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115th Congress                                                 Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                  115-379

======================================================================



 
                        SAVE LOCAL BUSINESS ACT

                                _______
                                

November 1, 2017.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Ms. Foxx, from the Committee on Education and the Workforce, submitted 
                             the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 3441]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 3441) to clarify the treatment of two 
or more employers as joint employers under the National Labor 
Relations Act and the Fair Labor Standards Act of 1938, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Save Local Business Act''.

SEC. 2. CLARIFICATION OF JOINT EMPLOYMENT.

  (a) National Labor Relations Act.--Section 2(2) of the National Labor 
Relations Act (29 U.S.C. 152(2)) is amended--
          (1) by striking ``The term `employer''' and inserting ``(A) 
        The term `employer'''; and
          (2) by adding at the end the following:
  ``(B) A person may be considered a joint employer in relation to an 
employee only if such person directly, actually, and immediately, and 
not in a limited and routine manner, exercises significant control over 
essential terms and conditions of employment, such as hiring employees, 
discharging employees, determining individual employee rates of pay and 
benefits, day-to-day supervision of employees, assigning individual 
work schedules, positions, and tasks, or administering employee 
discipline.''.
  (b) Fair Labor Standards Act of 1938.--Section 3(d) of the Fair Labor 
Standards Act of 1938 (29 U.S.C. 203(d)) is amended--
          (1) by striking ```Employer' includes'' and inserting ``(1) 
        `Employer' includes''; and
          (2) by adding at the end the following:
  ``(2) A person may be considered a joint employer in relation to an 
employee for purposes of this Act only if such person meets the 
criteria set forth in section 2(2)(B) of the National Labor Relations 
Act (29 U.S.C. 152(2)(B)).''.

                                Purpose

    H.R. 3441, the Save Local Business Act, provides a 
commonsense standard under the National Labor Relations Act 
(NLRA) and Fair Labor Standards Act (FLSA) for determining 
whether a joint employment relationship exists. The bill 
restores the long-held standard for determining joint employer 
status under the NLRA that was overturned by a decision of the 
National Labor Relations Board (NLRB or the Board). 
Additionally, the bill provides a uniform joint employer 
standard under the FLSA. Specifically, H.R. 3441 amends the 
NLRA and FLSA to allow two or more employers to be considered 
joint employers only if each shares and exercises actual, 
direct, and immediate control over essential terms and 
conditions of employment. In doing so, the bill protects the 
independence of businesses, in particular small businesses such 
as franchisees and subcontractors.

                            Committee Action


                             113TH CONGRESS

Subcommittee hearing on NLRB issues

    On June 24, 2014, the Subcommittee on Health, Employment, 
Labor, and Pensions (HELP) held an NLRB oversight hearing 
titled ``What Should Workers and Employers Expect Next from the 
National Labor Relations Board?'' Witnesses were Mr. Andrew F. 
Puzder, CEO, CKE Restaurants Holdings, Inc., Carpinteria, 
California; Mr. Seth H. Borden, Partner, McKenna Long & 
Aldridge, New York, New York; Mr. James B. Coppess, Associate 
General Counsel, AFL-CIO, Washington, D.C.; and Mr. G. Roger 
King, Of Counsel, Jones Day, Columbus, Ohio. Witnesses 
discussed upcoming NLRB cases as well as Board policy and cited 
changes to the joint employer standard as one of the most 
significant and controversial issues before the Board at that 
time.

Subcommittee hearing on potential changes to the NLRB's joint employer 
        standard

    On September 9, 2014, the HELP Subcommittee held a hearing 
on potential changes to the NLRB's joint employer standard 
titled ``Expanding Joint Employer Status: What Does It Mean for 
Workers and Job Creators?'' Witnesses were Mr. Todd Duffield, 
Shareholder, Ogletree, Deakins, Nash, Smoak & Stewart, Atlanta, 
Georgia; Mr. Clint Ehlers, President, FASTSIGNS of Lancaster 
and Willow Grove, Lancaster and Willow Grove, Pennsylvania, 
testifying on behalf of the International Franchise 
Association; Mr. Harris Freeman, Professor, Western New England 
University School of Law, Springfield, Massachusetts; Ms. 
Catherine Monson, Chief Executive Officer, FASTSIGNS 
International, Inc., Carrollton, Texas, testifying on behalf of 
the International Franchise Association; and Mrs. Jagruti 
Panwala, owner of multiple hotel franchises in the northeastern 
United States, Bensalem, Pennsylvania. Witnesses spoke about 
how an expanded joint employer standard would negatively impact 
franchises and other small businesses.

                             114TH CONGRESS

Subcommittee field hearing in Mobile, Alabama

    On August 25, 2015, the HELP Subcommittee held a field 
hearing titled ``Redefining `Employer' and the Impact on 
Alabama's Workers and Small Business Owners'' in Mobile, 
Alabama, in anticipation of the NLRB creating a new joint 
employer standard. Witnesses were Mr. Marcel Debruge, Burr and 
Forman LLP, Birmingham, Alabama; Mr. Chris Holmes, CEO, CLH 
Development Holdings, Tallahassee, Florida; and Col. Steve 
Carey, USAF, Ret., Owner and Operator, CertaPro Painters of 
Mobile and Baldwin Counties, Daphne, Alabama, testifying on 
behalf of the Coalition to Save Local Businesses and the 
International Franchise Association. Witnesses testified the 
new joint employer standard would threaten the independence of 
small businesses in Alabama and deter franchisors from 
licensing new franchisees.

Subcommittee field hearing in Savannah, Georgia

    On August 27, 2015, the HELP Subcommittee held a field 
hearing titled ``Redefining `Employer' and the Impact on 
Georgia's Workers and Small Business Owners'' in Savannah, 
Georgia, regarding the NLRB's joint employer standard. 
Witnesses were Mr. Jeffrey M. Mintz, Shareholder, Littler 
Mendelson, P.C., Atlanta, Georgia; Mr. Kalpesh ``Kal'' Patel, 
President and COO, Image Hotels, Inc., Pooler, Georgia; Mr. 
Alex Salguerio, Savannah Restaurants Corp., Savannah, Georgia; 
and Mr. Fred Weir, President, Meadowbrook Restaurant Company 
Inc., Cumming, Georgia, testifying on behalf of the Coalition 
to Save Local Businesses and the International Franchise 
Association. Witnesses testified the new joint employer 
standard would hurt small business growth in Georgia and create 
barriers to entry for potential franchise owners.

Introduction of H.R. 3459, Protecting Local Business Opportunity Act

    On September 9, 2015, then-Committee on Education and the 
Workforce (Committee) Chairman John Kline (R-MN) introduced 
H.R. 3459, the Protecting Local Business Opportunity Act. 
Recognizing the threat to small businesses posed by the NLRB's 
August 2015 decision in Browning-Ferris Industries of 
California, Inc. (Browning-Ferris),\1\ the legislation amended 
the NLRA to restore the long-held standard that two or more 
employers can only be considered joint employers for purposes 
of the Act if each shares and exercises control over essential 
terms and conditions of employment and such control over these 
matters is actual, direct and immediate. Chairman Lamar 
Alexander (R-TN) of the Senate Health, Education, Labor, and 
Pensions Committee introduced companion legislation, S. 2015, 
also on September 9, 2015.
---------------------------------------------------------------------------
    \1\362 NLRB No. 186 (2015).
---------------------------------------------------------------------------

Subcommittee Legislative Hearing on H.R. 3459, Protecting Local 
        Business Opportunity Act

    On September 29, 2015, the HELP Subcommittee held a 
legislative hearing on H.R. 3459, the Protecting Local Business 
Opportunity Act. Witnesses at the hearing were Mr. Ed Braddy, 
President, Winlee Foods, LLC, Timonium, Maryland, testifying on 
behalf of himself and the National Franchisee Association; Mr. 
Kevin Cole, CEO, Enniss Electric Company, Manassas, Virginia, 
testifying on behalf of the Independent Electrical Contractors; 
Mr. Charles Cohen, former Member of the NLRB and Senior 
Counsel, Morgan, Lewis & Bockius, LLP, Washington, D.C.; Ms. 
Mara Fortin, President and CEO, Nothing Bundt Cakes, San Diego, 
California, testifying on behalf of herself and the Coalition 
to Save Local Businesses; Mr. Michael Harper, Professor, Boston 
University School of Law, Boston, Massachusetts; and Dr. Anne 
Lofaso, Professor, West Virginia University College of Law, 
Morgantown, West Virginia. Witnesses testified H.R. 3459 would 
restore the joint employer standard that had worked well for 
workers and business owners for decades and would protect 
opportunities for small business growth.

Committee Passage of H.R. 3459, Protecting Local Business Opportunity 
        Act

    On October 28, 2015, the Committee considered and marked up 
H.R. 3459, the Protecting Local Business Opportunity Act. Rep. 
Buddy Carter (R-GA) offered an amendment in the nature of a 
substitute, making a technical change to clarify the Act. The 
Committee voted to adopt the amendment in the nature of a 
substitute by voice vote. The Committee then favorably reported 
H.R. 3459, as amended, to the House of Representatives by a 
vote of 21-15.

                             115TH CONGRESS

Subcommittee hearing on NLRB issues

    On February 14, 2017, the HELP Subcommittee held a hearing 
titled ``Restoring Balance and Fairness to the National Labor 
Relations Board.'' Witnesses decried the extreme, partisan 
decisions of the NLRB during the Obama administration, 
including the expanded joint employer standard. Witnesses were 
Ms. Reem Aloul, BrightStar Care of Arlington, Arlington, 
Virginia, testifying on behalf of the Coalition to Save Local 
Business; Ms. Susan Davis, Partner, Cohen, Weiss and Simon, 
LLP, New York, New York; Mr. Raymond J. LaJeunesse, Jr., Vice 
President, National Right to Work Legal Defense and Education 
Foundation, Springfield, Virginia; and, Mr. Kurt G. Larkin, 
Partner, Hunton & Williams LLP, Richmond, Virginia.

Full committee hearing on joint employer issues

    On July 12, 2017, the Committee held a hearing titled 
``Redefining Joint Employer Standards: Barriers to Job Creation 
and Entrepreneurship'' to examine the impact of expanding joint 
employer standards across federal labor laws, including the 
NLRA and the FLSA. Witnesses were Mr. Michael Harper, 
Professor, Boston University School of Law, Boston, 
Massachusetts; Mr. Richard Heiser, Vice President, FedEx Ground 
Package System, Inc., Chicago, Illinois; Mr. G. Roger King, 
Senior Labor and Employment Counsel, HR Policy Association, 
Washington, D.C.; Mr. Jerry Reese II, Director of Franchise 
Development, Dat Dog, New Orleans, Louisiana, testifying on 
behalf of the Coalition to Save Local Business; Ms. Catherine 
K. Ruckelhaus, General Counsel, National Employment Law 
Project, New York, New York; and Ms. Mary Kennedy Thompson, 
Chief Operating Officer of Franchise Brands,Dwyer Group, Waco, 
Texas, testifying on behalf of the International Franchise Association. 
Witnesses testified about the importance of reigning in expanding joint 
employer standards.

Introduction of H.R. 3441, Save Local Business Act

    On July 27, 2017, Subcommittee on Workforce Protections 
Chairman Bradley Byrne (R-AL) introduced H.R. 3441, the Save 
Local Business Act. In response to expanding joint employer 
standards under the NLRA and FLSA, the bill amends both laws to 
provide that two or more employers can only be considered joint 
employers if each shares and exercises control over essential 
terms and conditions of employment and such control over those 
matters is actual, direct, and immediate.

Joint subcommittee legislative hearing on H.R. 3441, Save Local 
        Business Act

    On September 13, 2017, the HELP and Workforce Protections 
Subcommittees held a joint legislative hearing on H.R. 3441. 
Witnesses were Mr. Zachary D. Fasman, Partner, Proskauer Rose 
LLP, New York, New York; Ms. Tamra Kennedy, President, Twin 
Cities T.J.'s Inc., Roseville, Minnesota, testifying on behalf 
of the Coalition to Save Local Business; Mr. Granger MacDonald, 
Chief Executive Officer, The MacDonald Companies, Kerrville, 
Texas, testifying on behalf of the National Association of Home 
Builders; and Mr. Michael Rubin, Partner, Altshuler Berzon LLP, 
San Francisco, California. Witnesses testified that H.R. 3441 
clarifies the joint employer standard used under both the NLRB 
and FLSA and benefits workers and business owners.

Committee passage of H.R. 3441, Save Local Business Act

    On October 4, 2017, the Committee considered and marked up 
H.R. 3441. Subcommittee on Workforce Protections Chairman Byrne 
offered an amendment in the nature of a substitute, making 
technical changes.\2\ The Committee voted to adopt the 
amendment in the nature of a substitute by voice vote. The 
Committee then favorably reported H.R. 3441, as amended, to the 
House of Representatives by a vote of 23 to 17.
---------------------------------------------------------------------------
    \2\The amendment in the nature of a substitute clarified that a 
list of terms and conditions of employment included in the act are 
examples of what can be considered in a joint employer analysis, but 
not a comprehensive list, and control of every term and condition is 
not required for joint employment to be found.
---------------------------------------------------------------------------

                                Summary

    The Save Local Business Act reaffirms that two or more 
employers must have ``direct, actual, and immediate'' control 
over employees to be considered joint employers. H.R. 3441 
provides needed clarity to the job creators, entrepreneurs, and 
workers who are being adversely impacted by expanding joint 
employer standards. In particular, the bill rolls back vague 
and convoluted joint employer schemes as created by the NLRB in 
Browning-Ferris,\3\ by the U.S. Court of Appeals for the Fourth 
Circuit with respect to the FLSA in Salinas v. Commercial 
Interiors, Inc. (Salinas),\4\ and by regulators and other 
courts. H.R. 3441 restores a commonsense definition of employer 
and protects workers and local employers from future overreach 
by unelected bureaucrats and activist judges.
---------------------------------------------------------------------------
    \3\362 NLRB No. 186 (2015).
    \4\848 F.3d 125 (4th Cir. 2017).
---------------------------------------------------------------------------

