USHBC Letter in Support of the Congressional Review Act Regarding the NLRB Joint-employer Rule

Jan 9

Written By Javier Palomarez, President & CEO of the USHBC

Dear Members of Congress,

As a staunch advocate for the American Small Business and Hispanic communities, I write to you today in support of the Congressional Review Act resolution regarding the National Labor Relations Board’s (NLRB) joint-employer rule.

Last October, the NLRB released a ruling that established a new standard under the National Labor Relations Act (NLRA). This new standard classifies a business relationship as ‘joint-employer’ regardless of whether or not a business actually exercises the control needed to meet that classification. It would even be applied if a business is using an intermediary, like a staffing agency, extending liability to a third party which may not have the ability to exercise control over essential conditions of employment and at the workplace.

The new joint-employer ruling places unfair and illogical liability on a variety of businesses including Business to Business (B2B) contractors, franchise owners and even staffing agencies for possible NLRA violations.

While well-intentioned, this change will induce unrecoverable operational changes to millions of businesses across the country - many of them small and minority owned - who could be held liable for potential NLRA violations by simply entering a business-to-business contract.

The rule will take effect on February 26, 2024, unless Congress acts.

The industries and businesses most threatened by this change serve as the bedrock of our American economy and a stepping stone for hard working Americans looking for a job or starting their own business:

Franchisers & Franchisees: According to an Oxford Economics study, 32% of all survey respondents said they would not own a business without franchising. Furthermore, minority owned franchises were found to earn up to twice as much than minority owned independent businesses. Increased and overreaching liability in this realm will inevitably hinder the success and abundance of franchised businesses, an industry that creates millions of American jobs and generates $830 billion in annual economic output.
B2B Contracting: An Insider Intelligence report found that close to $4 trillion a year is spent in the United States on B2B contracting, a significant amount of which involves small and/or minority owned businesses. In fact, roughly a quarter of all American businesses are in the B2B marketplace. The new rule undermines the effectiveness of most B2B contracts by coupling them with increased liability.
Staffing Agencies: A $270 billion dollar industry, staffing agencies specialize in matching businesses with temporary, or sometimes permanent, employees. They also serve as a lifeline for marginalized Americans that otherwise could struggle to find employment. The new ruling establishes an unclear, case-by-case analysis of contracts in this space that creates a legal uncertainty and unwillingness for businesses to engage with staffing agencies.

As our small businesses continue to claw us out of economic recession and stagnation, we ought to consider the unintended consequences of proposed legislation. While we agree that we must hold businesses accountable for the fair treatment of employees, the NLRB’s new ruling does more to jeopardize jobs than protect those who fill them.

For these reasons, we ask you to support the Congressional Review Act joint resolution of

disapproval (H.J Res.98/ S.J.Res. 49) and to repeal the NLRB’s final rule on joint employer status. We must ensure that by striving to protect employees, we do not undermine a business’ ability to be an employer.

Sincerely,