Include ‘Joint Employer’ Fix in Omnibus Budget Bill

Congress has until March 23rd to fund the federal government, and is currently close to voting on an omnibus spending bill that would pay for programs through September. Members of Congress often try to attach amendments called policy riders to such bills because of their must-pass nature. On March 13th, the Competitive Enterprise Institute led a free-market coalition urging Congress to attach the Save Local Business Act (H.R. 4331) as a policy rider to the current omnibus spending bill. The legislation would settle ongoing joint employer confusion by reinstating the longstanding joint employer precedent that established a bright-line rule based on “direct control.”

Now, under the Obama-era joint employer standard, one company may be held liable for violations committed by another company that they do not directly control. This broad and vague standard exposes businesses to near-unlimited liability. Negative results from the current joint employer standard impact businesses and workers: research finds that it will reduce employmeny, force companies to steer away from offering apprenticeship and workforce development opportunities, reduce prospects for entrepreneurs because large businesses will be less likely to contract out non-core business functions, and stall business expansion.

Including the Save Local Business Act in the upcoming spending bill is great opportunity to settle the joint employer saga. There is bipartisan support behind the legislation because it supports job creation and independent small businesses. Neither political party is in favor of the negative outcomes associated with the Obama joint employer standard. It is time for legislators to set aside party politics and support workers and the small business community.