                            Committee Views


Background on the NLRB and the Browning-Ferris decision

    Enacted in 1935, the NLRA guarantees the right of most 
private-sector employees to organize and bargain collectively 
with employers through representatives of their choosing, or to 
refrain from such activities. The NLRB is an independent 
federal agency established by the NLRA to fulfill two principal 
functions: (1) determine whether employees wish to be 
represented by a union and (2) prevent and remedy employer and 
union unlawful acts, called unfair labor practices.
    From 1984 to August 2015, the NLRB determined whether two 
separate entities should be considered joint employers by 
analyzing whether the entities shared control over or co-
determined the essential terms and conditions of employment.\5\ 
Essential terms and conditions of employment could include 
hiring, firing, discipline, supervision, and direction of 
employees. Prior to Browning-Ferris, control over these 
employment matters needed to be ``actual, direct, and 
immediate'' for the Board to find two or more entities to be 
joint employers.\6\ Thus, under this standard, the Board rarely 
found joint employer status.\7\
---------------------------------------------------------------------------
    \5\TLI, Inc., 271 NLRB 798, 798-99 (1984), overruled by BFI, 362 
NLRB No. 186.
    \6\See Airborne Express, 338 NLRB 597, 597 n.1 (2002) (``[The] 
essential element in [joint employer] analysis is whether a putative 
joint employer's control over employment matters is direct and 
immediate.''); AM Prop. Holding Corp., 350 NLRB 998, 1000 (2007) (``In 
assessing whether a joint employer relationship exists, the Board . . . 
looks to the actual practice of the parties.'').
    \7\Prior to 1984, the joint employer standard was less well-defined 
under the NLRA, but was generally never as expansive as the new 
standard from Browning-Ferris.
---------------------------------------------------------------------------
    On August 27, 2015, the NLRB issued a 3-2 decision in 
Browning-Ferris that radically revised the joint employer 
standard, causing significant concern for every employer with a 
contractual relationship with a separate entity, including 
franchisees and subcontractors. Under the standard set forth in 
Browning-Ferris, companies sharing indirect or potential 
control over another's workforce may be considered joint 
employers. Under this standard, an employer could be held 
liable for the decisions of another entity--decisions of which 
the employer may not even be aware.
    In Browning-Ferris, a Teamsters local sought to organize 
recycling sorters directly employed by Leadpoint Business 
Services (Leadpoint), a subcontractor of Browning-Ferris 
Industries (BFI). The Teamsters asserted BFI was a joint 
employer with Leadpoint. An NLRB regional director applied the 
traditional joint employer standard and found BFI did not exert 
sufficient control over Leadpoint's employees to be a joint 
employer. He then directed an election with Leadpoint as the 
sole employer. The Teamsters appealed to the Board.
    In its decision, the Board adopted a new standard and found 
BFI was a joint employer with Leadpoint. In ruling BFI to be a 
joint employer, the Board found the temporary labor service 
agreement between the two employers indicated BFI's indirect 
control over Leadpoint's employees. This agreement included 
BFI's ability to reject employees referred by Leadpoint, set 
specific productivity standards of Leadpoint's employees 
through Leadpoint's supervisors, and set wage ceilings for 
Leadpoint's employees performing comparable work to BFI 
employees.\8\
---------------------------------------------------------------------------
    \8\Browning-Ferris Industries, 362 NLRB No. 186 at 18-20.
---------------------------------------------------------------------------
    The Board held that two or more entities are joint 
employers if (1) there is a common-law employment relationship 
with the employees in question and (2) the putative joint 
employer possesses sufficient control over employees' essential 
terms and conditions of employment to permit meaningful 
collective bargaining.\9\ The Board rejected the previous 
requirement that the joint employer's control be actual, 
direct, and immediate--overruling three decades of Board 
precedent.\10\ Instead, the ``right to control,'' even if it is 
not actually exercised, is evidence of joint employer 
status.\11\
---------------------------------------------------------------------------
    \9\Id. at 2.
    \10\Id. at 16.
    \11\Id.
---------------------------------------------------------------------------
    BFI has challenged the new joint employer standard at the 
U.S. Court of Appeals for the District of Columbia Circuit.\12\ 
Over a dozen stakeholders filed amicus briefs arguing against 
the new standard because it is too broad, creates legal 
uncertainty that will lead to more litigation, and overturns a 
clear, bright-line test. In contrast, the Equal Employment 
Opportunity Commission filed an amicus brief in support of the 
NLRB's new joint employer standard, noting the test's 
``flexibility.''\13\ Oral arguments were held on March 9, 2017, 
but the Court has not yet issued its decision.
---------------------------------------------------------------------------
    \12\Browning-Ferris Indus. of Cal., Inc. v. NLRB, Nos. 16-1028, 16-
1063 & 16-1064 (D.C. Cir. 2016).
    \13\Brief of the U.S. Equal Emp't Opportunity Comm'n as Amicus 
Curiae in Support of Respondent/Cross-Petitioner and in Favor of 
Enforcement, Browning-Ferris Indus. of Cal., Inc., Nos. 16-1028, 16-
1063 & 16-1064, at 6 (D.C. Cir.) (filed Sept.14, 2016).
---------------------------------------------------------------------------
    In July 2016, the NLRB expanded the potential impact of 
Browning-Ferris in Miller and Anderson.\14\ This case concerned 
a ``mixed'' bargaining unit consisting of workers solely 
employed by one employer and workers jointly employed by two 
employers. Such mixed bargaining units have the potential to 
create conflicts of interest between differing sets of 
employees and employers all combined into one unit. Previously, 
establishing a mixed bargaining unit required the consent of 
both employers. Instead, Miller and Anderson reverted to a 
standard briefly used between 2000 and 2004, where unions could 
petition for mixed bargaining units without employer consent. 
For such a unit to be formed, a joint employer relationship 
must first exist. As Browning-Ferris makes a finding of a joint 
employer relationship more likely, there will be increased 
opportunities for mixed bargaining units.
---------------------------------------------------------------------------
    \14\364 NLRB No. 39 (2016).
---------------------------------------------------------------------------
    Under Browning-Ferris, there is already the potential to 
force joint employers with conflicting interests to bargain 
together across the table from the union. Such conflicts of 
interest will likely only be exacerbated when bargaining units 
consist of solely employed and jointly employed workers.

The expanding joint employer standard under the FLSA

    Enacted in 1938, the FLSA is the primary federal statute 
setting forth employment rules concerning minimum wages, 
maximum hours, and overtime pay. The FLSA covers some 135 
million full- and part-time workers in the private sector and 
in federal, state, and local governments\15\ and specifies 
minimum wage, overtime pay, child labor, and record keeping 
standards.\16\
---------------------------------------------------------------------------
    \15\The FLSA applies to federal employees of the Library of 
Congress, the U.S. Postal Service, the Postal Rate Commission, and the 
Tennessee Valley Authority.
    \16\The FLSA specifically requires employers to maintain adequate 
records reflecting covered employees' hours of work and pay for all 
hours worked.
---------------------------------------------------------------------------
    Congress delegates authority to DOL to interpret the FLSA 
via regulations; however, state wage and hour laws are not 
preempted by the FLSA, so long as states' laws are more 
``protective'' of employees.\17\ In addition, the FLSA provides 
for enforcement actions by DOL and private litigation between 
employees and employers in which court interpretations further 
shape the contours of the law.
---------------------------------------------------------------------------
    \17\29 U.S.C. Sec. 218.
---------------------------------------------------------------------------
    The FLSA, like the NLRA, currently defines only the term 
employer, not joint employer. This lack of a definition has led 
federal courts to develop various tests for determining whether 
two entities have a joint employer relationship under the FLSA. 
Standards vary from one federal circuit to another. For 
example, the First and Third Circuits examine the potential 
joint employer's control over essential terms and conditions of 
employment, such as the power to hire and fire the 
employee.\18\ Another circuit looks to the ``economic reality'' 
of the relationship, such as whether the employee works 
primarily for the potential joint employer.\19\ For the most 
part, the courts' various tests come down to whether the 
putative employer exercises authority and control over the 
employee, as would be expected in a traditional employment 
relationship.
---------------------------------------------------------------------------
    \18\See In re Enter. Rent-A-Car Wage & Hour Emp't Practices Litig., 
683 F.3d 462, 468-69 (3d Cir. 2012); Baystate Alt. Staffing, 163 F.3d 
668, 675 (1st Cir. 1998).
    \19\See, e.g., Zheng v. Liberty Apparel Co., 355 F.3d 61, 71-72 (2d 
Cir. 2003).
---------------------------------------------------------------------------
    DOL's Wage and Hour Division issued an Administrator's 
Interpretation (AI) in January 2016 on joint employment under 
the FLSA, further compounding the lack of judicial clarity.\20\ 
The AI's analysis broadly interpreted joint employment under 
the FLSA, rejecting ``control [over essential terms and 
conditions of employment] as the standard for determining 
employment.''\21\ The Obama administration's DOL said the AI 
was needed because the growing variety and prevalence of 
business models--such as third-party management companies, 
independent contractors, and staffing agencies--have made joint 
employment more common. The AI also highlighted certain 
industries where joint employment issues are more prevalent: 
construction, temporary staffing, hospitality, janitorial 
services, warehouse and logistics, and agriculture. However, 
stakeholders argued the AI would increase litigation and 
encourage companies to alter their business models or risk 
being exposed to significant liability.
---------------------------------------------------------------------------
    \20\DEP'T OF LABOR, ADMINISTRATOR'S INTERPRETATION NO. 2016-1 (Jan. 
20, 2016).
    \21\Id.
---------------------------------------------------------------------------
    On June 7, 2017, Secretary of Labor Alexander Acosta 
announced the withdrawal of the AI on joint employment.\22\ 
However, the now-withdrawn AI's broad interpretation of joint 
employment indicates how the plaintiffs' bar and select judges 
are continuing to aggressively pursue the issue. Moreover, 
under future administrations, DOL's Wage and Hour Division 
could reissue the AI unless Congress amends the FLSA to 
preclude it.
---------------------------------------------------------------------------
    \22\News Release, U.S. Dep't of Labor, US Sec'y of Labor Withdraws 
Joint Employment, Indep. Contractor Informal Guidance (June 7, 2017), 
https://www.dol.gov/newsroom/releases/opa/opa20170607.
---------------------------------------------------------------------------
    This expansive approach was typified by a Fourth Circuit 
case decided this year. On January 25, 2017, the U.S. Court of 
Appeals for the Fourth Circuit adopted an expansive new joint 
employer standard under the FLSA in Salinas.\23\ In this case, 
Commercial Interiors subcontracted with J.I. General 
Contractors for drywall installation on a project. When 
employees of J.I. General Contractors sued for overtime wages 
under the FLSA, they named both J.I. General Contractors and 
Commercial Interiors as employers.
---------------------------------------------------------------------------
    \23\848 F.3d 125 (4th Cir. 2017).
---------------------------------------------------------------------------
    On appeal, the Fourth Circuit ruled Commercial Interiors 
was a joint employer with J.I. General Contractors. The Fourth 
Circuit used a new test to find joint employer status under the 
FLSA where ``two or more persons or entities are not completely 
disassociated with respect to a worker such that the persons or 
entities share, agree to allocate responsibility for, or 
otherwise codetermine--formally or informally, directly or 
indirectly--the essential terms and conditions of the worker's 
employment.''\24\ The Court identified six factors courts 
should use in making that finding, including ``[t]he degree of 
permanency and duration of the relationship between the 
putative joint employers.''\25\
---------------------------------------------------------------------------
    \24\Id. at 141 (internal quotation marks omitted).
    \25\Id. at 141-42.
---------------------------------------------------------------------------
    Moreover, Salinas states ``one factor alone can serve as 
the basis for finding that two or more . . . entities are `not 
completely disassociated.'''\26\ As such, the Fourth Circuit's 
test seems to make any relationship or collaboration between 
two businesses a joint employer relationship because the two 
entities will not be completely disassociated from each other, 
even if the supposed joint employer has no direct authority or 
control over the other entity's employee.
---------------------------------------------------------------------------
    \26\Id. at 142.
---------------------------------------------------------------------------
    This test for joint employer status under the FLSA is even 
broader than the Browning-Ferris test under the NLRA. One 
commentator noted, ``No other court, and not even the Obama-era 
DOL, has interpreted joint employment this broadly.''\27\ While 
this test only applies to cases in the Fourth Circuit, other 
courts likely will be urged to adopt it.
---------------------------------------------------------------------------
    \27\Hunton & Williams LLP, 4th Circuit Significantly Expands Joint 
Employer Liability Under FLSA With Incredibly Broad New Test (Mar. 
2017), https://www.hunton.com/images/content/2/7/v2/27717/4th-cir-
expands-joint-employer-liability-flsa.pdf.
---------------------------------------------------------------------------

Consequences of expanded joint employer standards

    Unions have long sought a broader NLRA joint employer test 
to protect ``concerted activity''\28\ and bring more parties to 
the bargaining table. Prior to Browning-Ferris, there have been 
significant limits on union activity against non-employers, 
such as secondary boycotts.\29\ However, if a previously 
neutral employer (i.e., a franchisor or contracting company) is 
deemed a joint employer, a previously illegal secondary boycott 
would then be NLRA-protected concerted activity. This would 
allow a union to pressure one of the employers into a 
neutrality agreement or voluntary recognition.\30\
---------------------------------------------------------------------------
    \28\See 29 U.S.C. Sec. 157 (``Employees shall have the right to 
self-organization, to form, join, or assist labor organizations, to 
bargain collectively through representatives of their own choosing, and 
to engage in other concerted activities for the purpose of collective 
bargaining or other mutual aid or protection . . . .'').
    \29\In a secondary boycott, a union and its members refuse to work 
for, purchase from, or handle the products of a business with which the 
union has a dispute.
    \30\A ``neutrality agreement'' is a contract between a union and an 
employer under which the employer agrees to support a union's attempt 
to organize its workforce. ``Voluntary recognition'' is when employees 
persuade an employer to voluntarily recognize a union after showing 
majority support by signed authorization cards or other means.
---------------------------------------------------------------------------
    The threat of liability for actions taken entirely by a 
contractor or franchise partner will make larger businesses 
less likely to work with smaller businesses. Under the FLSA, 
employers will be particularly cautious about avoiding any 
chance of joint employer liability. Over the past several 
decades, FLSA litigation has skyrocketed, seeing over a 500 
percent increase between 1991 and 2012.\31\ Adding another 
defendant as a joint employer to an FLSA case can be an 
attractive proposition to a plaintiff's attorney, even if that 
extra defendant was not directly involved in the actions behind 
the underlying claim. As a result, larger companies will be 
constrained in their willingness and ability to boost the 
economy from the ground up by partnering with smaller, local 
businesses with less of a track record.
---------------------------------------------------------------------------
    \31\Government Accountability Office, Fair Labor Standards Act: The 
Department of Labor Should Adopt a More Systematic Approach to 
Developing Its Guidance, GAO-14-69 (December 18, 2013).
---------------------------------------------------------------------------
    The economic benefits of contract work will be greatly 
diminished by the expanded joint employer standards. For 
instance, many manufacturing plants contract out janitorial 
work so that they can efficiently focus on what they do best, 
manufacturing. Under the new joint employer standard, however, 
the manufacturing company may be liable for the janitorial 
company's employment actions and would be forced to bargain 
with the janitorial company's employees. Such a system may not 
be viable for many employers.
    Expanded joint employer standards under the FLSA and NLRA 
will hurt the franchise model as well. Franchisors may be found 
to be joint employers with their franchisees based on indirect 
control of the franchisees' operations. This will eliminate the 
primary benefit of the franchise system, which gives 
franchisees complete discretion over their workforce while at 
the same time enjoying the advantages of associating with a 
franchisor's brand name. With franchisors and franchisees now 
deemed joint employers, the franchisor's potential liabilities 
will increase, requiring greater involvement in franchisee 
stores. These added liabilities and responsibilities will 
reduce franchisees' independence and increase costs for the 
franchisor. Furthermore, because of these increased 
liabilities, franchisors will be more restrictive with their 
franchise sales. They will likely require greater experience 
and resources from new franchisees, thereby reducing new small 
businesses opportunities under the franchise model.
    The Committee heard from a variety of business owners about 
the negative impact of expanding joint employer standards. Ed 
Braddy, a Burger King franchisee who owns and operates a 
restaurant in Baltimore, stated, ``[T]he new joint employer 
standard will destroy smaller restaurant operators like me.'' 
According to Mr. Braddy, the new standard will result in 
franchisors repurchasing franchises, consolidating operations 
by selecting larger operators, or taking away the independence 
of franchisees by implementing detailed franchisee and employee 
policies, making him ``no more than a glorified manager in 
[his] own restaurant.''\32\ Mr. Braddy concluded:
---------------------------------------------------------------------------
    \32\Protecting Local Business Opportunity Act: Hearing on H.R. 3459 
Before the House Subcomm. on Health, Employment, Labor, and Pensions, 
Comm. on Educ. and the Workforce, 114th Cong. (Sept. 29, 2015) (written 
testimony of Ed Braddy at 3).

