A few weeks ago, I wrote about a number of the less-publicized but nevertheless important policy changes brought about by the Trump administration. These initiatives are not the stuff of bold headlines but rather sector-specific injunctions that have serious impact on job creation and economic growth.
The list of such hoped-for policy reversals is indeed long, but rational partisans understand that even "to do lists" must be prioritized in a slow moving body such as Congress. The question then becomes which Obama-era policies are causing the most damage to job producers and what is the most efficient way to remedy the situation?
One issue that fits the bill is the Obama National Labor Relations Board's not-so-improved definition of "joint employer" – what was a term of art in labor law until a progressive board majority saw an opportunity to feed its labor boss constituency.
The dirty deed was accomplished by changing the definition of employer from those exercising direct workplace control over employees to those having "indirect" or "reserved" control. Such an extraordinary definitional stretch subjects employers to increased liability for the actions of "employees" they have neither hired nor exercised control over. Another intended byproduct is more dues-paying worker bees pumping ever more money into union coffers – and more campaign contributions out the door to their Democratic Party beneficiaries.
For those not practiced in the language of labor law, think of your local McDonald's, Wendy's, Burger King, Arby's. The vast majority of these businesses are franchises owned and operated by entrepreneurs subject to a franchise agreement. (A few "company stores" retain company ownership.) The franchise owner manages and runs the operation, including employment decisions with respect to hiring and firing.
One impact of the NLRB's decision has been to freeze engagement of new franchisees. Fewer locations means fewer jobs and less growth, but franchisors simply do not need the headache of being held legally responsible for employees they do not control.
There are two primary reasons why this change of policy has hit home in the small business world, where 85 percent of new jobs are produced.
First is the reality of overturning 30-years worth of clearly established law – not such a big deal to progressives engaged in the act of transforming the country, especially the modern workplace, but a very big deal to corporations that wish to expand through a franchise model and aspiring franchisees who dream of owning their own business.
Second, it was the small business community and the people they employ that defined the Trump "movement" – a political coalition borne of the Obama era's slow economic growth whose members registered historic turnout in Rustbelt states on Election Day. You can still see them from time-to-time on your television screen at continuing Trump "campaign" rallies. They are the ones wearing the red "Make America Great Again" hats. They are also the ones worried that economic stagnation through overregulation and over-taxation is killing the working class.
Herein is a clash of major political players during a time of sustained inadequate growth. On the one hand is a progressive NLRB in cahoots with organized labor seeking to amend a principle of labor law universally accepted over the last 30 years in order to generate new paying members (and increase employer legal exposure) during a time private sector union membership continues to suffer a precipitous decline. On the other side of the aisle are small businesses weary after eight long years of playing defense as an Obama-controlled NLRB majority did its best to enact organized labor's agenda through administrative fiat (a game effort that was only slowed down by periodic adverse court decisions).
But that was then. President Trump's Labor Secretary Alexander Acosta has now withdrawn an Obama-era "guidance document" that expanded employer liability. This decision will assuredly be followed by additional moves to reverse Obama-era overreach. A conservative, small business-friendly GOP Congressional majority stands ready to assist, as does President Trump whose entire presidency rides on his ability to kick-start the job creation machine into the neighborhood of 3 percent annual growth.
Present and prospective employers and employees have much at stake. Numerous bills and appropriations riders have been introduced in both chambers of Congress in order to remedy this egregious decision. For now, the DOL's guidance recall is a significant first step in the right direction. But Congress needs to follow suit – and soon.
Gov. Robert Ehrlich is a Washington Examiner columnist, partner at King & Spalding and author of three books, including the recently released Turning Point. He was governor of Maryland from 2003 - 2007.
Disclosure: King & Spalding LLC represents The International Franchise Association.