertainty, and unpredictability regarding the definition of who is an “employer.”
According to the dissenting opinion this ruling will have a disruptive effect on business relationships including user-supplier, lessor-lessee, parent-subsidiary, contractor-subcontractor, franchisor-franchisee, predecessor-successor, creditor-debtor, and contractor-consumer. These relationships are key to the success of the American economy and the existence of millions of good jobs.
JCN is also questioning the legality of the decision, which misconstrues the NLRB’s right to determine who an employer is with the authority to modify the employer standard itself. The power to redefine economic policy like this is an authority that rests with Congress, not three unaccountable bureaucrats with a history of labor union sympathy.
Specifically JCN is highlighting four problems with the ruling that jeopardize millions of business relationships under the National Labor Relations Act:
- Overly broad and vague. The rule’s inclusion of all entities that have a “right” to exercise “indirect” control over employment terms subjects an untold number of entities to a new definition of “employer.” This throws management and employee relationships into unchartered waters. Certainty and predictability are replaced by ambiguity and circularity in determining who is the employer in a workplace.
- Based on flawed premise about a changing workplace. The NLRB 3-2 majority bases its decision on the premise that the joint employer definition must be changed to keep up with new innovations in the economy, however the principles underlying the basic employment relationship remain the same. Since the last legislative update, neither Democrat- nor Republican-controlled Congresses have seen the need to change the definition of employer because it works for both sides.
- Prevents people from being their own bosses. Contractors, consultants, and franchisees will see their ability to be their own bosses taken away.
- Government Overreach. The NLRB decision confuses its mandate to define employer with the authority to modify the employer standard itself. The authority for this redefinition of national economic policy rests with Congress, not unelected bureaucrats.
“Clear and predictable laws defining the employer have allowed a wide variety of business relationships to flourish in this country,” said Shelly Sun, CEO of Brightstar Care and member of the Job Creators Network. “Foremost among these is the franchise system, which has allowed 825,000 franchise businesses to generate more than 2.1 Trillion economic output to the U.S. economy and produce more than 18 million direct and indirect jobs.”
“The NLRB 3-2 majority is high-jacking millions of business contractual relationships,” said Alfredo Ortiz, president and CEO of the Job Creators Network, “This is one more burdensome NLRB decision that will have the unintended consequences of hurting rather than helping job creation.”