A recent NLRB decision is placing great burden on employers who contract with small businesses by expanding the definition of “joint employer.” This is done by making it more likely that one employer is held responsible for labor violations of another separate and independent employer.
By considering more large companies and small businesses “joint employers” increases liability on Big Business that makes them less likely to contract with small businesses in the future.
Take, for example, the franchise industry. A franchisor sells the rights to use its business model and products. A franchisee, a.k.a. small business owner, buys the right to use the brand name, tested business methods, and products, but is responsible for the day-to-day operations. The franchisee is independent from the franchisor. The franchisee makes all decisions relating to its workforce—hiring, pay, scheduling, and supervision.
But the NLRB’s joint employer standard wants to deem the franchisor and franchisee one entity, which takes away the incentives of both parties to enter into a contractual relationship together. This shuts downs a tried and true avenue of becoming your own boss.
It gets worse. Such a misguided decision is going to take away the best job many Americans have ever had—being a small business owner. A recent survey by Endurance International Group found that 70 percent of small business owners said it was the best job ever despite the personal risks and financial costs.
Why is running our own business so important? Because Americans want the freedom to do what they love. According to the survey, 68% of respondents chose to become small business owners because it allowed them the independence to “pursue their passion.”
Almost half of those surveyed said the best aspect of being a small business owner was the “freedom and flexibility it gives them.”
The NLRB’s new joint employer standard is not just bad news for entrepreneurs who want to go into business for themselves. It’s a disaster for the whole economy.
According to the U.S. Small Business Administration, there are 28 million small businesses in the U.S., which make up for 54 percent of all U.S. sales. The SBA also finds that small business is responsible for 66% of all net new jobs since the 1970s.
The NLRB’s new joint employer standard blocks a path toward entrepreneurship, reduces job creation, and expands employer liability.
It’s time for the members of Congress to stand up to the unelected bureaucrats at the NLRB and demand they allow Americans to do what they love..