House Education & Workforce Committee
Opening Statement by Chairwoman Virginia Foxx (R-AL): Markup of H.R. 3441, the Save Local Business Act
Today, the committee will consider H.R. 3441, the Save Local Business Act. Since the National Labor Relations Board unilaterally redefined what it means to be an employer in 2015, more than two dozen witnesses have come before this committee and others in Congress to tell us, in practical terms, what the decision means for the future of American jobs.
We’ve heard firsthand how the board’s decision, and the actions of regulators and activist judges that followed, have disrupted the daily operations of business owners across the country.
The consequences have been far-reaching. Basic, business-to-business relationships that have long been a part of the American way of life and a critical component to the success of our economy have been called into question.
The lines of responsibility for important worker protections are now blurry. Small business owners fear they will lose the independence they worked so hard to achieve. Others who rely on contracting opportunities fear their options for growth, along with their limited stream of revenue, will suddenly diminish.
Meanwhile, many hardworking men and women are left wondering why the relationship they have with their employer is changing, or if unelected bureaucrats or activist judges will dictate that they have a new boss at some distant company.
And that’s not all. While we’ve all been working together here in Congress to support workforce development reforms, we’ve simultaneously heard how the joint employer scheme makes it harder for employers effectively to do their part in addressing our nation’s skills gap.
All of this damage began with one extreme and obstructive ruling. We wouldn’t be here today if the overwhelming consensus wasn’t that the NLRB and Obama-era bureaucrats made serious mistakes.
We’re here today to complete one of the most important steps in correcting those mistakes. Mr. Byrne has introduced the Save Local Business Act with the support of most of the members of this committee.
The bill directly addresses the mistakes the NLRB made when it redefined the concept of joint employment and put so many jobs and livelihoods at risk. And it addresses the mistakes the Obama administration made when it spread the board’s flawed policy to other areas of federal labor law.
Both of our workforce subcommittee chairmen, Mr. Byrne and Mr. Walberg, have carefully examined the statutes under their respective jurisdictions. They worked together to ensure that the scope of the bill under consideration today appropriately clears up the existing confusion and restores the commonsense concept of joint employer for businesses of every size.
American workers deserve to know who they’re dealing with in their workplaces. They should have the power to speak for themselves on matters of pay, schedules, professional development — anything that helps them have the successful life they want for themselves.
In order to do that, they need to know with certainty who their employer is. But both employers and employees have made clear to this committee that the current joint employer standard is confusing at best, devastating at worst, and simply not sustainable.
We have heard them, and that’s what leads us to where we are today. I thank Mr. Byrne for his hard work bringing the Save Local Business Act this far, and I thank all of our members for being here and for ensuring the joint employer problem and this solution get the thorough attention they deserve.
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To most Americans, the question over who their employer is seems to be an obvious answer. It’s the person who hired them, the one who signs their paycheck.
As a former labor attorney, I can tell you it used to be very clear in legal terms how you become someone’s employer. But that’s no longer the case since the National Labor Relations Board stepped in.
Many people would be shocked to find out that some company they’ve had zero contact with is also considered their employer, in addition to the employer that actually hired them.
Now, we all agree there are times when two or more employers should be deemed “joint employers.” Before the NLRB overstepped, there was a commonsense understanding of the circumstances establishing that joint employer relationship. Both employers had to have “actual, direct, and immediate” control over essential terms and conditions of employment.
This standard made sense. But today, business owners and their employees face a standard vastly different, and far more confusing. They face a situation where a group of unelected bureaucrats in Washington are interfering with their relationship in a way that has created a lot of problems.
The NLRB’s decision and the Obama administration’s actions that followed, in addition to a litany of rulings by activist judges, have inserted a great deal of uncertainty and confusion into the traditional employer-employee relationship. Two completely separate employers can be considered joint employers if they made a business agreement that “indirectly” or “potentially” impacts their employees.
What does that even mean? It’s vague and confusing. Think of it from the employee’s standpoint. There shouldn’t be any room for question on who their employer is.
As for employers, they should have the clarity they need to look out for their employees in the way the law requires. Because in order for employees to have strong protections in the workplace, it needs to be crystal clear who is responsible for providing those protections.
We are here today because we are determined to provide that clarity once and for all and protect jobs and small businesses in our communities. I’m proud to say three of our Democrat colleagues, Representatives Correa, Cuellar, and Peterson, are cosponsors of the Save Local Business Act, and we hope to continue to build bipartisan support so we can restore commonsense to the joint employer issue.
This is an issue of great importance to both of our workforce subcommittees, which is why this critical legislation has been a joint effort with my colleague, Mr. Walberg. Chairwoman Foxx has made the Save Local Business Act a top priority for the full committee, and this hearing will bring us one step closer to moving it through the legislative process.
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This committee has been fighting to roll back the extreme joint employer scheme since it first took effect, and for good reason. It’s a threat to jobs, entrepreneurship, and local employers across the country.
We know this new joint employer standard has led to a whole host of real-world consequences, because that’s exactly what we’ve heard from business owners and their employees in each of our districts and before this committee.
