79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 115–379 

SAVE LOCAL BUSINESS ACT 

NOVEMBER 1, 2017.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Ms. FOXX, from the Committee on Education and the Workforce, 

submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 3441] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Education and the Workforce, to whom was 

referred the bill (H.R. 3441) to clarify the treatment of two or more 

employers as joint employers under the National Labor Relations 

Act and the Fair Labor Standards Act of 1938, having considered 

the same, report favorably thereon with an amendment and recommend that the bill as amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Save Local Business Act’’. 

SEC. 2. CLARIFICATION OF JOINT EMPLOYMENT. 

(a) NATIONAL LABOR RELATIONS ACT.—Section 2(2) of the National Labor Relations Act (29 U.S.C. 152(2)) is amended— 

(1) by striking ‘‘The term ‘employer’ ’’ and inserting ‘‘(A) The term ‘employer’ ’’; 

and 

(2) by adding at the end the following: 

‘‘(B) A person may be considered a joint employer in relation to an employee only 

if such person directly, actually, and immediately, and not in a limited and routine 

manner, exercises significant control over essential terms and conditions of employment, such as hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions, and tasks, or administering employee discipline.’’. 

(b) FAIR LABOR STANDARDS ACT OF 1938.—Section 3(d) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(d)) is amended— 

2 

(1) by striking ‘‘ ‘Employer’ includes’’ and inserting ‘‘(1) ‘Employer’ includes’’; 

and 

(2) by adding at the end the following: 

‘‘(2) A person may be considered a joint employer in relation to an employee for 

purposes of this Act only if such person meets the criteria set forth in section 2(2)(B) 

of the National Labor Relations Act (29 U.S.C. 152(2)(B)).’’. 

PURPOSE

H.R. 3441, the Save Local Business Act, provides a commonsense 

standard under the National Labor Relations Act (NLRA) and Fair 

Labor Standards Act (FLSA) for determining whether a joint employment relationship exists. The bill restores the long-held standard for determining joint employer status under the NLRA that 

was overturned by a decision of the National Labor Relations 

Board (NLRB or the Board). Additionally, the bill provides a uniform joint employer standard under the FLSA. Specifically, H.R. 

3441 amends the NLRA and FLSA to allow two or more employers 

to be considered joint employers only if each shares and exercises 

actual, direct, and immediate control over essential terms and conditions of employment. In doing so, the bill protects the independence of businesses, in particular small businesses such as 

franchisees and subcontractors. 

COMMITTEE ACTION

113TH CONGRESS

Subcommittee hearing on NLRB issues 

On June 24, 2014, the Subcommittee on Health, Employment, 

Labor, and Pensions (HELP) held an NLRB oversight hearing titled ‘‘What Should Workers and Employers Expect Next from the 

National Labor Relations Board?’’ Witnesses were Mr. Andrew F. 

Puzder, CEO, CKE Restaurants Holdings, Inc., Carpinteria, California; Mr. Seth H. Borden, Partner, McKenna Long & Aldridge, 

New York, New York; Mr. James B. Coppess, Associate General 

Counsel, AFL–CIO, Washington, D.C.; and Mr. G. Roger King, Of 

Counsel, Jones Day, Columbus, Ohio. Witnesses discussed upcoming NLRB cases as well as Board policy and cited changes to the 

joint employer standard as one of the most significant and controversial issues before the Board at that time. 

Subcommittee hearing on potential changes to the NLRB’s joint employer standard 

On September 9, 2014, the HELP Subcommittee held a hearing 

on potential changes to the NLRB’s joint employer standard titled 

‘‘Expanding Joint Employer Status: What Does It Mean for Workers and Job Creators?’’ Witnesses were Mr. Todd Duffield, Shareholder, Ogletree, Deakins, Nash, Smoak & Stewart, Atlanta, Georgia; Mr. Clint Ehlers, President, FASTSIGNS of Lancaster and 

Willow Grove, Lancaster and Willow Grove, Pennsylvania, testifying on behalf of the International Franchise Association; Mr. 