          I am concerned that those who created this new 
        standard believe it will help the ``little guy'' and 
        put more mandates on large corporations. As a one-store 
        operator in an inner-city neighborhood, I can tell you 
        that nothing is further from the truth. The new joint 
        employer standard will hurt me, my employees and the 
        neighborhood I support. Please restore the definition 
        to require actual, direct, immediate control over the 
        essential terms of employment.\33\
---------------------------------------------------------------------------
    \33\Id. at 4.

    Kevin Cole, CEO of the Ennis Electric Company and speaking 
on behalf of the Independent Electrical Contractors, testified 
the new joint employer standard would deter those in the 
construction industry from working with small, start-up 
---------------------------------------------------------------------------
subcontractors. Mr. Cole stated:

          This new standard . . . prevents us from working with 
        certain start-ups or new small businesses that may have 
        a limited track record. For example, my company will 
        take on certain small businesses as subcontractors, 
        which will often times be owned by minorities or women, 
        and help mentor them on certain projects. With this new 
        standard, I'm now less likely to take on that risk. I 
        am also less likely to bid on federal contracts over 
        $1.5 million, under which the Federal Acquisition 
        Regulation (FAR) system mandates 1 subcontract with 
        small businesses.\34\
---------------------------------------------------------------------------
    \34\Protecting Local Business Opportunity Act: Hearing on H.R. 3459 
Before the House Subcomm. on Health, Employment, Labor, and Pensions, 
Comm. on Educ. and the Workforce, 114th Cong. (Sept. 29, 2015) (written 
testimony of Kevin Cole at 3).

    In his testimony, Charles Cohen, former NLRB Member, echoed 
Mr. Cole's concern the new joint employer standard would likely 
discourage companies from ``promoting special hiring programs'' 
and working with underrepresented groups such as veterans.\35\
---------------------------------------------------------------------------
    \35\Id. (written testimony of Charles Cohen at 5.) [Hereinafter 
Cohen Testimony]
---------------------------------------------------------------------------
    Mara Fortin, owner of several Nothing Bundt Cakes 
franchises, testified that due to the Browning-Ferris decision, 
she could lose control of her own business. Ms. Fortin stated:

          My franchisor had nothing to do with hiring my 
        employees or setting their wages and benefits. My 
        franchisor has nothing to do with the day-to-day 
        operations of my small business. But if they are to be 
        considered a joint employer, my franchisor may decide 
        to exert more control over my business, relegating me 
        to a middle manager role for which I did not sign 
        up.\36\
---------------------------------------------------------------------------
    \36\Protecting Local Business Opportunity Act: Hearing on H.R. 3459 
Before the House Subcomm. on Health, Employment, Labor, and Pensions, 
Comm. on Educ. and the Workforce, 114th Cong. (Sept. 29, 2015) (written 
testimony of Mara Fortin at 6) [Hereinafter Fortin Testimony].

    Tamra Kennedy, owner of several Taco John's franchises, 
noted the opportunities lost to franchisees when franchisors 
---------------------------------------------------------------------------
have to withdraw support over joint employer concerns:

          My franchisor used to provide standard employee 
        handbooks to its franchisees. But due to expanded joint 
        employment liability, the company no longer provides me 
        employee handbooks--even though my brand has the 
        expertise and best practices that would be most helpful 
        for me and my employees. Now, I must hire an outside 
        attorney to write an employee handbook for me. It cost 
        my business $9,000 to have outside counsel prepare my 
        employee handbook. Not to mention, I need my attorneys 
        to update my handbook each time the law changes. All 
        told, I need to sell hundreds of extra tacos every day 
        to cover this needless expense.\37\
---------------------------------------------------------------------------
    \37\The Save Local Business Act: Hearing on H.R. 3441 Before the 
House Subcomm. on Health, Employment, Labor and Pensions and the 
Subcomm. on Workforce Protections, Comm. on Educ. and the Workforce, 
115th Congress (September 13, 2017) (written testimony of Tamra Kennedy 
at 3).

    Fred Weir, a Zaxby's franchisee, also spoke about the 
negative consequences of new joint employer standards. Mr. Weir 
stated that expanded joint employer standards ``would drain the 
life from the hundreds of thousands of small businesses that 
operate just like mine. The new standard would force 
operational changes on the franchisor, and on 
franchisees.''\38\
---------------------------------------------------------------------------
    \38\Redefining ``Employer'' and the Impact on Georgia's Workers and 
Small Business Owners: Hearing Before the House Subcomm. on Health, 
Employment, Labor, and Pensions, Comm. on Educ. and the Workforce, 
114th Cong. (Aug. 27, 2015) (written testimony of Fred Weir at 3).
---------------------------------------------------------------------------
    Among the many concerns raised, business owners were 
especially alarmed about the loss of flexibility and 
independence under these new standards. CertaPro Paint 
franchisee Col. Steve Carey, USAF, Ret., testified about the 
potential impact new joint employer standards would have on his 
industry:

          If CertaPro is going to be responsible for the 
        liabilities arising out of the operation of the 
        business, and oversight of the workforce, why would 
        they hand control over to me? Many businesses may feel 
        this way and opportunities for local business ownership 
        will decline dramatically. I know how fortunate I am to 
        own my business after my long service in the military. 
        While CertaPro provides advice and support, I am the 
        decision-maker when it comes to my business. The 
        success or failure of my business is, essentially, all 
        on me--and that's exactly what I signed up for. It 
        would be a real shame to take these opportunities away 
        from other veterans looking to start their ``second 
        life'' as a local franchise business owner as well.\39\
---------------------------------------------------------------------------
    \39\Redefining ``Employer'' and the Impact on Alabama's Workers and 
Small Business Owners: Hearing Before the House Subcomm. on Health, 
Employment, Labor, and Pensions, Comm. on Educ. and the Workforce, 
114th Cong. (Aug. 25, 2015) (written testimony of Steve Carey at 4) 
[Hereinafter Carey Testimony].

    Mary Kennedy Thompson of the Dwyer Group noted the broad 
implications of expanding joint employer standards across all 
---------------------------------------------------------------------------
sectors of the economy:

          Research from the American Action Forum in April 2017 
        projected that the new joint employer standard could 
        result in 1.7 million fewer jobs in the entire private 
        sector and 500,000 fewer jobs in the leisure and 
        hospitality industry alone. It is imperative that the 
        locally-owned businesses created by the franchise 
        system remain open and continue to operate with the 
        full support of their brand. The system gives 
        entrepreneurs a leg up because they can rely on the 
        proven-to-work tools that we as franchisors give them, 
        and that system is currently in jeopardy.\40\
---------------------------------------------------------------------------
    \40\Redefining Joint Employer Standards: Barriers to Job Creation 
and Entrepreneurship: Hearing before the House Comm. on Educ. and the 
Workforce, 115th Cong. (July 12, 2017) (written Testimony of Tamra 
Kennedy at 5) [Hereinafter Kennedy Testimony].

    Kal Patel, a hotel franchisee and past board member of the 
Asian American Hotel Owners Association (AAHOA), testified 
before the HELP Subcommittee about the impact of the NLRB's 
---------------------------------------------------------------------------
Browning-Ferris decision. Mr. Patel stated:

          As an hotelier, I have come to depend on the 
        franchise model as the most advantageous means to small 
        business ownership. Consequently, I am deeply concerned 
        that the NLRB's efforts to expand the definition of 
        joint employer status will transfer control of small 
        businesses from independent hotel owners and operators 
        to large corporations. An expanded joint employer legal 
        standard intimated by the NLRB would compel franchisors 
        to take an active role in staffing decisions due to the 
        newly manufactured potential for liability. 
        Franchisees, including the majority of AAHOA members, 
        would lose independence in decision making and would 
        effectively become employees of the franchisor because 
        they would be forced to follow someone else's 
        directives.\41\
---------------------------------------------------------------------------
    \41\Redefining ``Employer'' and the Impact on Georgia's Workers and 
Small Business Owners: Hearing Before the House Subcomm. on Health, 
Employment, Labor, and Pensions, Comm. on Educ. and the Workforce, 
114th Cong. (Aug. 27, 2015) (written testimony of Kal Patel at 3).

    Labor attorney Jeffrey Mintz criticized the NLRB 
specifically for ``disturbing the well-established standard 
applied to determine whether a joint employer relationship 
exists and, more particularly, opting for a broader, ambiguous 
standard'' that would ``require many employers to revisit, 
analyze and likely revise their current business practices 
which could negatively impact many other businesses and their 
employees.''\42\
---------------------------------------------------------------------------
    \42\Id. (written testimony of Jeffrey Mintz at 1).
---------------------------------------------------------------------------
    The threat of expanding joint employer standards under the 
FLSA was also addressed by labor attorneys testifying before 
the Committee. Zachary Fasman, Partner at Proskauer Rose, LLP 
in New York City, noted:

          While there have been numerous decisions on joint 
        employer status under the FLSA, there is no commonly 
        accepted test for joint employer liability under the 
        statute. Some courts rely upon a four factor ``economic 
        reality'' test; others add as many as six or eight 
        factors to that test, others consider whether the 
        putative joint employer can discipline or discharge an 
        employee, while new and novel--and different--tests 
        continue to arise in federal courts across the country. 
        Employers with multi-state operations have no idea what 
        standards will apply to their operations, or when they 
        may be held responsible--after the fact, if the NLRB's 
        Browning-Ferris standards are applied--for another 
        employer's wage and payroll practices.\43\
---------------------------------------------------------------------------
    \43\The Save Local Business Act: Hearing on H.R. 3441 Before the 
House Subcomm. on Health, Employment, Labor, and Pensions and the 
Subcomm. on Workforce Protections, Comm. on Educ. and the Workforce, 
115th Congress (September 13, 2017) (written testimony of Zachary D. 
Fasman at 10) [Hereinafter Fasman Testimony].

    Labor attorney Roger King of the HR Policy Association 
---------------------------------------------------------------------------
agreed in his testimony:

          Although employer exposure to increased liability as 
        a result of the National Labor Relation Board's (NLRB) 
        recent decision in the Browning-Ferris case has 
        received considerable attention--as it should--the 
        potential for litigation risk is arguably even greater 
        under other federal labor statutes such as the Fair 
        Labor Standards Act (FLSA).\44\
---------------------------------------------------------------------------
    \44\Redefining Joint Employer Standards: Barriers to Job Creation 
and Entrepreneurship: Hearing before the House Comm. on Educ. and the 
Workforce, 115th Cong. (July 12, 2017) (written testimony of Roger King 
at 3).

---------------------------------------------------------------------------
    Mr. Fasman also noted:

          H.R. 3441 solves these problems by defining the term 
        ``joint employer'' under the NLRA and the FLSA based 
        upon the standards applied by the NLRB for 30 years 
        prior to Browning-Ferris. The bill would properly limit 
        joint employment to situations where the putative joint 
        employer ``actually'' exercises ``significant direct 
        and immediate control'' over the ``essential terms and 
        conditions of employment.''\45\
---------------------------------------------------------------------------
    \45\Fasman Testimony at 11.
---------------------------------------------------------------------------

Business models affected by the new standards

    A broad range of business arrangements, well beyond the 
specific types at issue in Browning-Ferris, Salinas, and other 
recent decisions, will be considered joint employer 
relationships under new NLRA and FLSA standards. Franchised 
businesses, for example, are already being affected. Currently, 
the NLRB General Counsel is pursuing nearly 100 complaints 
against McDonald's under this joint employer theory.\46\ But as 
Ms. Thompson noted in her testimony, ``franchises are not the 
only business model threatened by the new standards.''\47\ A 
vast scope of businesses are reliant on vendor and contractor 
arrangements that may now be considered joint employer 
relationships.
---------------------------------------------------------------------------
    \46\NLRB, McDonald's Fact Sheet, https://www.nlrb.gov/news-
outreach/fact-sheets/mcdonalds-fact-sheet.
    \47\Kennedy Testimony at 5.
---------------------------------------------------------------------------
    In their dissent to the Browning-Ferris decision, NLRB 
Members Philip Miscimarra and Harry Johnson discussed the 
numerous industries and business relationships that may be 
affected by the Board's joint employer standard. The number of 
contractual relationships now potentially encompassed within 
the majority's new standard appears to be virtually unlimited:
          [bullet] Insurance companies that require employers 
        to take certain actions with employees in order to 
        comply with policy requirements for safety, security, 
        health, etc.;
          [bullet] Franchisors (see below);
          [bullet] Banks or other lenders whose financing terms 
        may require certain performance measurements;
          [bullet] Any company that negotiates specific quality 
        or product requirements;
          [bullet] Any company that grants access to its 
        facilities for a contractor to perform services there, 
        and then continuously regulates the contractor's access 
        to the property for the duration of the contract;
          [bullet] Any company that is concerned about the 
        quality of the contracted services;
          [bullet] Consumers or small businesses who dictate 
        times, manner, and some methods of performance of 
        contracts.\48\
---------------------------------------------------------------------------
    \48\BFI, 362 NLRB No. 186, slip op. at 37 (Miscimarra and Johnson, 
Members, dissenting).
---------------------------------------------------------------------------
    Testifying before the HELP Subcommittee, Mr. Mintz stated 
that ``in addition to franchise businesses, a revised standard 
would affect relationships and have potential economic 
consequence within supply chains, dealer networks and staffing 
companies.''\49\ Labor attorney Marcel Debruge further 
explained to the Subcommittee that many automakers rely on the 
flexibility of temporary workers to survive during economic 
downturns, but they will likely be unable to continue this 
practice under expanded joint employer standard.\50\ Former 
Board Member Cohen testified expanded joint employer standards 
have ``the potential to apply to a wide variety of business 
relationships in which one employer contracts for the work of 
another business entity's employees, including outside 
suppliers and on-site contractors.''\51\
---------------------------------------------------------------------------
    \49\Redefining ``Employer'' and the Impact on Georgia's Workers and 
Small Business Owners: Hearing Before the House Subcomm. on Health, 
Employment, Labor, and Pensions, Comm. on Educ. and the Workforce, 
114th Cong. (Aug. 27, 2015) (written testimony of Jeffrey Mintz at 7).
    \50\Redefining ``Employer'' and the Impact on Alabama's Workers and 
Small Business Owners: Hearing Before the House Subcomm. on Health, 
Employment, Labor, and Pensions, Comm. on Educ. and the Workforce, 
114th Cong. (Aug. 25, 2015) (written testimony of Marcel Debruge at 4-
5).
    \51\Cohen Testimony at 2.
---------------------------------------------------------------------------
    Richard Heiser, Vice President at FedEx Ground, Inc., noted 
in his testimony that ``on a broader basis, it is important to 
consider how joint employment can affect all businesses--small 
and large.''\52\ He concluded that ``many businesses are at 
risk of being embroiled in protracted litigation because of 
another company's alleged actions.''\53\
---------------------------------------------------------------------------
    \52\Redefining Joint Employer Standards: Barriers to Job Creation 
and Entrepreneurship: Hearing before the House Comm. on Educ. and the 
Workforce, 115th Cong. (July 12, 2017) (written testimony of Richard 
Heiser at 2).
    \53\Id.
---------------------------------------------------------------------------
    Furthermore, the Subcommittee heard from a diverse group of 
small business owners, all of whom predicted expanded joint 
employer standards would without a doubt impact their 
businesses. Reem Aloul, owner of a BrightStar Care franchise, 
testified that expanding joint employer standards could impact 
``nearly any conceivable business relationship'' and the 
franchise model in particular.\54\ Jerry Reese II, Director of 
Franchise Development at Dat Dog, noted that joint employer 
uncertainty could be of especial concern to smaller local 
business like his as they ``may run out of resources'' due to 
the legal confusion.\55\
---------------------------------------------------------------------------
    \54\Restoring Balance and Fairness to the National Labor Relations 
Board: Hearing Before the House Subcomm. on Health, Employment, Labor 
and pensions, Comm. on Educ. and the Workforce, 115th Cong. (Feb. 14, 
2017) (written testimony of Reem Aloul at 4).
    \55\Redefining Joint Employer Standards: Barriers to Job Creation 
and Entrepreneurship: Hearing before the House Comm. on Educ. and the 
Workforce, 115th Cong. (July 12, 2017) (written testimony of Jerry 
Reese II at 5).
---------------------------------------------------------------------------
    Granger MacDonald, a homebuilder, testified about how 
expanded joint employer standards could greatly impact the 
construction industry:

          If MacDonald Companies contracted with a painting 
        company for a multifamily building in San Antonio, by 
        telling the subcontractors when to paint the walls or 
        even when the walls would be constructed, we could be 
        found a joint employer. To avoid a joint employer 
        finding, would we be prevented from scheduling 
        installation of the fire sprinklers or cabinets? Would 
        the roof be completed in time for the codes inspector 
        to visit? This would be akin to ordering a pizza, but 
        allowing the delivery service to show up at the 
        driver's discretion.\56\
---------------------------------------------------------------------------
    \56\The Save Local Business Act: Hearing on H.R. 3441 Before the 
House Subcomm. on Health, Employment, Labor and Pensions and the 
Subcomm. on Workforce Protections, Comm. On Educ. and the Workforce, 
115th Congress (September 13, 2017) (written testimony of Granger 
MacDonald at 3).

