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NRA welcomes House vote to narrow definition of joint employer liability

November 8, 2017

The U.S. House of Representatives Tuesday passed the Save Local Business Act, a decision that the National Restaurant Association described as a win for the foodservice industry.

The NRA strongly applauded Congress for standing up for small businesses across the country, Cicely Simpson, executive vice president of public affairs, National Restaurant Association, said in a press release. 

The bill passed with 234 Republicans and eight Democrats. Before the bill becomes a law, the Senate must also pass it, however. 

The Save Local Business Act would undo the Obama administration's National Labor Relations and Fair Labor Standards Acts to state that a company is jointly liable for a business partner's labor law violations only when it has "direct control" of the partner's workers. Before 2015, joint employer liability applied only when one company had "direct control" over another, but the Obama administration expanded the rule to include "indirect control."

Business groups — including the NRA —  predicted that the wording could make employers responsible for violations by other companies and have spent the past few years lobbying for the reversal.

The NRA, for example, created an animated video depicting a fictional restaurant owner hiring a crew to clean her restaurant. She later finds out that the company wasn't paying their employees overtime, and under the National Labor Relations and Fair Labor Standards Acts, she could be held liable despite not having "direct control" of payment, according to the video.

Christine Owens, executive director of the National Employment Law Project, disagrees with that sentiment, saying in a statement that the House voted to put working people last. Instead, she said, it sided with large corporations and business interests over the rights of workers to be paid fairly for their labor, to have safe working conditions, and to organize and bargain over the terms and conditions of their work.

"Rather than saving any local businesses, if this legislation becomes law, it will leave small and local businesses holding the bag when the conditions forced upon them by larger corporations result in legal violations perpetrated against their employees," she said.

Owens believes that the "so-called" Save Local Business Act immunizes contractors and franchisors from a host of legal responsibilities to the workers they jointly employ with their subcontractors and franchisees.

"Workers and local businesses are on the losing end of today's vote," she said. "The winners are the large corporations and their lobbyists and trade associations who already enjoy outsized power over the economy and the workplace, and whose contributions line the campaign coffers of the House members who voted for this bill."