Harris Freeman, Professor, Western New England University 

School of Law, Springfield, Massachusetts; Ms. Catherine Monson, 

Chief Executive Officer, FASTSIGNS International, Inc., 

Carrollton, Texas, testifying on behalf of the International Franchise Association; and Mrs. Jagruti Panwala, owner of multiple 

3 

1 362 NLRB No. 186 (2015). 

hotel franchises in the northeastern United States, Bensalem, 

Pennsylvania. Witnesses spoke about how an expanded joint employer standard would negatively impact franchises and other 

small businesses. 

114TH CONGRESS

Subcommittee field hearing in Mobile, Alabama 

On August 25, 2015, the HELP Subcommittee held a field hearing titled ‘‘Redefining ‘Employer’ and the Impact on Alabama’s 

Workers and Small Business Owners’’ in Mobile, Alabama, in anticipation of the NLRB creating a new joint employer standard. 

Witnesses were Mr. Marcel Debruge, Burr and Forman LLP, Birmingham, Alabama; Mr. Chris Holmes, CEO, CLH Development 

Holdings, Tallahassee, Florida; and Col. Steve Carey, USAF, Ret., 

Owner and Operator, CertaPro Painters of Mobile and Baldwin 

Counties, Daphne, Alabama, testifying on behalf of the Coalition to 

Save Local Businesses and the International Franchise Association. 

Witnesses testified the new joint employer standard would threaten the independence of small businesses in Alabama and deter 

franchisors from licensing new franchisees. 

Subcommittee field hearing in Savannah, Georgia 

On August 27, 2015, the HELP Subcommittee held a field hearing titled ‘‘Redefining ‘Employer’ and the Impact on Georgia’s 

Workers and Small Business Owners’’ in Savannah, Georgia, regarding the NLRB’s joint employer standard. Witnesses were Mr. 

Jeffrey M. Mintz, Shareholder, Littler Mendelson, P.C., Atlanta, 

Georgia; Mr. Kalpesh ‘‘Kal’’ Patel, President and COO, Image Hotels, Inc., Pooler, Georgia; Mr. Alex Salguerio, Savannah Restaurants Corp., Savannah, Georgia; and Mr. Fred Weir, President, 

Meadowbrook Restaurant Company Inc., Cumming, Georgia, testifying on behalf of the Coalition to Save Local Businesses and the 

International Franchise Association. Witnesses testified the new 

joint employer standard would hurt small business growth in Georgia and create barriers to entry for potential franchise owners. 

Introduction of H.R. 3459, Protecting Local Business Opportunity 

Act 

On September 9, 2015, then-Committee on Education and the 

Workforce (Committee) Chairman John Kline (R–MN) introduced 

H.R. 3459, the Protecting Local Business Opportunity Act. Recognizing the threat to small businesses posed by the NLRB’s August 

2015 decision in Browning-Ferris Industries of California, Inc. 

(Browning-Ferris),1 the legislation amended the NLRA to restore 

the long-held standard that two or more employers can only be considered joint employers for purposes of the Act if each shares and 

exercises control over essential terms and conditions of employment 

and such control over these matters is actual, direct and immediate. Chairman Lamar Alexander (R–TN) of the Senate Health, 

Education, Labor, and Pensions Committee introduced companion 

legislation, S. 2015, also on September 9, 2015. 

4 

Subcommittee Legislative Hearing on H.R. 3459, Protecting Local 

Business Opportunity Act 

On September 29, 2015, the HELP Subcommittee held a legislative hearing on H.R. 3459, the Protecting Local Business Opportunity Act. Witnesses at the hearing were Mr. Ed Braddy, President, Winlee Foods, LLC, Timonium, Maryland, testifying on behalf 

of himself and the National Franchisee Association; Mr. Kevin 

Cole, CEO, Enniss Electric Company, Manassas, Virginia, testifying on behalf of the Independent Electrical Contractors; Mr. 

