The Trump administration’s greatest, and perhaps most underappreciated, achievement has been its ability to unwind Obama-era regulations and unleash the potential of American workers and entrepreneurs. In its first year, the Trump administration eliminated more regulations than any administration in history. The administration’s deregulatory tenacity, combined with Congress’ passage of the Tax Cuts and Jobs Act, has made former President Barack Obama’s “new normal” of anemic growth seem abnormal and unacceptable.
Today, the economy is growing at a healthy clip again. Our annual growth is approaching 3 percent, which is almost twice the growth rate under Obama. Unemployment is at its lowest level in nearly two decades. And more than 300 American companies have increased hiring, boosted wages, given bonuses or increased benefits since tax reform became law.
The administration and Congress should double down on what’s working. This should include advancing a deregulation 2.0 agenda that will give America’s innovators and job creators an even greater boost.
One of the greatest threats to American businesses today comes from a National Labor Relations Board decision made in the waning days of the Obama administration that wrongly defined local franchises and the franchise headquarters as “joint employers.” This designation needlessly exposes local franchises to severe liability risks under national labor laws. OMB Director Mick Mulvaney recently said the NLRB’s decision could result in the “end of the franchising business as we know it.”
Under the traditional and long-standing definition, if a franchisor, or national brand headquarters, did not exert “direct control” over a franchisee’s employees — which in fact they do not — they were not deemed to be a joint employer. Under the new NLRB standard, however, any entity exercising “indirect or potential control” over employees can be considered a joint employer and exposed to liability under national labor laws. The NLRB’s action, which attempted to solve a problem that did not exist, created a liability crisis for businesses across the country.
This issue is a serious threat to franchise business models across the country. This model is critically important in my home state. Kansas’ 9,000 franchise businesses employ 89,000 individuals. Franchising is an avenue to entrepreneurship, utilized by start-up small business owners like Title Boxing and Carstar located in Kansas, and well-established brands like Pizza Hut, and Freddy’s Frozen Custard and Steakburgers, both founded in Wichita. Franchising supports other sectors as well. Whenever a new franchise storefront opens, the location needs to be renovated or built. This process employs construction crews, landscapers, and more. Franchising also impacts manufacturing and agriculture sectors that make materials and machines and produce the food franchises often buy.
Members of Congress on both sides of the aisle are working to solve this problem. The “Save Local Business Act” (H.R. 3441), which passed the House last November with bipartisan support, is intended to correct the vague joint employer regulation. Because the bill has stalled in the Senate, the best way to ensure swift action on this bipartisan solution is to include it in the omnibus appropriations bill. That’s why I’m urging House and Senate leadership to provide clarity now and fix this disastrous Obama-era regulation. The vote for the omnibus appropriations bill could come as early as this week, so now is our opportunity to take care of this issue and continue growing our economy.
The country can’t afford to let this unique chance to provide relief to our nation’s small business owners slip away. Congress must act and tell the NLRB it can’t change established precedent through regulation without congressional approval. Exposing small businesses to the whipsaw of liability exposure stymies potential growth, higher wages, and job creation.
The Trump administration has made tremendous gains through deregulation. Overruling the NLRB’s wrongheaded joint employer ruling will give the country more of what’s working. Congress should take this extra step and provide commonsense relief to our small business owners and their employees struggling under the burden of unclear regulations.
Rep. Ron Estes, a Republican, represents Kansas’ fourth congressional district. You can follow him on Twitter: @RepRonEstes
