Backgrounder

Save Local Business Act

Bill name: Save Local Business Act
Bill sponsors: Sponsored by Sen. Roger Marshall (R-KS), Rep. James Comer (R-KY)

Summary:  The Save Local Business act would amend the National Labor Relations Act (NLRA) and Fair Labor Standards Act (FLSA) to only consider a business a “joint employer” if it directly, actually, and immediately exercises control over employment decisions, such as the hiring, pay structure, and overall contractual employment of each employee.  Being classified as a joint employer means a business shares with another business the control of employees as well as legal liability.  That exposure could be devastating for small businesses, contractors, and franchisors.

Marshall and Comer’s bill would provide clarity for employers and employees by returning to the “directly, actually, and immediately” joint employer standard as it was before a controversial 2015 NLRB decision, Browning-Ferris, and related Department of Labor guidance during the Obama administration, which expanded the joint employer standard and ensuing legal exposure to businesses engaged in even indirect, potential, or reserved control of the practices of another business and its employees.

In contrast to the Save Local Business Act, the controversial Protecting the Right to Organize (PRO) Act moving through Congress would make permanent the Obama Administration’s joint employer standard that would take away the ability of many small businesses to control aspects of how they work with their employees, making them “joint employers” with large and often distant corporations.

For example, many local restaurant chains aren’t owned by their corporate counterparts, but rather, by local individuals and families. While the corporation may dictate marketing standards and menus, it’s the local franchise owner who operates the business, makes hiring decisions, sets wages, and ensures health department and labor laws are followed. Under the PRO Act’s joint employer standard, the corporation would be responsible for the actions of the small business, meaning they will exert more control over franchises to mitigate liability.

The Trump administration’s Department of Labor issued a rule to reinstate a direct control joint employer standard for the FLSA, but it was withdrawn by the Biden administration.  The National Labor Relations Board also issued a joint employer rule during the Trump Administration to return the standard to as it was before the Browning-Ferris decision.

Unlike rulemakings and policy changes that can shift administration to administration, the Save Local Business act would be a lasting solution for businesses seeking clarity on joint employer and support American entrepreneurs, workers, and job creators.


Bill Status
:  Sen. Marshall and Rep. Comer reintroduced the Save the Local Business Act in May 2021, and the bill was referred to the Senate Committee on Health, Education, Labor, and Pensions and the House Committee on Education and Labor, which have sole jurisdiction on this issue.

In the 115th Congress, the legislation was approved by the House of Representatives on November 7, 2017 on a bipartisan vote of 242-181 [roll call vote]. Eight Democrats joined all Republicans to support the bill. No Republicans opposed.

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Additional Resources

The Save Local Business Act would go to bat for local job creators
June 16, 2021, Washington Examiner
Rep. James Comer (R-Ky.), U. S. Congress

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