    These witnesses represent small, medium, and large 
businesses in urban, suburban, and rural markets around the 
country that provide a variety of services across different 
industries. Every one of them fear expanding joint employer 
standards would wreak havoc on their business. Expanding joint 
employer standards have the potential to affect countless 
business relationships, and the impact will almost always be 
negative.
    Proponents of the NLRB's new joint employer standard have 
often cited an April 2015 non-binding advice memorandum from 
the NLRB general counsel's office to argue the franchise model 
will not be impacted by Browning-Ferris. In that memo, the 
general counsel's office stated that Freshii, a fast casual 
restaurant franchisor, was not a joint employer with its 
franchisees.\57\ Unlike Browning-Ferris, which involved a 
staffing firm, the Freshii advice memorandum involved a 
franchisor and franchisee. Unions and Democrats have claimed 
this memorandum proves franchises should not be concerned about 
the Browning-Ferris decision or an allegedly expanding joint 
employer standard. The Freshii advice memorandum, however, was 
decided before the Browning-Ferris standard was in place and 
was released as a non-binding advice memorandum that has no 
value as precedent in other cases.
---------------------------------------------------------------------------
    \57\Advice Memorandum regarding Nutritionality, Inc., d/b/a Freshii 
from Barry J. Kearney, Associate General Counsel, NLRB Office of the 
General Counsel, to Peter Sung Ohn, Regional Director, NLRB Region 13 
(Apr. 28 2015), https://www.nlrb.gov/case/13-CA-134294.
---------------------------------------------------------------------------
    Thus, franchisors and franchisees across the country remain 
concerned about the potential effects of Browning-Ferris on the 
industry. In May 2017, 13 Democrat Representatives wrote a 
letter to the NLRB asking for clarification about the 
memorandum.\58\ Specifically, the letter asked if the 
memorandum can be used as ``a blueprint for all franchise 
systems,'' notwithstanding Browning-Ferris. On June 27, 2017, 
NLRB General Counsel Richard Griffin (D) replied in a one-page 
letter that the non-binding advice memo ``speaks for itself'' 
and should be read ``in light of'' subsequent developments 
including the Browning-Ferris decision.\59\ Accordingly, 
employers cannot rely on the Freshii memorandum for meaningful 
guidance.
---------------------------------------------------------------------------
    \58\Letter from thirteen Members of the House of Representatives to 
Barry J. Kearney, Associate General Counsel, NLRB Office of the General 
Counsel (May 8, 2017), http://savelocalbusinesses.com/wp-content/
uploads/2017/05/House-Dem-Letter-to-NLRB-5-10-17.pdf.
    \59\Letter from Richard F. Griffin, Jr., NLRB General Counsel, to 
Rep. Scott H. Peters (June 27, 2017), http://src.bna.com/qjS.
---------------------------------------------------------------------------

Needed legislation

    Congress is responsible for establishing and revising, as 
necessary, standards in federal labor law. The NLRB's decision 
in Browning-Ferris and court decisions interpreting the FLSA 
uniquely threaten the independence of small businesses and 
reduce opportunities for many Americans to own a business. 
Expanded joint employer standards extend liability to entities 
that have never been considered joint employers previously. 
Legislation is the appropriate and necessary solution to this 
issue. The Save Local Business Act returns certainty and 
predictability back to consumers, employees, and employers by 
reinstating the previous joint employer standard used by the 
NLRB for decades before Browning-Ferris. H.R. 3441 clarifies 
that two or more employers are considered joint employers under 
the NLRA and FLSA only if each employer shares and exercises 
``actual, direct, and immediate'' control over essential terms 
and conditions of employment.

                               Conclusion

    H.R. 3441 restores the commonsense joint employer standard 
workers and employers relied on for decades before the NLRB 
overreached. H.R. 3441 clarifies two or more employers must 
have actual, direct, and immediate control over employees to be 
considered employers. This is the same standard that existed 
for more than 30 years before the NLRB dramatically expanded 
it--a standard that provides stability and legal clarity for 
employers and employees. Moreover, H.R. 3441 provides much 
needed uniformity to the joint employment standard under the 
FLSA and provides the certainty employers need to expand their 
businesses and increase hiring. Joint employment under the FLSA 
is far from settled law and is an area marked by inconsistency 
and increasing litigation. Without this bill, the patchwork of 
joint employer standards across the country will continue to 
grow, creating regulatory confusion for job creators doing 
business in multiple states.
    This bill is a proportional response to misguided and 
unprecedented actions by the NLRB, Obama-era regulators, and 
activist judges. H.R. 3441 maintains existing worker 
protections while correcting an extreme, partisan, and 
confusing joint employer scheme that makes it harder for 
individuals to climb the economic ladder. The bill ensures an 
actual employer is the one legally responsible for complying 
with those protections.

                      Section-by-Section Analysis

    The following is a section-by-section analysis of the Save 
Local Business Act reported favorably by the Committee.
    Section 1. Provides that the short title is the ``Save 
Local Business Act.''
    Section 2. Amends the NLRA to allow two or more employers 
to be considered joint employers for purposes of the Act only 
if each shares and exercises control over essential terms and 
conditions of employment and such control over these matters is 
``actual, direct, and immediate.''
    Section 3. Amends the FLSA to allow two or more employers 
to be considered joint employers for purposes of the Act only 
if each shares and exercises control over essential terms and 
conditions of employment and such control over these matters is 
``actual, direct, and immediate.''

                       Explanation of Amendments

    The amendments, including the amendment in the nature of a 
substitute, are explained in the body of this report.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. H.R. 3441 restores the long-held standard for 
determining joint employer status under the NLRA that was 
overturned by a decision of the NLRB and provides a uniform 
joint employer standard under the FLSA.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement of 
whether the provisions of the reported bill include unfunded 
mandates. This issue is addressed in the CBO letter.

                           Earmark Statement

    H.R. 3441 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of House Rule XXI.

                            Roll Call Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee Report to include for 
each record vote on a motion to report the measure or matter 
and on any amendments offered to the measure or matter the 
total number of votes for and against and the names of the 
Members voting for and against.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         Statement of General Performance Goals and Objectives

    In accordance with clause (3)(c) of House Rule XIII, the 
goal of H.R. 3441 is to ensure a commonsense standard for 
determining whether a joint employment relationship exists.

                    Duplication of Federal Programs

    No provision of H.R. 3441 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting H.R. 3441 does not 
specifically direct the completion of any specific rulemakings 
within the meaning of 5 U.S.C. 551.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the body of this report.

               New Budget Authority and CBO Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following estimate for H.R. 3441 from the Director of the 
Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 27, 2017.
Hon. Virginia Foxx,
Chairwoman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
    Dear Madam Chairwoman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3441, the Save 
Local Business Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Christina 
Hawley Anthony.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 3441--Save Local Business Act

    H.R. 3441 would amend the National Labor Relations Act 
(NLRA) to specify that a person may be considered a ``joint 
employer'' only if that person exercises significant control 
over employees' essential terms and conditions of employment. 
If enacted, the bill would effectively negate a 2015 ruling by 
the National Labor Relations Board in which the board concluded 
a joint employer relationship could be established when an 
employer exercises control over employment matters indirectly 
or has reserved such control by contract.
    Implementing the bill would not affect the operations of 
federal and state agencies because the NLRA excludes federal 
governmental entities as well as states and political 
subdivisions of states from the definition of employer under 
the act.
    Enacting H.R. 3441 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply. CBO 
estimates that enacting H.R. 3441 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2028.
    H.R. 3441 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Christina Hawley 
Anthony. The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

                        Committee Cost Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.R. 3441. 
However, clause 3(d)(2)(B) of that rule provides that this 
requirement does not apply when the Committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                      NATIONAL LABOR RELATIONS ACT




           *       *       *       *       *       *       *
                              definitions

  Sec. 2. When used in this Act--
  (1) The term ``person'' includes one or more individuals, 
labor organizations, partnerships, associations, corporations, 
legal representatives, trustees, trustees in cases under title 
11 of the United States Code, or receivers.
  (2) [The term ``employer''] (A) The term ``employer'' 
includes any person acting as an agent of an employer, directly 
or indirectly, but shall not include the United States or any 
wholly owned Government corporation, or any Federal Reserve 
Bank, or any State or political subdivision thereof, or any 
person subject to the Railway Labor Act, as amended from time 
to time, or any labor organization (other than when acting as 
an employer), or anyone acting in the capacity of officer or 
agent of such labor organization.
  (B) A person may be considered a joint employer in relation 
to an employee only if such person directly, actually, and 
immediately, and not in a limited and routine manner, exercises 
significant control over essential terms and conditions of 
employment, such as hiring employees, discharging employees, 
determining individual employee rates of pay and benefits, day-
to-day supervision of employees, assigning individual work 
schedules, positions, and tasks, or administering employee 
discipline.
  (3) The term ``employee'' shall include any employee, and 
shall not be limited to the employees of a particular employer, 
unless the Act explicitly states otherwise, and shall include 
any individual whose work has ceased as a consequence of, or in 
connection with, any current labor dispute or because of any 
unfair labor practice, and who has not obtained any other 
regular and substantially equivalent employment, but shall not 
include any individual employed as an agricultural laborer, or 
in the domestic service of any family or person at his home, or 
any individual employed by his parent or spouse, or any 
individual having the status of an independent contractor, or 
any individual employed as a supervisor, or any individual 
employed by an employer subject to the Railway Labor Act, as 
amended from time to time, or by any other person who is not an 
employer as herein defined.
  (4) The term ``representatives'' includes any individual or 
labor organization.
  (5) The term ``labor organization'' means any organization of 
any kind, or any agency or employee representation committee or 
plan, in which employees participate and which exists for the 
purpose, in whole or in part, of dealing with employers 
concerning grievances, labor disputes, wages, rates of pay, 
hours of employment, or conditions of work.
  (6) The term ``commerce'' means trade, traffic, commerce, 
transportation, or communication among the several States, or 
between the District of Columbia or any Territory of the United 
States and any State or other Territory, or between any foreign 
country and any State, Territory, or the District of Columbia, 
or within the District of Columbia or any Territory, or between 
points in the same State but through any other State or any 
Territory or the District of Columbia or any foreign country.
  (7) The term ``affecting commerce'' means in commerce, or 
burdening or obstructing commerce or the free flow of commerce, 
or having led or tending to lead to a labor dispute burdening 
or obstructing commerce or the free flow of commerce.
  (8) The term ``unfair labor practice'' means any unfair labor 
practice listed in section 8.
  (9) The term ``labor dispute'' includes any controversy 
concerning terms, tenure or conditions of employment, or 
concerning the association or representation of persons in 
negotiating, fixing, maintaining, changing, or seeking to 
arrange terms or conditions of employment, regardless of 
whether the disputants stand in the proximate relation of 
employer and employee.
  (10) The term ``National Labor Relations Board'' means the 
National Labor Relations Board provided for in section 3 of 
this Act.
  (11) The term ``supervisor'' means any individual having 
authority, in the interest of the employer, to hire, transfer, 
suspend, lay off, recall, promote, discharge, assign, reward, 
or discipline other employees, or responsibly to direct them, 
or to adjust their grievances, or effectively to recommend such 
action, if in connection with the foregoing the exercise of 
such authority is not of a merely routine or clerical nature, 
but requires the use of independent judgment.
  (12) The term ``professional employee'' means--
          (a) any employee engaged in work (i) predominantly 
        intellectual and varied in character as opposed to 
        routine mental, manual, mechanical, or physical work; 
        (ii) involving the consistent exercise of discretion 
        and judgment in its performance; (iii) of such a 
        character that the output produced or the result 
        accomplished cannot be standardized in relation to a 
        given period of time; (iv) requiring knowledge of an 
        advanced type in a field of science or learning 
        customarily acquired by a prolonged course of 
        specialized intellectual instruction and study in an 
        institution of higher learning or a hospital, as 
        distinguished from a general academic education or from 
        an apprenticeship or from training in the performance 
        of routine mental, manual, or physical processes; or
          (b) any employee, who (i) has completed the courses 
        of specialized intellectual instruction and study 
        described in clause (iv) of paragraph (a), and (ii) is 
        performing related work under the supervision of a 
        professional person to qualify himself to become a 
        professional employee as defined in paragraph (a).
  (13) In determining whether any person is acting as an 
``agent'' of another person so as to make such other person 
responsible for his acts, the question of whether the specific 
acts performed were actually authorized or subsequently 
ratified shall not be controlling.
  (14) The term ``health care institution'' shall include any 
hospital, convalescent hospital, health maintenance 
organization, health clinic, nursing home, extended care 
facility, or other institution devoted to the care of sick, 
infirm, or aged person.