Charles Cohen, former Member of the NLRB and Senior Counsel, 

Morgan, Lewis & Bockius, LLP, Washington, D.C.; Ms. Mara 

Fortin, President and CEO, Nothing Bundt Cakes, San Diego, California, testifying on behalf of herself and the Coalition to Save 

Local Businesses; Mr. Michael Harper, Professor, Boston University School of Law, Boston, Massachusetts; and Dr. Anne Lofaso, 

Professor, West Virginia University College of Law, Morgantown, 

West Virginia. Witnesses testified H.R. 3459 would restore the 

joint employer standard that had worked well for workers and 

business owners for decades and would protect opportunities for 

small business growth. 

Committee Passage of H.R. 3459, Protecting Local Business Opportunity Act 

On October 28, 2015, the Committee considered and marked up 

H.R. 3459, the Protecting Local Business Opportunity Act. Rep. 

Buddy Carter (R–GA) offered an amendment in the nature of a 

substitute, making a technical change to clarify the Act. The Committee voted to adopt the amendment in the nature of a substitute 

by voice vote. The Committee then favorably reported H.R. 3459, 

as amended, to the House of Representatives by a vote of 21–15. 

115TH CONGRESS

Subcommittee hearing on NLRB issues 

On February 14, 2017, the HELP Subcommittee held a hearing 

titled ‘‘Restoring Balance and Fairness to the National Labor Relations Board.’’ Witnesses decried the extreme, partisan decisions of 

the NLRB during the Obama administration, including the expanded joint employer standard. Witnesses were Ms. Reem Aloul, 

BrightStar Care of Arlington, Arlington, Virginia, testifying on behalf of the Coalition to Save Local Business; Ms. Susan Davis, 

Partner, Cohen, Weiss and Simon, LLP, New York, New York; Mr. 

Raymond J. LaJeunesse, Jr., Vice President, National Right to 

Work Legal Defense and Education Foundation, Springfield, Virginia; and, Mr. Kurt G. Larkin, Partner, Hunton & Williams LLP, 

Richmond, Virginia. 

Full committee hearing on joint employer issues 

On July 12, 2017, the Committee held a hearing titled ‘‘Redefining Joint Employer Standards: Barriers to Job Creation and Entrepreneurship’’ to examine the impact of expanding joint employer 

standards across federal labor laws, including the NLRA and the 

FLSA. Witnesses were Mr. Michael Harper, Professor, Boston University School of Law, Boston, Massachusetts; Mr. Richard Heiser, 

Vice President, FedEx Ground Package System, Inc., Chicago, IlliVerDate Sep 11 2014 18:17 Nov 03, 2017 Jkt 079006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\HR379.XXX HR379
5 

2The amendment in the nature of a substitute clarified that a list of terms and conditions 

of employment included in the act are examples of what can be considered in a joint employer 

analysis, but not a comprehensive list, and control of every term and condition is not required 

for joint employment to be found. 

nois; Mr. G. Roger King, Senior Labor and Employment Counsel, 

HR Policy Association, Washington, D.C.; Mr. Jerry Reese II, Director of Franchise Development, Dat Dog, New Orleans, Louisiana, 

testifying on behalf of the Coalition to Save Local Business; Ms. 

Catherine K. Ruckelhaus, General Counsel, National Employment 

Law Project, New York, New York; and Ms. Mary Kennedy Thompson, Chief Operating Officer of Franchise Brands, Dwyer Group, 

Waco, Texas, testifying on behalf of the International Franchise Association. Witnesses testified about the importance of reigning in 

expanding joint employer standards. 

Introduction of H.R. 3441, Save Local Business Act 

On July 27, 2017, Subcommittee on Workforce Protections Chairman Bradley Byrne (R–AL) introduced H.R. 3441, the Save Local 

Business Act. In response to expanding joint employer standards 

under the NLRA and FLSA, the bill amends both laws to provide 

that two or more employers can only be considered joint employers 

if each shares and exercises control over essential terms and conditions of employment and such control over those matters is actual, 

direct, and immediate. 

