Business Groups Push Congress to Clarify Joint Employer Standard

FEDA has joined other business groups and trade associations in urging Congress to pass legislation that would define a business as a joint employer only if it has direct and immediate control over workers’ essential terms and conditions of employment.

Rep. James Comer (R-KY) is expected to reintroduce the Save Local Businesses Act, which would amend the National Labor Relations Act and the Fair Labor Standards Act to clarify which businesses can be considered a joint employer. The joint employer standard has changed during the last several presidential administrations, as officials have, at times, attempted to broaden the definition to encompass a wider range of businesses. The Biden administration was the last to expand the standard to include any entity that had indirect or even unexercised reserved control over another company’s workforce. This significantly increased thousands of employers’ liability and responsibility under the law, including requiring them to participate in collective bargaining for employees they may not directly control.

If the Biden administration’s standard was implemented, it would affect nearly every business that contracts for labor and decimate the franchise model many industries rely upon. In a letter to Congress, business groups said the Save Local Businesses Act would prevent this scenario by codifying the traditional joint employer standard into the NLRA and FLSA, creating clarity and predictability for employers. “It would safeguard pathways to the American Dream by protecting proven business models that allow small businesses and entrepreneurs to offer their services, expand, and thrive,” the letter states.

The full letter is available here.