We’ve all heard the voices of local job creators who fear they could lose control of their businesses to larger companies. One small business owner, who described himself as the “living definition of the American Dream,” warned the committee that he would “virtually overnight become a manager for a large company.”
We’ve also heard how this new standard has made it harder for small businesses to grow and create jobs in their communities. Kristie Arslan, the owner of a small gourmet popcorn shop, said she was considering opening five new locations through franchising, but the joint employer threat made her expansion plans too risky. She decided she could only open one new store instead of five.
This is just one concerning example of lost jobs and opportunity. So many hardworking entrepreneurs, who took a risk to start their own business, now find themselves in a sea of uncertainty. And it’s not just those in the franchising industry. Many small businesses and local vendors rely on contracts with larger companies, and they are concerned those contracts could soon be harder to come by.
According to the American Action Forum, the joint employer scheme threatens 1.7 million jobs. To protect those jobs, we have to restore a commonsense definition of what it means to be an employer.
I’d like to remind some of our critics that the Save Local Business Act reflects the same straight- forward joint employer test that workers and job creators relied on for decades.
To be someone’s employer, it makes perfect sense that you need to have “actual, direct, and immediate control” over terms and conditions of employment. This clear test does nothing to let employers off the hook for their obligations to their employees. What it does is ensure the actual employer is the one held responsible. And that’s the way it should be.
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.
As recognized by at least three of our colleagues on the other side of the aisle, this isn’t a Democrat versus Republican issue. The Save Local Business Act is about providing certainty for job creators in each and every one of our districts. It’s about keeping the American Dream within reach.
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Rep. Virginia Foxx (R-NC), chairwoman of the Committee on Education and the Workforce spoke on the House floor to commemorate the 25th anniversary of the opening of the nation’s first charter school, and praised the hope an opportunity charter schools across the country provide for students and families.
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“Mr. Speaker, twenty-five years ago something monumental occurred for students and families who were seeking a new way to pursue a high-quality education.
“Twenty-five years ago, our nation’s first charter school, the City Academy, opened its doors in St. Paul, Minnesota.
“City Academy began a new era for school choice, and provided families with an alternative option to the traditional public school system.
“Today, over 3 million students are enrolled in charter schools, and more than 6,800 have opened in over 40 states.
“Charter schools are not only growing as an option for students, but these schools are also getting results.
“Innovative charter schools are providing thousands of students and families with the hope and opportunity that they can receive a high-quality education, and gain the skills they need to succeed for the future.
“I congratulate City Academy for being a true pioneer in school choice twenty-five years ago, and support the expansion of school choice for American students and families.”
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Chairwoman Foxx Opening Statement: Hearing on “The Sharing Economy: Creating Opportunities for Innovation and Flexibility”
That same ingenuity is what led to the rise of the sharing economy, which is changing the way we live, work, and connect.
The growth of the sharing economy may be relatively recent. But the idea behind it really isn’t a new concept. For quite some time, people have exchanged goods and services, or shared their skills, time, or resources for a fee.
Think about it. For decades, people have found ways to earn extra income through babysitting, renting property, dog walking, holding garage sales, cleaning homes, or mowing a neighbor’s lawn.
What’s taking place in the sharing economy isn’t much different. But the Internet has brought this type of economic activity to a whole new level, and it has empowered people from all sorts of backgrounds to put their entrepreneurial ideas into motion.
There is no question that this growing economic sector has improved the American quality of life. Consumers have more choices. People in need of transportation have more options. Families can easily rent out their home to help pay their mortgage. Individuals have a new way to sell their homemade goods and crafts.
The sharing economy has also helped start-up businesses get off the ground, and it has created new job opportunities that didn’t exist before.
Not everyone is looking for a 9-5 job. More and more people are increasingly drawn to flexible work arrangements, and that’s what attracts them to the sharing economy. They want to be their own boss, control their own schedule, or earn extra cash while pursuing an education.
The sharing economy has provided thousands of hardworking men and women the opportunity to do just that. Today, there are an estimated 3.2 million people working in the sharing economy. 79 percent are doing so on a part-time basis.
This is an industry that has really taken off. And as we have seen throughout our history, innovation often occurs and flourishes during challenging economic times, which is remarkable and should be celebrated. It’s a testament to the strength of our economy and the resilience of the American people.
As the sharing economy continues to grow, we need to make sure outdated federal policies don’t stand in the way. The self-employed individuals who rely on the sharing economy for work don’t fit neatly into obsolete job categories defined in another era. So, there are important questions over how we can modernize policies to meet the needs of the future.
There are also questions over how sharing economy workers can gain access to affordable health care and prepare for a secure retirement. Not every answer can or should come from Washington. Innovation outside of Washington is needed to help tackle these challenges. And I have no doubt that the same creative minds behind the sharing economy will rise to the occasion.
Earlier this year, a bipartisan group of committee members visited the San Francisco area to meet with leaders in the technology industry. We saw the operations of sharing economy companies firsthand. It’s my hope that today’s conversation will build off that experience, inform our future policy discussions, and help all of us better understand the realities of this emerging workforce.
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