           *       *       *       *       *       *       *

                              ----------                              


                    FAIR LABOR STANDARDS ACT OF 1938



           *       *       *       *       *       *       *
                              definitions

  Sec. 3. As used in this Act--
  (a) ``Person'' means an individual, partnership, association, 
corporation, business trust, legal representative, or any 
organized group of persons.
  (b) ``Commerce'' means trade, commerce, transportation, 
transmission, or communication among the several States or 
between any State and any place outside thereof.
  (c) ``State'' means any State of the United States or the 
District of Columbia or any Territory or possession of the 
United States.
  (d) [``Employer'' includes] (1)  ``Employer'' includes any 
person acting directly or indirectly in the interest of an 
employer in relation to an employee and includes a public 
agency, but does not include any labor organization (other than 
when acting as an employer) or anyone acting in the capacity of 
officer or agent of such labor organization.
  (2) A person may be considered a joint employer in relation 
to an employee for purposes of this Act only if such person 
meets the criteria set forth in section 2(2)(B) of the National 
Labor Relations Act (29 U.S.C. 152(2)(B)).
  (e)(1) Except as provided in paragraphs (2), (3), and (4), 
the term ``employee'' means any individual employed by an 
employer.
  (2) In the case of an individual employed by a public agency, 
such term means--
          (A) any individual employed by the Government of the 
        United States--
                  (i) as a civilian in the military departments 
                (as defined in section 102 of title 5, United 
                States Code),
                  (ii) in any executive agency (as defined in 
                section 105 of such title),
                  (iii) in any unit of the judicial branch of 
                the Government which has positions in the 
                competitive service,
                  (iv) in a nonappropriated fund 
                instrumentality under the jurisdiction of the 
                Armed Forces,
                  (v) in the Library of Congress, or
                  (vi) the Government Printing Office;
          (B) any individual employed by the United States 
        Postal Service or the Postal Rate Commission; and
          (C) any individual employed by a State, political 
        subdivision of a State, or an interstate governmental 
        agency, other than such an individual--
                  (i) who is not subject to the civil service 
                laws of the State, political subdivision, or 
                agency which employs him; and
                  (ii) who--
                          (I) holds a public elective office of 
                        that State, political subdivision, or 
                        agency,
                          (II) is selected by the holder of 
                        such an office to be a member of his 
                        personal staff,
                          (III) is appointed by such an 
                        officeholder to serve on a policymaking 
                        level,
                          (IV) is an immediate adviser to such 
                        an officeholder with respect to the 
                        constitutional or legal powers of his 
                        office, or
                          (V) is an employee in the legislative 
                        branch or legislative body of that 
                        State, political subdivision, or agency 
                        and is not employed by the legislative 
                        library of such State, political 
                        subdivision, or agency.
  (3) For purposes of subsection (u), such term does not 
include any individual employed by an employer engaged in 
agriculture if such individual is the parent, spouse, child, or 
other member of the employer's immediate family.
  (4)(A) The term ``employee'' does not include any individual 
who volunteers to perform services for a public agency which is 
a State, a political subdivision of a State, or an interstate 
governmental agency, if--
          (i) the individual receives no compensation or is 
        paid expenses, reasonable benefits, or a nominal fee to 
        perform the services for which the individual 
        volunteered; and
          (ii) such services are not the same type of services 
        which the individual is employed to perform for such 
        public agency.
  (B) An employee of a public agency which is a State, 
political subdivision of a State, or an interstate governmental 
agency may volunteer to perform services for any other State, 
political subdivision, or interstate governmental agency, 
including a State, political subdivision or agency with which 
the employing State, political subdivision, or agency has a 
mutual aid agreement.
  (5) The term ``employee'' does not include individuals who 
volunteer their services solely for humanitarian purposes to 
private non-profit food banks and who receive from the food 
banks groceries.
  (f) ``Agriculture'' includes farming in all its branches and 
among other things includes the cultivation and tillage of the 
soil, dairying, the production, cultivation, growing, and 
harvesting of any agricultural or horticultural commodities 
(including commodities defined as agricultural commodities in 
section 15(g) of the Agricultural Marketing Act, as amended), 
the raising of livestock, bees, fur-bearing animals, or 
poultry, and any practices (including any forestry or lumbering 
operations) performed by a farmer or on a farm as an incident 
to or in conjunction with such farming operations, including 
preparation for market, delivery to storage or to market or to 
carriers for transportation to market.
  (g) ``Employ'' includes to suffer or permit to work.
  (h) ``Industry'' means a trade, business, industry, or other 
activity, or branch or group thereof, in which individuals are 
gainfully employed.
  (i) ``Goods'' means goods (including ships and marine 
equipment), wares, products, commodities, merchandise, or 
articles or subjects of commerce of any character, or any part 
or ingredient thereof, but does not include goods after their 
delivery into the actual physical possession of the ultimate 
consumer thereof other than a producer, manufacturer, or 
processor thereof.
  (j) ``Producer'' means produced, manufactured, mined, 
handled, or in any manner worked on in any State; and for the 
purposes of this Act an employee shall be deemed to have been 
engaged in the production of goods if such employee was 
employed in producing, manufacturing, mining, handling, 
transporting, or in any other manner working on such goods, or 
in any closely related process or occupation directly essential 
to the production thereof, in any State.
  (k) ``Sale'' or ``sell'' includes any sale, exchange, 
contract to sell, consignment for sale, shipment for sale, or 
other disposition.
  (l) ``Oppressive child labor'' means a condition of 
employment under which (1) any employee under the age of 
sixteen years is employed by an employer (other than a parent 
or a person standing in place of a parent employing his own 
child or a child in his custody under the age of sixteen years 
in an occupation other than manufacturing or mining or an 
occupation found by the Secretary of Labor to be particularly 
hazardous for the employment of children between the ages of 
sixteen and eighteen years or detrimental to their health or 
well-being) in any occupation, or (2) any employee between the 
ages of sixteen and eighteen years is employed by an employer 
in any occupation which the Secretary of Labor shall find and 
by order declare to be particularly hazardous for the 
employment of children between such ages or detrimental to 
their health or well-being; but oppressive child labor shall 
not be deemed to exist by virture of the employment in any 
occupation of any person with respect to whom the employer 
shall have on file an unexpired certificate issued and held 
pursuant to regulations of the Secretary of Labor certifying 
that such person is above the oppressive child labor age. The 
Secretary of Labor shall provide by regulation or by order that 
the employment of employees between the ages of fourteen and 
sixteen years in occupations other than manufacturing and 
mining shall not be deemed to constitute oppressive child labor 
if and to the extent that the Secretary of Labor determines 
that such employment is confined to periods which will not 
interfere with their schooling and to conditions which will not 
interfere with their health and well-being.
  (m) ``Wage'' paid to any employee includes the reasonable 
cost, as determined by the Secretary of Labor, to the employer 
of furnishing such employee with board, lodging, or other 
facilities, if such board, lodging, or other facilities are 
customarily furnished by such employer to his employees: 
Provided, That the cost of board, lodging, or other facilities 
shall not be included as a part of the wage paid to any 
employee to the extent it is excluded therefrom under the terms 
of a bona fide collective-bargaining agreement applicable to 
the particular employee: Provided further, That the Secretary 
is authorized to determine the fair value of such board, 
lodging, or other facilities for defined classes of employees 
and in defined areas, based on average cost to the employer or 
to groups of employers similarly situated, or average value to 
groups of employees, or other appropriate measures of fair 
value. Such evaluations, where applicable and pertinent, shall 
be used in lieu of actual measure of cost in determining the 
wage paid to any employee. In determining the wage an employer 
is required to pay a tipped employee, the amount paid such 
employee by the employee's employer shall be an amount equal 
to--
          (1) the cash wage paid such employee which for 
        purposes of such determination shall be not less than 
        the cash wage required to be paid such an employee on 
        the date of the enactment of this paragraph; and
          (2) an additional amount on account of the tips 
        received by such employee which amount is equal to the 
        difference between the wage specified in paragraph (1) 
        and the wage in effect under section 6(a)(1).
The additional amount on account of tips may not exceed the 
value of the tips actually received by an employee. The 
preceding 2 sentences shall not apply with respect to any 
tipped employee unless such employee has been informed by the 
employer of the provisions of this subsection, and all tips 
received by such employee have been retained by the employee, 
except that this subsection shall not be construed to prohibit 
the pooling of tips among employees who customarily and 
regularly receive tips.
  (n) ``Resale'' shall not include the sale of goods to be used 
in residential or farm building construction, repair, or 
maintenance: Provided, That the sale is recognized as a bona 
fide retail sale in the industry.
  (o) Hours Worked.--In determining for the purposes of 
sections 6 and 7 the hours for which an employee is employed, 
there shall be excluded any time spent in changing clothes or 
washing at the beginning or end of each workday which was 
excluded from measured working time during the week involved by 
the express terms of or by custom or practice under a bona fide 
collective-bargaining agreement applicable to the particular 
employee.
  (p) ``American vessel'' includes any vessel which is 
documented or numbered under the laws of the United States.
  (q) ``Secretary'' means the Secretary of Labor.
  (r)(1) ``Enterprise'' means the related activities performed 
(either through unified operation or common control) by any 
person or persons for a common business purpose, and includes 
all such activities whether performed in one or more 
establishments or by one or more corporate or other 
organizational units including departments of an establishment 
operated through leasing arrangements, but shall not include 
the related activities performed for such enterprise by an 
independent contractor. Within the meaning of this subsection, 
a retail or service establishment which is under independent 
ownership shall not be deemed to be so operated or controlled 
as to be other than a separate and distinct enterprise by 
reason of any arrangement, which includes, but is not 
necessarily limited to, an agreement, (A) that it will sell, or 
sell only, certain goods specified by a particular 
manufacturer, distributor, or advertiser, or (B) that it will 
join with other such establishments in the same industry for 
the purpose of collective purchasing, or (C) that it will have 
the exclusive rights to sell the goods or use the brand name of 
a manufacturer, distributor, or advertiser within a specified 
area, or by reason of the fact that it occupies premises leased 
to it by a person who also leases premises to other retail or 
service establishments.
  (2) For purposes of paragraph (1), the activities performed 
by any person or persons--
          (A) in connection with the operation of a hospital, 
        an institution primarily engaged in the care of the 
        sick, the aged, the mentally ill or defective who 
        reside on the premises of such institution, a school 
        for mentally or physicially handicapped or gifted 
        children, a preschool, elementary or secondary school, 
        or an institution of higher education (regardless of 
        whether or not such hospital, institution, or school is 
        operated for profit or not for profit), or
          (B) in connection with the operation of a street, 
        suburban or interurban electric railway, or local 
        trolley or motorbus carrier, if the rates and services 
        of such railway or carrier are subject to regulation by 
        a State or local agency (regardless of whether or not 
        such railway or carrier is public or private or 
        operated for profit or not for profit), or
          (C) in connection with the activities of a public 
        agency.
shall be deemed to be activities performed for a business 
purpose.
  (s)(1) ``Enterprise engaged in commerce or in the production 
of goods for commerce'' means an enterprise that--
          (A)(i) has employees engaged in commerce or in the 
        production of goods for commerce, or that has employees 
        handling, selling, or otherwise working on goods or 
        materials that have been moved in or produced for 
        commerce by any person; and
          (ii) is an enterprise whose annual gross volume of 
        sales made or business done is not less than $500,000 
        (exclusive of excise taxes at the retail level that are 
        separately stated);
          (B) is engaged in the operation of a hospital, an 
        institution primarily engaged in the care of the sick, 
        the aged, or the mentally ill or defective who reside 
        on the premises of such institution, a school for 
        mentally or physically handicapped or gifted children, 
        a preschool, elementary or secondary school, or an 
        institution of higher education (regardless of whether 
        or not such hospital, institution, or school is public 
        or private or operated for profit or not for profit); 
        or
          (C) is an activity of a public agency.
  (2) Any establishment that has as its only regular employees 
the owner thereof or the parent, spouse, child, or other member 
of the immediate family of such owner shall not be considered 
to be an enterprise engaged in commerce or in the production of 
goods for commerce or a part of such an enterprise. The sales 
of such an establishment shall not be included for the purpose 
of determining the annual gross volume of sales of any 
enterprise for the purpose of this subsection.
  (t) ``Tipped employee'' means any employee engaged in an 
occupation in which he customarily and regularly receives more 
than $30 a month in tips.
  (u) ``Man-day'' means any day during which an employee 
performs any agricultural labor for not less than one hour.
  (v) ``Elementary school'' means a day or residential school 
which provides elementary education, as determined under State 
law.
  (w) ``Secondary school'' means a day or residential school 
which provides secondary education, as determined under State 
law.
  (x) ``Public agency'' means the Government of the United 
States; the government of a State or political subdivision 
thereof; any agency of the United States (including the United 
States Postal Service and Postal Rate Commission), a State, or 
a political subdivision of a State; or any interstate 
governmental agency.
  (y) ``Employee in fire protection activities'' means an 
employee, including a firefighter, paramedic, emergency medical 
technician, rescue worker, ambulance personnel, or hazardous 
materials worker, who--
          (1) is trained in fire suppression, has the legal 
        authority and responsibility to engage in fire 
        suppression, and is employed by a fire department of a 
        municipality, county, fire district, or State; and
          (2) is engaged in the prevention, control, and 
        extinguishment of fires or response to emergency 
        situations where life, property, or the environment is 
        at risk.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

                              INTRODUCTION

    The Save Local Business Act (H.R. 3441) dismantles 
longstanding legal protections for employees under the National 
Labor Relations Act (NLRA) and the Fair Labor Standards Act 
(FLSA). It does so by allowing employers who jointly determine 
working conditions to evade responsibility for collective 
bargaining, and to avoid liability for wage theft, child labor, 
and equal pay violations committed by subcontractors and 
intermediaries over which they exercise control. Despite the 
bill's pro-business title, H.R. 3441 disadvantages franchisees 
by leaving them on the hook for decisions directed by their 
franchisors. All Democratic members of the Committee opposed 
H.R. 3441 during the October 4, 2017 markup.

                               BACKGROUND

    In recent years, employers have increasingly moved away 
from direct hiring of employees to the use of permatemps and 
subcontracting to reduce labor costs and liability. For many 
workers, the name on the door of the building where they work 
may not be the name of the company that signs their paycheck. 
Approximately three million Americans are employed by a 
temporary staffing agency on any given day, performing work on 
behalf of a client company that directs the employee's work but 
does not write the employee's paycheck.\1\ Since the end of the 
recession in mid-2009, one study found that almost one-fifth of 
all job growth has been through temp agencies.\2\ Another 
recent study found that 94% of all new jobs between 2005 and 
2015 involved alternative work arrangements--including 
temporary help agency workers, on-call workers, contract 
workers, and independent contractors.\3\ The largest increase 
involved the percentage of workers hired out through contract 
companies, increasing from 1.4 percent in 2014 to 3.1 percent 
(of all employment) in 2015.\4\
---------------------------------------------------------------------------
    \1\Employees on Nonfarm Payrolls by Industry Sector and Selected 
Industry Data, Bureau of Labor Statistics (last accessed Jul. 7, 2017), 
available at https://www.bls.gov/news.release/empsit.t17.htm.
    \2\Michael Grabell, ``The Expendables: How the Temps Who Power 
Corporate Giants are Getting Crushed,'' ProPublica (June 27, 2013), 
available at 3https://www.propublica.org/article/the-expendables-how-
the-temps-who-power-corporate-giants-are-getting-crushe
    \3\Katz and Krueger, ``The Rise and Nature of Alternative Work 
Arrangements in the United States, 1995-2015,'' National Bureau of 
Economic Research Working Paper 22667, (Sept. 2016), available at 
www.nber.org/papers/w22667.
    \4\Id.
---------------------------------------------------------------------------
    As direct hire arrangements give way to increased use of 
subcontractors, permatemps, or employee leasing arrangements, 
accountability for compliance with labor and employment laws is 
at risk of being undermined if companies can shield themselves 
from liability by contracting out while retaining contractual 
control over the terms and conditions of employment. As the 
National Employment Law Project notes, under current law, 
``joint employer liability doesn't bar companies from 
outsourcing; it simply means that the companies cannot also 
outsource responsibility for their workers when they control 
the conditions of their work.''\5\
---------------------------------------------------------------------------
    \5\Joint Employment Explained: How H.R. 3441 Legalizes a Corporate 
Rip-Off of Workers, National Employment Law Project (Sept. 8, 2017), 
available at http://nelp.org/publication/joint-employment-explained-
how-hr-3441-legalizes-corporate-rip-off-workers/.
---------------------------------------------------------------------------
    Congressional efforts to narrow joint employer liability 
over the past two Congresses were spurred by two events. First, 
on December 19, 2014, the National Labor Relations Board's 
(NLRB or Board) General Counsel alleged that McDonald's USA is 
a joint employer with its franchisees in a complaint alleging 
unlawful retaliation against employees who protested for better 
wages as part of the ``Fight for $15 and a Union.'' This case 
remains pending before an administrative law judge. Secondly, 
on August 27, 2015, the NLRB reinstated its traditional joint 
employment standard in its Browning Ferris\6\ decision, which 
found that a waste-management company jointly controlled the 
employment conditions of its subcontracted workers. That case 
is on appeal to the D.C. Circuit Court of Appeals.
---------------------------------------------------------------------------
    \6\362 NLRB No. 186 (2015).
---------------------------------------------------------------------------
    In response to these events, in the 114th Congress the 
Education and the Workforce Committee reported the Protecting 
Local Business Opportunity Act (H.R. 3459) by a margin of 21-
15, with all present Democrats opposing.\7\ That bill sought to 
narrow the legal standard for a joint employer only under the 
NLRA.
---------------------------------------------------------------------------
    \7\H. Rept. 114-355--Protecting Local Business Opportunity Act 
(Dec. 1, 2015).
---------------------------------------------------------------------------
    Committee Republicans introduced H.R. 3441 on July 27, 
2017, following the July 12, 2017 Committee hearing entitled, 
``Redefining Joint Employer Standards: Barriers to Job Creation 
and Entrepreneurship.'' That bill narrows the legal standard 
for a joint employer under both the NLRA and the FLSA. A 
legislative hearing was held on September 13, 2017, and a 
Committee markup was held on October 4, 2017.