Joint subcommittee legislative hearing on H.R. 3441, Save Local 

Business Act 

On September 13, 2017, the HELP and Workforce Protections 

Subcommittees held a joint legislative hearing on H.R. 3441. Witnesses were Mr. Zachary D. Fasman, Partner, Proskauer Rose 

LLP, New York, New York; Ms. Tamra Kennedy, President, Twin 

Cities T.J.’s Inc., Roseville, Minnesota, testifying on behalf of the 

Coalition to Save Local Business; Mr. Granger MacDonald, Chief 

Executive Officer, The MacDonald Companies, Kerrville, Texas, 

testifying on behalf of the National Association of Home Builders; 

and Mr. Michael Rubin, Partner, Altshuler Berzon LLP, San Francisco, California. Witnesses testified that H.R. 3441 clarifies the 

joint employer standard used under both the NLRB and FLSA and 

benefits workers and business owners. 

Committee passage of H.R. 3441, Save Local Business Act 

On October 4, 2017, the Committee considered and marked up 

H.R. 3441. Subcommittee on Workforce Protections Chairman 

Byrne offered an amendment in the nature of a substitute, making 

technical changes.2 The Committee voted to adopt the amendment 

in the nature of a substitute by voice vote. The Committee then favorably reported H.R. 3441, as amended, to the House of Representatives by a vote of 23 to 17. 

SUMMARY

The Save Local Business Act reaffirms that two or more employers must have ‘‘direct, actual, and immediate’’ control over employees to be considered joint employers. H.R. 3441 provides needed 

clarity to the job creators, entrepreneurs, and workers who are 

being adversely impacted by expanding joint employer standards. 

6 

3 362 NLRB No. 186 (2015). 

4 848 F.3d 125 (4th Cir. 2017). 

5TLI, Inc., 271 NLRB 798, 798–99 (1984), overruled by BFI, 362 NLRB No. 186. 6See Airborne Express, 338 NLRB 597, 597 n.1 (2002) (‘‘[The] essential element in [joint employer] analysis is whether a putative joint employer’s control over employment matters is direct 

and immediate.’’); AM Prop. Holding Corp., 350 NLRB 998, 1000 (2007) (‘‘In assessing whether 

a joint employer relationship exists, the Board . . . looks to the actual practice of the parties.’’). 7Prior to 1984, the joint employer standard was less well-defined under the NLRA, but was 

generally never as expansive as the new standard from Browning-Ferris. 

In particular, the bill rolls back vague and convoluted joint employer schemes as created by the NLRB in Browning-Ferris,3 by 

the U.S. Court of Appeals for the Fourth Circuit with respect to the 

FLSA in Salinas v. Commercial Interiors, Inc. (Salinas),4 and by 

regulators and other courts. H.R. 3441 restores a commonsense definition of employer and protects workers and local employers from 

future overreach by unelected bureaucrats and activist judges. 

COMMITTEE VIEWS

Background on the NLRB and the Browning-Ferris decision 

Enacted in 1935, the NLRA guarantees the right of most privatesector employees to organize and bargain collectively with employers through representatives of their choosing, or to refrain from 

such activities. The NLRB is an independent federal agency established by the NLRA to fulfill two principal functions: (1) determine 

whether employees wish to be represented by a union and (2) prevent and remedy employer and union unlawful acts, called unfair 

labor practices. 

From 1984 to August 2015, the NLRB determined whether two 

separate entities should be considered joint employers by analyzing 

whether the entities shared control over or co-determined the essential terms and conditions of employment.5 Essential terms and 

conditions of employment could include hiring, firing, discipline, supervision, and direction of employees. Prior to Browning-Ferris, 

control over these employment matters needed to be ‘‘actual, direct, 

and immediate’’ for the Board to find two or more entities to be 

joint employers.6 Thus, under this standard, the Board rarely 

found joint employer status.7

On August 27, 2015, the NLRB issued a 3–2 decision in Browning-Ferris that radically revised the joint employer standard, causing significant concern for every employer with a contractual relationship with a separate entity, including franchisees and subcontractors. Under the standard set forth in Browning-Ferris, companies sharing indirect or potential control over another’s workforce 

may be considered joint employers. Under this standard, an employer could be held liable for the decisions of another entity—decisions of which the employer may not even be aware. 

In Browning-Ferris, a Teamsters local sought to organize recycling sorters directly employed by Leadpoint Business Services 

(Leadpoint), a subcontractor of Browning-Ferris Industries (BFI). 

