Democrats attacked bipartisan legislation to amend the National Labor Relations Act and the Fair Labor Standards Act, saying Thursday that the bill would undermine workers’ rights. The legislation would roll back an Obama administration-era legal standard that vastly increased legal liability for corporations, especially those that franchise their brands.
“While framed as a bill to help protect the independence of small businesses that operate as franchisees, legal experts point out that the bill will insulate franchisers from liability. H.R. 3441 will likely harm small franchisees by leaving them on the hook for their franchisers’ decisions,” said Rep. Bobby Scott, D-Va., the top Democrat on the House Education and the Workforce Committee.
The legislation would amend the NLRA and FLSA to clarify that a business can be held liable for workplace conditions at another business only when it has “direct control” over those conditions. That was the long-held standard until 2014, when the National Labor Relations Board, the main federal labor law enforcement agency, adopted a much vaguer “indirect control” standard. It has used this expanded standard to pursue a major case against McDonald’s Corp., arguing that it is responsible for violations by its franchisees even though most are independent businesses that rent out the corporate brand. Other federal agencies adopted the same standard during the Obama administration.
Republicans and business groups have been highly critical of the move, arguing that the NLRB’s definition would harm the economy by making businesses reluctant to franchise at all. Labor Secretary Alexander Acosta formally announced last month that the department would no longer use the standard. The House Appropriations Committee passed a spending bill this month that would prohibit the NLRB, an independent agency, from using the expanded standard.
Critics nevertheless believe broader legislation is needed to prevent private lawsuits that would invoke the NLRB’s standard. On Thursday, Reps. Bradley Byrne, R-Ala., Virginia Foxx, R-N.C., chairwoman of the House Education and the Workforce Committee, Tim Walberg, R-Mich., and Henry Cuellar, D-Texas, introduced legislation to codify direct control as the standard.
Rep. Mark Takano, D-Calif., said the legislation would merely protect bad actors in business. “The joint employer standard under the National Labor Relations Act and the Fair Labor Standards Act prevents employers from outsourcing accountability for complying with workplace laws. The legislation introduced today weakens that standard and it weakens American workers’ ability to hold employers responsible for wage theft, unfair labor practices, and other violations of workplace rights.”