         DESCRIPTION OF H.R. 3441, THE SAVE LOCAL BUSINESS ACT

    Labor and employment laws have long held that when more 
than one employer controls or has the right to control the 
terms and conditions of employment, whether directly or 
indirectly, they may be liable as ``joint employers.''\8\ H.R. 
3441 amends the NLRA and the FLSA by adding a new, narrow 
definition for ``joint employer'' to the existing definition of 
``employer'' under each law and eliminates indirect control as 
indicia of joint employment.
---------------------------------------------------------------------------
    \8\Under section 2(2) of the NLRA, an employer ``includes any 
person acting as an agent of an employer, directly or indirectly, but 
shall not include the United States or any wholly owned Government 
corporation, or any Federal Reserve Bank, or any State or political 
subdivision thereof, or any person subject to the Railway Labor Act, as 
amended from time to time, or any labor organization (other than when 
acting as an employer), or anyone acting in the capacity of officer or 
agent of such labor organization.'' Under the FLSA, an employer 
``includes any person acting directly or indirectly in the interest of 
an employer in relation to an employee and includes a public agency, 
but does not include any labor organization (other than when acting as 
an employer) or anyone acting in the capacity of officer or agent of 
such labor organization.'' 29 U.S.C. Sec. 203(d) (emphasis added).
---------------------------------------------------------------------------
    H.R. 3441 confers joint employer status on a company if it 
``directly, actually, and immediately . . . exercises 
significant control over essential terms and conditions of 
employment.'' Specifically, the bill identifies a non-exclusive 
list of nine essential terms and conditions: ``hiring 
employees, discharging employees, determining individual 
employee rates of pay and benefits, day-to-day supervision of 
employees, assigning individual work schedules, positions, and 
tasks, or administering employee discipline.'' Under this 
legislation as reported from Committee, a company can have 
indirect control over all of nine of these terms and 
conditions, and so long as it exercises that control through a 
subcontractor or intermediary, the company is immune from 
liability under the NLRA or the FLSA.

 H.R. 3441 CREATES A ROADMAP FOR EMPLOYERS TO ELIMINATE JOINT EMPLOYER 
                               LIABILITY

    H.R. 3441's definition of a joint employer is so narrow 
that any entity can arrange its relationships with staffing 
agencies or subcontractors to avoid liability. Because the bill 
requires that a joint employer control the ``essential terms 
and conditions of employment,'' and describes nine of those 
terms, an entity may no longer be a joint employer under the 
bill as long as it delegates at least one of the nine listed 
terms to another entity, no matter how much control it retains. 
Further, because a joint employer must exert control 
``directly, actually, and immediately'' under the bill, an 
entity can convey all employment directions through an 
intermediary without ever being considered a joint employer.
    Michael Rubin, an attorney at Altshuler Berzon LLP who has 
litigated joint employer cases involving wage theft, testified 
at the legislative hearing on this very point:

          In practical effect, this means there will be no more 
        ``joint employment'' under the FLSA or NLRA, because 
        once an FLSA or NLRA employer . . . delegates any 
        significant control over any terms or conditions of its 
        workers' employment, it ceases to exercise ``direct'' 
        control over those terms and conditions and is no 
        longer a potential ``joint employer'' under the bill's 
        definition.\9\
---------------------------------------------------------------------------
    \9\Testimony of Michael Rubin, before a joint hearing of the 
Subcommittee on Workforce Protections and the Subcommittee on Health, 
Employment, Labor and Pensions Regarding H.R. 3441 (Sept. 13, 2017) 
(emphasis added).
---------------------------------------------------------------------------

     H.R. 3441 MAY LEAVE EMPLOYEES COMPLETELY WITHOUT RECOURSE FOR 
     VIOLATIONS WHEN MULTIPLE EMPLOYERS CONTROL WORKING CONDITIONS

    As originally drafted and introduced, H.R. 3441 provided 
that if one company controls some of the enumerated terms and 
conditions and another company controls the others, then each 
company could argue in their defense that they are not an 
employer because they do not control all nine terms. A court 
could find that neither company is a joint employer, and thus 
that neither company is liable as an employer. The bill 
provided no guidance on how to resolve this problem.
    At the September 13, 2017 legislative hearing on H.R. 3441, 
Ranking Member Scott raised this concern with Michael Rubin.

          Mr. Scott: [I]f you have a Fair Labor Standards Acts 
        violation and somebody comes in and says, ``I'm not an 
        employer under this definition,'' and then the other 
        guy comes in and says, ``I'm not an employer under this 
        definition either,'' is it possible that nobody is 
        responsible?
          Mr. Rubin: Wow. In fact, as I look at the language of 
        the Act, that is possible. Imagine this circumstance: 
        Company A is in charge of hiring. Company A and B share 
        responsibility for firing. And company B also sets 
        wages. The worker says, who is my employer under this 
        definition? Well, does either company, A or B, control 
        the essential terms, which are then listed? There are 9 
        of them in the conjunctive? No. So in that case there 
        may be no employer.
          Mr. Scott: So if there's a finding that I wasn't paid 
        overtime, nobody owes it?
          Mr. Rubin: Neither company is a joint employer and 
        arguably neither is an employer at all . . . [T]his 
        language explodes uncertainty to the point where every 
        single case, where any element, any term or condition 
        of employment is shared, there's going to be litigation 
        over whether either company would be [liable].

    During the markup, Committee Republicans attempted to 
alleviate this concern through an Amendment in the Nature of a 
Substitute (ANS), but in doing so rendered the bill even more 
ambiguous. The ANS modified the bill primarily by changing the 
``and'' to an ``or,'' so that the nine essential terms and 
conditions are now listed in the disjunctive. These changes are 
set forth below. The relevant text to be changed is in bold 
italics and the new text is bold and underlined.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The changes in the ANS do not remedy the problem. The ANS 
states that a person is a joint employer only if such person 
``exercises significant control over essential terms and 
conditions of employment.'' Since the bill retains a list of 
nine ``essential'' terms and conditions that the person must 
control, the problem remains that a person who does not control 
all of the nine terms and conditions may not face any liability 
under the NLRA or the FLSA, regardless of how much control they 
possess. Even if the NLRB or courts interpreting the NLRA or 
FLSA avoid this plain reading of H.R. 3441, the bill still 
provides no guidance over how many of the essential terms and 
conditions a person would need to control in order to be a 
joint employer.
    Committee Republicans have promoted the need for this 
legislation because they contend it will provide needed 
clarity. Subcommittee Chairman Walberg stated:

          ``It's time to settle, once and for all, what 
        constitutes a joint employer, not through arbitrary and 
        misguided NLRB decisions and rulings by activist 
        judges, but through legislation. This is obviously an 
        area of labor law that is in desperate need of 
        clarity.''\10\
---------------------------------------------------------------------------
    \10\Opening Statement of U.S. Representative Tim Walberg, at a 
joint hearing of the Subcommittee on Workforce Protections and the 
Subcommittee on Health, Employment, Labor and Pensions regarding H.R. 
3441 (Sept. 13, 2017).

    At the October 4th markup, Ranking Member Scott tried to 
identify whether the bill provides improved clarity by asking 
the bill's sponsor, Representative Byrne, exactly how many of 
the nine listed terms and conditions a party would need to 
control. Mr. Byrne replied that this would depend on the 
``facts of each individual case'' and how a judge or the NLRB 
analyzes those facts. Mr. Scott replied: ``I think we are right 
back where we started from. We don't know what it means, 
whether you are an employer or joint employer or not.''\11\ 
This exchange exposed the fallacy of the Majority's argument, 
and demonstrates that this bill opens the door for uncertainty.
---------------------------------------------------------------------------
    \11\U.S. House of Representatives Committee on Education and the 
Workforce, Markup of H.R. 3441, pp. 20-21 (Oct. 4, 2017).
---------------------------------------------------------------------------

 H.R. 3441 CRIPPLES WORKERS' FREEDOM TO NEGOTIATE FOR BETTER WAGES AND 
                 BENFITS WHEN THERE ARE JOINT EMPLOYERS

    When workers organize unions, the NLRA guarantees them the 
right to collectively bargain for better wages and working 
conditions without fear of retaliation. Where multiple entities 
control the essential terms and conditions of employment, this 
right is rendered futile if workers cannot bargain with all 
those entities controlling wages and working conditions. The 
new definition of a joint employer under H.R. 3441 is so narrow 
that it effectively writes the concept out of law.
    Committee Republicans have criticized the NLRB's 2015 
Browning Ferris decision, which reinstated the traditional 
joint employer standard the Board used prior to 1984.\12\ In 
this case, the NLRB found that a client employer (BFI) and its 
staffing agency (Leadpoint) were joint employers and had a 
joint duty to bargain with the Teamsters union. BFI operates a 
municipal recycling facility in Milpitas, California, but 
contracted with Leadpoint to hire workers sorting recyclable 
materials under a cost reimbursement contract. BFI 
contractually capped the maximum wage that Leadpoint could pay 
at a rate that could not exceed what BFI paid its own workers. 
BFI also reserved and exercised the right to overrule any of 
Leadpoint's personnel decisions and assigned shifts to the 
workers through Leadpoint's supervisors. When the Teamsters 
sought to organize 240 Leadpoint workers, it named BFI as the 
joint employer with Leadpoint in a petition for a union 
election.
---------------------------------------------------------------------------
    \12\362 NLRB No. 186 (2015).
---------------------------------------------------------------------------
    Susan K. Garea, an attorney who represents the workers in 
Browning Ferris, explains:

          These workers want to negotiate better wages and 
        working conditions in exchange for their back-breaking 
        labor. Many concerns brought these workers to the 
        Teamsters including their low wages and distress over 
        the speed and safety of the work. These concerns cannot 
        be addressed by negotiating with the temporary staffing 
        agency. BFI must be at the table to negotiate over the 
        speed of the streams, the number of workers per line or 
        breaks, wages, safety protocols and other major terms 
        and conditions of employment. Leadpoint has literally 
        no control over these core terms and conditions of 
        employment.\13\
---------------------------------------------------------------------------
    \13\Letter from Susan K. Garea, Esq., Beeson Taylor and Bodine, to 
Chairman Foxx and Ranking Member Scott, submitted for the record at the 
July 12, 2017 hearing before the Committee on Education and the 
Workforce entitled ``Redefining Joint Employer Standards: Barriers to 
Job Creation and Entrepreneurship'' (Jul. 10, 2017).

    The NLRB's traditional joint employer test asks: (1) 
whether there is a common law employment relationship, and (2) 
whether the employer possesses sufficient control over 
employees' essential terms and conditions of employment to 
permit meaningful collective bargaining. In examining whether 
there is a common law relationship, the NLRB uses the standard 
that Anglo-American courts have applied for centuries to 
determine whether there is a ``master-servant'' 
relationship.\14\ The NLRB considers both the employer's 
``right to control'' in addition to its actual exercise of 
control. That control may be either direct or indirect, such as 
through the other joint employer as an intermediary.
---------------------------------------------------------------------------
    \14\As articulated by the Supreme Court in Nationwide Mutual 
Insurance Co. v. Darden, 503 U.S. 318 (1992), determining an employment 
relationship under common law depends on ``the hiring party's right to 
control the manner and means'' by which the worker accomplishes the 
project.
---------------------------------------------------------------------------
    The Board's traditional joint employer test as articulated 
in Browning Ferris is consistent with the legislative history 
of the Taft-Hartley Act, which states that the definition of an 
employment relationship should be governed by the common law 
principles of agency.\15\ Under the Restatement of Agency Sec.  
2(1), an employer is one who ``controls or has the right to 
control the physical conduct of the other in the performance of 
the service.''\16\ In contrast to this centuries-old test, H.R. 
3441 creates a completely new test, requiring that the joint 
employer's control must be ``direct, actual, and immediate.''
---------------------------------------------------------------------------
    \15\Congressional Record, Senate, at 1575-1576 (1947), reprinted in 
2 Legislative History of the Labor Management Relations Act, 1947, 51 
(1948), and House Conf. Rep. No. 510 on H.R. 3020 at 36 (1947) 
reprinted in 1 Legislative History of the Labor Management Relations 
Act, 1947, at 540 (1948).
    \16\The Restatement of Agency is a set of principles issued by the 
American Law Institute, intended to clarify the prevailing opinion on 
how the law of agency stands.
---------------------------------------------------------------------------
    The practical effect of this bill is to suppress wages for 
hundreds of thousands of permatemps, such as the Leadpoint 
workers, by making it easier for putative employers to avoid 
their bargaining obligations under the NLRA. This point is 
illustrated in the chart below, which shows that at recycling 
plants in the vicinity of BFI's facility, employees covered by 
a collective bargaining agreement earn between $19 and $30 per 
hour, plus health and retirement benefits. The subcontracted 
Leadpoint workers only make $12.50 per hour, with no benefits.

    WAGES AND BENEFITS OF MUNICIPAL WASTE SORTERS IN SAN FRANCISCO BAY AREA REPRESENTED BY TEAMSTERS LOCAL 350 COMPARED WITH LEADPOINT SORTERS AT THE
                                               BROWNING FERRIS INDUSTRIES (BFI) FACILITY (AUGUST 2017)\17\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                       BFI direct-hire
                                                                    South San     California Waste      South Bay          workers          Leadpoint
                                               Recology  (San       Francisco      Solutions (San    Recycling (San    (grandfathered    Sorters at BFI
                                                 Francisco)         Scavenger           Jose)            Carlos)           sorter)          Facility
                                                                     Company                                             (Milpitis)        (Milpitis)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly Wages................................            $30.11            $22.88            $23.52            $24.60            $19.20            $12.50
Health Care Contribution/Hour...............             12.31             11.96             11.96             11.96             11.96  ................
Pension Contribution/Hour...................                 *              4.85              3.18               6.3              3.15  ................
Retirement Security Plan Contribution/Hour..
                                             ----------------*---------------3.8--................---------------3.8--................--................
    Total...................................            $42.42            $43.49            $38.66            $46.66            $34.31            $12.50
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Note: Recology SF has a defined benefit of $4,583.33/month.