The Teamsters asserted BFI was a joint employer with Leadpoint. 

An NLRB regional director applied the traditional joint employer 

standard and found BFI did not exert sufficient control over 

Leadpoint’s employees to be a joint employer. He then directed an 

election with Leadpoint as the sole employer. The Teamsters appealed to the Board. 

7 

8 Browning-Ferris Industries, 362 NLRB No. 186 at 18–20. 9 Id. at 2. 10 Id. at 16. 11 Id. 12 Browning-Ferris Indus. of Cal., Inc. v. NLRB, Nos. 16–1028, 16–1063 & 16–1064 (D.C. Cir. 

2016). 13 Brief of the U.S. Equal Emp’t Opportunity Comm’n as Amicus Curiae in Support of Respondent/Cross-Petitioner and in Favor of Enforcement, Browning-Ferris Indus. of Cal., Inc., 

Nos. 16–1028, 16–1063 & 16–1064, at 6 (D.C. Cir.) (filed Sept.14, 2016). 14 364 NLRB No. 39 (2016). 

In its decision, the Board adopted a new standard and found BFI 

was a joint employer with Leadpoint. In ruling BFI to be a joint 

employer, the Board found the temporary labor service agreement 

between the two employers indicated BFI’s indirect control over 

Leadpoint’s employees. This agreement included BFI’s ability to reject employees referred by Leadpoint, set specific productivity 

standards of Leadpoint’s employees through Leadpoint’s supervisors, and set wage ceilings for Leadpoint’s employees performing 

comparable work to BFI employees.8

The Board held that two or more entities are joint employers if 

(1) there is a common-law employment relationship with the employees in question and (2) the putative joint employer possesses 

sufficient control over employees’ essential terms and conditions of 

employment to permit meaningful collective bargaining.9 The 

Board rejected the previous requirement that the joint employer’s 

control be actual, direct, and immediate—overruling three decades 

of Board precedent.10 Instead, the ‘‘right to control,’’ even if it is 

not actually exercised, is evidence of joint employer status.11

BFI has challenged the new joint employer standard at the U.S. 

Court of Appeals for the District of Columbia Circuit.12 Over a 

dozen stakeholders filed amicus briefs arguing against the new 

standard because it is too broad, creates legal uncertainty that will 

lead to more litigation, and overturns a clear, bright-line test. In 

contrast, the Equal Employment Opportunity Commission filed an 

amicus brief in support of the NLRB’s new joint employer standard, noting the test’s ‘‘flexibility.’’ 13 Oral arguments were held on 

March 9, 2017, but the Court has not yet issued its decision. 

In July 2016, the NLRB expanded the potential impact of Browning-Ferris in Miller and Anderson.14 This case concerned a ‘‘mixed’’ 

bargaining unit consisting of workers solely employed by one employer and workers jointly employed by two employers. Such mixed 

bargaining units have the potential to create conflicts of interest 

between differing sets of employees and employers all combined 

into one unit. Previously, establishing a mixed bargaining unit required the consent of both employers. Instead, Miller and Anderson 

reverted to a standard briefly used between 2000 and 2004, where 

unions could petition for mixed bargaining units without employer 

consent. For such a unit to be formed, a joint employer relationship 

must first exist. As Browning-Ferris makes a finding of a joint employer relationship more likely, there will be increased opportunities for mixed bargaining units. 

Under Browning-Ferris, there is already the potential to force 

joint employers with conflicting interests to bargain together across 

the table from the union. Such conflicts of interest will likely only 

be exacerbated when bargaining units consist of solely employed 

and jointly employed workers. 