    \   \\17\Susan K. Garea, Esq., Beeson Taylor and Bodine, and 
Teamsters Local 350 (Aug. 29, 2017).

    The growing use of permatemps, coupled with the specific 
facts of the Browning Ferris case, provided ample reasons for 
the NLRB to return to its traditional joint employer standard. 
---------------------------------------------------------------------------
As the NLRB stated in that decision:

          [T]he primary function and responsibility of the 
        Board . . . is that of applying the general provisions 
        of the Act to the complexities of industrial life. If 
        the current joint-employer standard is narrower than 
        statutorily necessary and if joint-employment 
        arrangements are increasing, the risk is increased that 
        the Board is failing in what the Supreme Court has 
        described as the Board's responsibility to adapt the 
        Act to the changing patterns of industrial life.\18\
---------------------------------------------------------------------------
    \18\Browning Ferris, 362 NLRB No. 186 (2015) (internal citations 
omitted).
---------------------------------------------------------------------------

 H.R. 3441 EMPOWERS JOINT EMPLOYERS TO EVADE LIABILITY FOR WAGE THEFT 
AND CHILD LABOR VIOLATIONS UNDER THE FLSA, AS WELL AS VIOLATIONS OF THE 
                             EQUAL PAY ACT

    The Fair Labor Standards Act sets minimum wage, overtime, 
and child labor standards, and has long held that a single 
individual may be employed by two or more employers at the same 
time. The FLSA defines ``employ'' as ``to suffer or permit to 
work.''\19\ Its definition is the ``broadest definition [of 
employ] that has ever been included in any one act.''\20\ It is 
more encompassing than the definition of ``employer'' under the 
NLRA.
---------------------------------------------------------------------------
    \19\29 U.S.C. Sec.  203(g).
    \20\United States v. Rosenwasser, 323 U.S. 360, 363 (1945) (quoting 
81 Cong. Rec. 7,657 (1938) (remarks of Sen. Hugo Black).
---------------------------------------------------------------------------
    Congress developed the ``suffer or permit to work'' 
definition from several state laws. At the time, state 
legislatures had adopted a broad definition of employment to 
impose employer status on larger businesses that claimed 
ignorance when their labor intermediaries violated child labor 
laws. The state laws defined employers as entities that 
directly or indirectly employed a worker and defined the word 
``employ'' more broadly than the common law ``control or right 
to control test'', but instead as ``to suffer or permit to 
work.'' To ``suffer'' in this context means to acquiesce in, 
passively allow, or to fail to prevent the worker's work.\21\ 
As noted by Bruce Goldstein, President of Farmworker Justice:
---------------------------------------------------------------------------
    \21\Bruce Goldstein, Statement on H.R. 3441 (Oct. 2, 2017), 
available at: http://democrats-edworkforce.house.gov/imo/media/doc/
ESPAILLAT_FWJ%20Statement%20H.R%203441%20JtEmployer.pdf.

          This broad definition imposed liability on a company 
        that had the power to prevent the work of the worker 
        from happening and denied the business the ability to 
        hide its head in the sand about what was happening in 
        its business, including where it utilized labor 
        contractors or other intermediaries which were 
        considered employers of those workers.\22\
---------------------------------------------------------------------------
    \22\Id.
---------------------------------------------------------------------------
    The courts have found that a joint employment relationship 
can be found by assessing the economic realities between an 
employee and a putative joint employer. Consideration of these 
economic realities is consistent with the approach used by 
courts to determine employment status generally.\23\ In 
Rutherford Food Corporation v. McComb, the U.S. Supreme Court 
held that an employment relationship ``does not depend on . . . 
isolated factors but rather upon the circumstances of the whole 
activity.''\24\
---------------------------------------------------------------------------
    \23\United States v. Silk, 331 U.S. 704, 713 (1947).
    \24\In Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947), 
meat boners who worked on the premises of a slaughterhouse were hired 
by another employer under contract with the slaughterhouse. The Supreme 
Court held that the slaughterhouse was a joint employer for the purpose 
of minimum wage obligations under the FLSA because the boners' work was 
``part of the integrated unit of production''.
---------------------------------------------------------------------------
    In the Ninth Circuit case Bonnette v. California Health & 
Welfare Agency,\25\ the court set four factors to be used when 
establishing joint employment relationships. Courts examine 
whether the alleged employer:
---------------------------------------------------------------------------
    \25\704 F.2d 1465 (1983).

          1. Had the power to hire and fire employees,
          2. Supervised and controlled employee work schedules 
        or conditions of employment,
          3. Determined the rate and method of payment, and
          4. Maintained employment records.\26\
---------------------------------------------------------------------------
    \26\1 Ellen C. Kerns et al., The Fair Labor Standards Act, Sec.  3-
65.

    Bonnette was the standard for the economic realities test 
used for determining joint employment under the FLSA, and was 
translated to many other circuits. Since the case was decided 
in 1983, several circuit courts have amended and added to this 
list of factors based on the facts of the case. Courts have 
found joint employment relationships under the FLSA with 
respect to labor contractors, farming companies, and in sectors 
ranging from the janitorial sector to garment manufacturing. 
Courts have not found a franchisor to be a joint employer under 
the FLSA.
    The Majority contends that there is a need to legislate a 
change to the definition for joint employer under the FLSA 
based on recent Fourth Circuit decision Salinas v. 
Commercial,\27\ which the Majority Views characterize as 
adopting ``an expansive new joint employer standard.'' In the 
Salinas case, residential drywall workers who worked for a 
subcontractor in Maryland brought a claim for violations of the 
FLSA. Their subcontractor disappeared; the Court deemed the 
subcontractor defunct. The workers brought a claim against the 
general contractor as a joint employer. The Salinas decision 
applied a six factor test to assess whether there was an 
employment relationship between the prime contractor and the 
subcontractor's employees. The court found that the general 
contractor provided both direct supervision and supplied tools 
and equipment for performing the work. The Fourth Circuit's 
test was ``designed to capture the economic realities of the 
relationship between the worker and the putative employer'' and 
is well within the bounds of the FLSA.\28\
---------------------------------------------------------------------------
    \27\848 F.3d 125 (4th Cir. 2017).
    \28\Id. at 150.
---------------------------------------------------------------------------
    H.R. 3441 dramatically narrows who is liable as a joint 
employer under the FLSA and would allow low-road companies to 
benefit from workers' labor while shirking any responsibility 
to them simply by using an intermediary contractor.\29\ H.R. 
3441 would open the door to widespread wage theft in many 
growth industries, and reverse decades of judicial precedent 
and congressional intent. As noted by Michael Rubin in his 
testimony before the September 13th legislative hearing on this 
bill, ``The bill completely abandons [the FLSA's] longstanding 
definition and the decades of case law applying it to 
circumstances where two companies co-determine and share 
responsibility for their workers' terms and conditions of 
employment.''\30\
---------------------------------------------------------------------------
    \29\Joint Employment Explained: How H.R. 3441 Legalizes a Corporate 
Rip-Off of Workers, National Employment Law Project (Sept. 8, 2017), 
available at http://nelp.org/publication/joint-employment-explained-
how-hr-3441-legalizes-corporate-rip-off-workers/.
    \30\Testimony of Michael Rubin, before a joint hearing of the 
Subcommittee on Workforce Protections and the Subcommittee on Health, 
Employment, Labor and Pensions regarding H.R. 3441 (Sept. 13, 2017).
---------------------------------------------------------------------------
    To illustrate this, Michael Rubin described an FLSA case he 
litigated:

          In a case we settled a few years ago in Southern 
        California, hundreds of hard-working warehouse workers 
        were employed in four warehouses, loading and unloading 
        trucks for deliveries to Walmart distribution centers 
        throughout the country. Walmart owned the warehouses 
        and all of their contents. It contracted with a 
        subsidiary of Schneider Logistics, Inc. to operate the 
        warehouses. Schneider, in turn, retained two labor 
        services subcontractors who hired the warehouse 
        workers. By contract, all responsibility for legal 
        compliance rested solely with those two labor services 
        subcontractors. Yet Walmart and Schneider had kept for 
        themselves the contractual right to control almost 
        every aspect of those warehouse workers' employment, 
        directly and indirectly.
          The violations we found in those warehouses were 
        egregious. But the only reason the workers were 
        eventually able to obtain relief--through a $22.7 
        million settlement that resulted in many class members 
        receiving tens of thousands of dollars each as 
        compensation--was because the warehouse workers had 
        demonstrated a likelihood of success in proving that 
        Walmart and Schneider, as well as the staffing 
        agencies, were the workers' joint employers. The two 
        staffing agencies were undercapitalized . . . Only 
        because the federal courts focused on the actual 
        working relationships in those warehouses, as other 
        courts have done in other joint-employer cases under 
        the NLRA and FLSA, were the workers able to retain 
        compensation for past violations, to obtain higher 
        wages and significant benefits, and to have deterred 
        future violations.\31\
---------------------------------------------------------------------------
    \31\29 U.S.C. Sec.  206(d).

    At the September 13th legislative hearing, Representative 
Takano asked what these workers' remedy would be under this 
bill. Mr. Rubin's response: ``They would have no remedy at all. 
Their only recourse would be against the labor services 
contractor, who'' could only pay 7.5% of the total settlement 
amount.
    Amending the FLSA's definition of employer also hinders 
workers' abilities to bring equal pay claims when multiple 
employers are responsible for the violation. More than 50 years 
ago, President Kennedy signed the Equal Pay Act of 1963 (EPA) 
into law. The EPA amended the FLSA to prohibit sex-based wage 
discrimination between men and women in the same establishment 
who perform jobs that require substantially equal skill, 
effort, and responsibility under similar working 
conditions.\31\ Because the EPA is a part of the FLSA, the same 
definitions of ``employer,'' ``employ,'' and ``employee'' 
apply. Thus, narrowing the scope of who is considered a joint 
employer under the FLSA may impact the ability to bring equal 
pay claims under the EPA.

 H.R. 3441 WILL CREATE UNCERTAINTY REGARDING JOINT EMPLOYER LIABILITY 
   UNDER THE MIGRANT AND SEASONAL AGRICULTURAL WORKER PROTECTION ACT

    H.R. 3441 will also create uncertainty for farmworkers, who 
are among our nation's most vulnerable workers. The Migrant and 
Seasonal Agricultural Worker Protection Act (MSPA), the 
principal labor statute protecting agriculture workers, 
establishes wage, health, safety, and recordkeeping standards 
for seasonal or temporary farmworkers. Joint employment 
standards under this law and the FLSA are vital to protecting 
the rights and protections afforded to these workers.
    Frequently, farmworkers are recruited, hired, supervised, 
or transported by intermediaries, who are often referred to as 
farm labor contractors (FLC). Farm operators utilizing FLCs 
maintain control over working conditions, as Bruce Goldstein, 
President of Farmworker Justice, points out in his statement to 
the Committee:

          The economic reality is that few farm operators will 
        risk their profitability and the survival of their 
        business by delegating all responsibility to a labor 
        contractor. Most farm operators who engage labor 
        intermediaries exercise substantial decision-making 
        regarding the impact of subcontracted workers on their 
        business . . . In most cases, there is shared 
        responsibility among the farm operator and the labor 
        contractor so that the workers on the farm ensure the 
        profitability of that business.\32\
---------------------------------------------------------------------------
    \32\Bruce Goldstein, Statement for the Record on H.R. 3441 (Oct. 2, 
2017), p. 3., available at http://democrats-edworkforce.house.gov/imo/
media/doc/ESPAILLATFWJ%20Statement%20 H.R%203441%20JtEmployer.pdf.

    Despite this shared responsibility, farm operators may 
contend that the FLC's they engage are the farmworkers' sole 
employer responsible for compliance. FLCs are thinly 
capitalized and often cannot afford to pay court judgements for 
violations. Under the MSPA, joint employer liability helps 
ensure covered workers have adequate avenues for redress.
    In 1982, the Committee on Education and Labor incorporated 
the FLSA's broad definition of ``employ'' into the MSPA for the 
direct purpose of adopting the FSLA's joint employer doctrine. 
Congress believed this standard was the ``central foundation'' 
of MSPA's protections and necessary to ``reverse the historical 
pattern of abuse and exploitation of migrant and seasonal farm 
workers.''\33\ According to the committee report, the joint 
employer standard is ``the indivisible hinge between certain 
important duties imposed for the protection of migrant and 
seasonal workers and those liable for any breach of those 
duties.''\34\
---------------------------------------------------------------------------
    \33\H. Rep. No. 97-885, 97th Cong., 2d Sess., 1982.
    \34\Id. at 6.
---------------------------------------------------------------------------
    The MSPA regulations make it clear that the terms 
``employer'' and ``employee'' have the same meaning under both 
the FLSA and the MSPA. As the MSPA regulations read, ``[j]oint 
employment under the Fair Labor Standards Act is joint 
employment under the MSPA.''\35\ This means where a farmworker 
is economically dependent on a farm operator, he or she may be 
jointly employed by the FLC and the farm operator.
---------------------------------------------------------------------------
    \35\29 C.F.R. Sec.  500.20(h)(5)(i).
---------------------------------------------------------------------------
    While H.R. 3441 does not directly amend the FLSA's 
definition of ``employ,'' by creating a new, extremely narrow 
definition of ``joint employer'' under the FLSA, H.R. 3441 
upends the FLSA's joint employer framework upon which the MSPA 
relies. It is unclear how this legislative change would impact 
the application of joint employment liability under the MSPA, 
creating significant uncertainty for our nation's migrant and 
seasonal farmworkers.

   THE SAVE LOCAL BUSINESS ACT WOULD HURT LAW ABIDING CONTRACTORS BY 
          FORCING THEM TO COMPETE ON AN UNLEVEL PLAYING FIELD

    H.R. 3441 forces law abiding construction contractors to 
compete on an unlevel playing field, because it allows 
unscrupulous competitors to be free from joint employer 
liability when they use subcontractors who can cut project 
costs by engaging in wage theft. For this reason, the Signatory 
Wall and Ceiling Contractors Alliance (SWACCA), an association 
of construction contractors, opposes H.R. 3441. They recently 
wrote: ``The joint employment doctrine is an important means 
for forcing these unscrupulous contractors to compete on a 
level playing field and to be held accountable for the unlawful 
treatment of the workers they utilize.''\36\
---------------------------------------------------------------------------
    \36\Letter from the Signatory Wall and Ceiling Contractors Alliance 
to Speaker Paul Ryan and Minority Leader Nancy Pelosi (Oct. 5, 2017), 
available at http://democrats-edworkforce. house.gov/imo/media/doc/
SWACCA%20ltr%20of%20opposition%20-%20H.R.%203441.pdf.
---------------------------------------------------------------------------
    H.R. 3441 would exempt these unscrupulous contractors from 
liability by enabling them to exert even more control over the 
workers' terms and conditions while facing no liability for 
wage theft or overtime claims under the FLSA. As SWACCA noted, 
``H.R. 3441 would create a standard that would surely 
accelerate a race to the bottom in the construction industry 
and many other sectors of the economy. It would further tilt 
the field of competition against honest, ethical 
businesses.''\37\
---------------------------------------------------------------------------
    \37\Id.
---------------------------------------------------------------------------

    H.R. 3441 EMPOWERS FRANCHISORS TO DICTATE FRANCHISEES' EMPLOYEE 
RELATIONS, WHILE LEAVING FRANCHISEES EXCLUSIVELY ON THE HOOK WHEN THERE 
                             ARE VIOLATIONS

    Committee Republicans have claimed that this bill protects 
the franchising business model because the NLRB's Browning 
Ferris decision created legal uncertainty which hinders the 
growth of that model. The Majority has also claimed that this 
legislation would protect the independence of small franchisees 
by ensuring that franchisors would not feel compelled to take 
control of franchisees' labor relations in order to limit their 
own potential liability. Committee Republicans contend that the 
current standard ``threatens to upend small businesses, 
undermine their independence, and put jobs and livelihoods at 
risk.''\38\
---------------------------------------------------------------------------
    \38\Press Release, Committee on Education and the Workforce (Jul. 
27, 2017), available at https://edworkforce.house.gov/news/
documentsingle.aspx?DocumentID=401928.
---------------------------------------------------------------------------
    These arguments have no merit.
    First, no franchisor has ever been found to be a joint 
employer with its franchisees under the NLRA or the FLSA. The 
Browning Ferris decision explicitly stated that it did not 
affect the franchise model, and the decision has not had any 
documented effect on the industry's growth.\39\ Indeed, the 
franchise industry flourished in the decades before the NLRB 
narrowed its joint employer standard in 1984, using a standard 
identical to the one articulated in Browning Ferris. Franchise 
employment actually grew by 3 percent in 2015, the year 
Browning Ferris was decided, and by 3.5 percent in 2016. This 
rate is faster than the growth of franchising employment in the 
year prior to Browning Ferris.\40\
---------------------------------------------------------------------------
    \39\Browning Ferris, 362 NLRB No. 186 n.120 (2015) (``The dissent 
is simply wrong when it insists that today's decision `fundamentally 
alters the law' with regard to the employment relationships that may 
arise under various legal relationships between different entities: 
`lessor-lessee, parent-subsidy, contractor-subcontractor, franchisor-
franchisee, predecessor-successor, creditor-debtor, and contractor-
consumer.' None of those situations are before us today . . . As we 
have made clear, the common-law test requires us to review, in each 
case, all of the relevant control factors that are present determining 
the terms of employment.'').
    \40\Karla Walter, ``The So-Called `Save Local Business Act' Harms 
Workers and Small Businesses,'' Center for American Progress (Oct. 3, 
2017), available at https://www.americanprogressaction.org/issues/
economy/reports/2017/10/03/168754/called-save-local-business-act-harms-
workers-small-businesses/ (citing IHS Markit Economics, ``Franchise 
Business Economic Outlook for 2017'' (2017), available at https://
www.franchise.org/sites/default/files/
Franchise_Business_Outlook_Jan_2017.pdf; IHS Economics, ``Franchise 
Business Economic Outlook for 2015'' (2015), available at: https://
www.franchisefacts.org/assets/files/FranchiseBizOutlook2015.pdf.
---------------------------------------------------------------------------
    Second, the NLRB takes a reasoned, case-by-case approach 
when assessing whether any company, including a franchisor, is 
a joint employer. For example, the NLRB's General Counsel 
recently determined that Freshii's, a fast-casual restaurant 
franchisor, would not be deemed to be a joint employer with its 
franchisees, because its control was limited to maintaining 
brand standards and food quality.\41\ The threshold for joint 
employment liability is control over labor-management 
relationships. Control over brand standards does not cross that 
threshold.
---------------------------------------------------------------------------
    \41\See Nutritionality, Inc., d/b/a/ Freshii, Case 13-CA-134294 et 
al., Advice Memorandum (Apr. 28, 2015), available at http://
apps.nlrb.gov/link/document.aspx/09031d4581c23996.
---------------------------------------------------------------------------
    Testimony at a September 29, 2015 legislative hearing 
before the Subcommittee on Health, Employment, Labor and 
Pensions debunked the Majority's claim that the Browning Ferris 
standard has undermined franchisees' independence from their 
franchisors. Two franchisee witnesses--a Burger King franchisee 
and a Nothing Bundt Cakes franchisee--testified to this fear 
that franchisors would take over their employee relations in 
order to limit the franchisors' joint employer liability. 
However, in response to questioning, both testified that they 
have absolute and total control over their employment policies, 
and that their respective franchisors do not exercise control 
over their business operations.
    Mara Fortin (owner and operator of Nothing Bundt Cakes 
franchises) testified:

          I hire my own workers, set their wages, benefit 
        packages, et cetera. I manage my inventory and I 
        purchase equipment. I pay taxes as my own small 
        business with my own employer identification numbers. 
        And I help my employees when they are in need of 
        assistance. My franchisor plays no part in any of these 
        key functions that only a true and sole employer 
        performs.\42\
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    \42\Testimony of Mara Fortin before the Subcommittee on Health, 
Employment, Labor and Pensions of the Committee on Education and the 
Workforce, H.R. 3459, Protecting Local Business Opportunity Act (Sept. 
29, 2015), pp. 21 (Serial No. 114-28).

    In an exchange between Representative Guthrie and Ed 
Braddy, a Burger King franchisee testifying on behalf of the 
---------------------------------------------------------------------------
International Franchise Association, Mr. Braddy was asked:

          Representative Guthrie: Do you or do [sic] the 
        franchisor hire and fire and determine the work of your 
        employees?
          Mr. Braddy: I schedule interviews every other 
        Wednesday. I sit down with eight people every other 
        Wednesday. Even though I am not hiring, I do the 
        interviews because I always like to have a waiting list 
        of people who want to work. So I do all the hiring. I 
        don't allow my managers or my assistants to terminate 
        anyone because I want to make sure that once I let 
        someone go it is for a good reason.
          Mr. Guthrie: But it is you as the business owner, not 
        the--what role does the franchisor play in any of 
        your--those issues?
          Mr. Braddy: None at all.\43\
---------------------------------------------------------------------------
    \43\Testimony of Ed Braddy before the Subcommittee on Health, 
Employment, Labor and Pensions of the Committee on Education and the 
Workforce, H.R. 3459, Protecting Local Business Opportunity Act (Sept. 
29, 2015), pp. 84 (Serial No. 114-28).

    Based on this testimony, nothing in the Browning Ferris 
decision could establish that these franchisors are exercising 
sufficient control to be deemed a joint employer with their 
respective franchisees.
    Third, H.R. 3441 does not reduce franchisees' exposure to 
liability. A franchisee is an employer under the NLRA and the 
FLSA and will always have liability under current law. The 
question is whether the franchisor also shares liability as a 
joint employer, if it shares control over its franchisees' 
employee relations. This bill insulates franchisors from 
potential liability as a joint employer if they exercise 
control through their franchise agreement; moreover, this 
liability shield empowers franchisors to exercise indirect 
control over franchisees while leaving franchisees exposed to 
liability. If the franchisor mandates a policy that could 
violate the NLRA or the FLSA--such as firing workers who try to 
form a union--then the franchisee may be forced to choose 
between abiding by their franchisor's direction or compliance 
with the law.
    The current joint employer standards under the NLRA and the 
FLSA therefore benefit franchisees who want autonomy to manage 
their employment practices, because franchisors who involve 
themselves in their franchisees' labor relations will risk 
incurring a bargaining obligation or liability under the NLRA 
and FLSA. That potential liability will incentivize franchisors 
to distance themselves from control over their franchisees' 
labor relations.

    COMMITTEE DEMOCRATS OFFERED AMENDMENTS TO FIX FLAWS IN H.R. 3441

    Democrats offered the following seven amendments to the 
Amendment in the Nature of a Substitute to H.R. 3441, which was 
introduced by Representative Byrne (AL) as the base text at the 
beginning of the markup.

Amendment #1--Strikes the bill's definition of a ``joint employer'' 
        under the NLRA and replaces it with the traditional common law 
        test articulated in Browning Ferris, and strikes the bill's 
        definition of ``joint employer'' under the FLSA

    Representative Norcross (NJ) offered an amendment to adopt 
the NLRB's traditional common law test for determining who is a 
joint employer. The Norcross amendment would ensure that 
workers can meaningfully collectively bargain where more than 
one employer exercises control over the terms and conditions of 
employment. The amendment also strikes the bill text regarding 
the definition of a joint employer under the FLSA.
    The amendment was rejected 17 to 23, with all Democrats 
voting in favor of the amendment.

Amendment #2--Prevents disputes under the bill from being subject to a 
        pre-dispute arbitration agreement

    Representative Fudge (OH) offered an amendment that states 
that the provisions of this bill would not be subject to the 
terms of a pre-dispute arbitration agreement between an 
employee and the alleged employer, unless the arbitration 
agreement is pursuant to a collective bargaining agreement. The 
Fudge amendment would ensure that workers have full due process 
rights to hold employers responsible when they violate the NLRA 
or the FLSA. Over the past few decades employers have 
increasingly conditioned job offers on an employee's agreement 
to waive their right to seek recourse in the courts for 
employment related disputes and to submit such disputes solely 
to a private arbitrator. Employee win rates are far lower in 
mandatory arbitration than they are in federal or state courts, 
according to a report by the Economic Policy Institute.\44\
---------------------------------------------------------------------------
    \44\Alexander J.S. Colvin, ``The Growing Use of Mandatory 
Arbitration,'' Economic Policy Institute (Sept. 27, 2017), available at 
http://www.epi.ogv/publication/the-growing-use-of-mandatory-
arbitration/.
---------------------------------------------------------------------------
    The amendment was rejected 16 to 23, with all Democrats 
present voting in favor of the amendment.

Amendment #3--Prevents the bill from applying in cases when multiple 
        employers control the terms of employment, but no person meets 
        the test as an ``employer'' as set forth in H.R. 3441

    Ranking Member Scott (VA) offered an amendment to clarify 
that when there is a violation of the NLRA or the FLSA 
involving joint employers, but neither entity is deemed to be 
an ``employer'' under the criteria set forth in H.R. 3441, then 
the bill's provisions cannot be applied by a court. 
Representative Scott noted:

          I think it is clear under the amendment [in the 
        nature of a substitute] that it is possible that nobody 
        has total, direct control over the employment. It could 
        be shared, and if it is shared everybody gets to escape 
        liability. I do not think that is fair to the employee, 
        and if that is not a possibility, then the provisions 
        in the amendment would not make any difference. If it 
        is a possibility, then the amendment fixes it.

    The author of the bill, Representative Byrne, opposed the 
amendment saying it is ``totally unneeded,'' and that ``there 
is no unclear thing about this at all.''\45\ Mr. Scott replied: 
``I would just say that if there is no chance that you could 
end up with no employer, then you should not be afraid of this 
amendment.''\46\
---------------------------------------------------------------------------
    \45\Statement of the Representative Byrne, Committee Markup 
Transcript (Oct. 4, 2017), p.57.
    \46\Statement of Ranking Member Scott, Committee Markup Transcript 
(Oct. 4, 2017), pp.58-59.
---------------------------------------------------------------------------
    The amendment was rejected 17 to 23, with all Democrats 
voting in favor of the amendment.

Amendment #4--Holds a franchisor jointly and severally liable if a 
        franchisee takes an action at the direction of a franchisor and 
        such action violates the NLRA or the FLSA

    Representative Bonamici (OR) offered an amendment that 
states that when a franchisee takes an employment-related 
action at the direction of a franchisor and such action 
violates the NLRA or the FLSA, the franchisor shall be jointly 
and severally liable for such violation. The Bonamici amendment 
would ensure that small businesses, such as franchisees, are 
not treated unfairly under this legislation.
    The amendment was rejected 17 to 23, with all Democrats 
voting in favor of the amendment.

Amendment #5--Prevents provisions of the bill from applying unless the 
        employee receives regular paystubs

    Representative Takano (CA) offered an amendment that states 
that the provisions of H.R. 3441 would not apply unless the 
employee receives regular paystubs that correspond to the work 
performed by the employee during an applicable pay period. The 
Takano amendment would ensure that workers have the tools to 
fight back against wage theft.
    The amendment was rejected 17 to 23, with all Democrats 
voting in favor of the amendment.

Amendment #6--Renames H.R. 3441 the ``Wage Theft Immunity Act''

    Representative Polis (CO) offered an amendment to rename 
this bill the ``Wage Theft Promotion Act'' given that this 
legislation eviscerates worker protections under the NLRA and 
the FLSA by eliminating longstanding avenues for workers to 
recover stolen wages or to secure recourse for unfair labor 
practices from employers who jointly control terms of 
employment., According to a recent report from the Economic 
Policy Institute, 2.4 million workers in the 10 most populous 
States lost $8 billion annually from minimum wage violations 
alone.\47\ That is an average of 3,300 annually per year-round 
worker.
---------------------------------------------------------------------------
    \47\David Cooper and Teresa Kroeger, ``Employers Steal Billions 
from Workers' Paychecks Each Year,'' Economic Policy Institute (May 10, 
2017), available at http://www.epi.org/publication/employers-steal-
billions-from-workers-paychecks-each-year-survey-data-show-millions-of-
workers-are-paid-less-than-the-minimum-wage-at-significant-cost-to-
taxpayers-and-state-economies/.
---------------------------------------------------------------------------
    The amendment was rejected 17 to 23, with all Democrats 
voting in favor of the amendment.

Amendment #7--An Amendment in the Nature of a Substitute to enact the 
        Raise the Wage Act (H.R. 15), a bill to raise the minimum wage 
        to $15 per hour

    Representative Wilson (FL) offered a substitute that 
increases the minimum wage to $15 per hour by 2024. Today's 
minimum wage workers earn less per hour, adjusted for 
inflation, than their counterparts did 50 years ago even though 
productivity has more than doubled over that same time period. 
Raising the minimum wage to $15 an hour by 2024 will lift pay 
for nearly 30 percent of the American workforce and reverse the 
growing trend in income inequality between those at the top and 
everyone else.
    The amendment was ruled non germane.

                               CONCLUSION

    H.R. 3441 enables unscrupulous employers to avoid their 
legal responsibilities under the NLRA and FLSA, while denying 
employees recourse for violations of law and inflicting 
collateral damage to adversely impacted businesses. We urge the 
full House of Representatives to reject this legislation.
    The following organizations have opposed H.R. 3441: AFL 
CIO; Center for American Progress; Economic Policy Institute; 
Farmworker Justice, International Brotherhood of Teamsters; 
International Union, United Automobile, Aerospace and 
Agricultural Implement Workers of America (UAW); National 
Employment Law Project; North America's Building Trades Unions 
(NABTU); Service Employees International Union (SEIU); 
Signatory Wall and Ceiling Contractors Alliance; United 
Brotherhood of Carpenters and Joiners of America; United Farm 
Workers of America (UFW); United Food and Commercial Workers 
International Union (UFCW); and the United Steel, Paper and 
Forestry, Rubber, Manufacturing, Energy, Allied Industrial and 
Service Workers International Union (USW).
                                   Robert C. ``Bobby'' Scott,
                                             Ranking Member.
                                   Susan A. Davis.
                                   Raul M. Grijalva.
                                   Joe Courtney.
                                   Marcia L. Fudge.
                                   Jared Polis.
                                   Gregorio Kilili Camacho Sablan.
                                   Frederica S. Wilson.
                                   Suzanne Bonamici.
                                   Mark Takano.
                                   Alma S. Adams.
                                   Mark DeSaulnier.
                                   Donald Norcross.
                                   Lisa Blunt Rochester.
                                   Raja Krishnamoorthi.
                                   Carol Shea-Porter.
                                   Adriano Espaillat.

                                  [all]