8 

15The FLSA applies to federal employees of the Library of Congress, the U.S. Postal Service, 

the Postal Rate Commission, and the Tennessee Valley Authority. 16The FLSA specifically requires employers to maintain adequate records reflecting covered 

employees’ hours of work and pay for all hours worked. 17 29 U.S.C. § 218. 18See In re Enter. Rent-A-Car Wage & Hour Emp’t Practices Litig., 683 F.3d 462, 468–69 (3d 

Cir. 2012); Baystate Alt. Staffing, 163 F.3d 668, 675 (1st Cir. 1998). 19See, e.g., Zheng v. Liberty Apparel Co., 355 F.3d 61, 71–72 (2d Cir. 2003). 20DEP’T OF LABOR, ADMINISTRATOR’S INTERPRETATION NO. 2016–1 (Jan. 20, 2016). 21 Id. 22 News Release, U.S. Dep’t of Labor, US Sec’y of Labor Withdraws Joint Employment, Indep. 

Contractor Informal Guidance (June 7, 2017), https://www.dol.gov/newsroom/releases/opa/ 

opa20170607. 

The expanding joint employer standard under the FLSA 

Enacted in 1938, the FLSA is the primary federal statute setting 

forth employment rules concerning minimum wages, maximum 

hours, and overtime pay. The FLSA covers some 135 million fulland part-time workers in the private sector and in federal, state, 

and local governments15 and specifies minimum wage, overtime 

pay, child labor, and record keeping standards.16

Congress delegates authority to DOL to interpret the FLSA via 

regulations; however, state wage and hour laws are not preempted 

by the FLSA, so long as states’ laws are more ‘‘protective’’ of employees.17 In addition, the FLSA provides for enforcement actions 

by DOL and private litigation between employees and employers in 

which court interpretations further shape the contours of the law. 

The FLSA, like the NLRA, currently defines only the term employer, not joint employer. This lack of a definition has led federal 

courts to develop various tests for determining whether two entities 

have a joint employer relationship under the FLSA. Standards vary 

from one federal circuit to another. For example, the First and 

Third Circuits examine the potential joint employer’s control over 

essential terms and conditions of employment, such as the power 

to hire and fire the employee.18 Another circuit looks to the ‘‘economic reality’’ of the relationship, such as whether the employee 

works primarily for the potential joint employer.19 For the most 

part, the courts’ various tests come down to whether the putative 

employer exercises authority and control over the employee, as 

would be expected in a traditional employment relationship. 

DOL’s Wage and Hour Division issued an Administrator’s Interpretation (AI) in January 2016 on joint employment under the 

FLSA, further compounding the lack of judicial clarity.20 The AI’s 

analysis broadly interpreted joint employment under the FLSA, rejecting ‘‘control [over essential terms and conditions of employment] 

as the standard for determining employment.’’ 21 The Obama administration’s DOL said the AI was needed because the growing 

variety and prevalence of business models—such as third-party 

management companies, independent contractors, and staffing 

agencies—have made joint employment more common. The AI also 

highlighted certain industries where joint employment issues are 

more prevalent: construction, temporary staffing, hospitality, janitorial services, warehouse and logistics, and agriculture. However, 

stakeholders argued the AI would increase litigation and encourage 

companies to alter their business models or risk being exposed to 

significant liability. 

On June 7, 2017, Secretary of Labor Alexander Acosta announced the withdrawal of the AI on joint employment.22 However, 

9 

23 848 F.3d 125 (4th Cir. 2017). 24 Id. at 141 (internal quotation marks omitted). 25 Id. at 141–42. 26 Id. at 142. 27 Hunton & Williams LLP, 4th Circuit Significantly Expands Joint Employer Liability Under 

FLSA With Incredibly Broad New Test (Mar. 2017), https://www.hunton.com/images/content/2/ 

7/v2/27717/4th-cir-expands-joint-employer-liability-flsa.pdf. 28See 29 U.S.C. § 157 (‘‘Employees shall have the right to self-organization, to form, join, or 

assist labor organizations, to bargain collectively through representatives of their own choosing, 

and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection . . . .’’). 

the now-withdrawn AI’s broad interpretation of joint employment 

indicates how the plaintiffs’ bar and select judges are continuing to 

aggressively pursue the issue. Moreover, under future administrations, DOL’s Wage and Hour Division could reissue the AI unless 

Congress amends the FLSA to preclude it. 

This expansive approach was typified by a Fourth Circuit case 

decided this year. On January 25, 2017, the U.S. Court of Appeals 

for the Fourth Circuit adopted an expansive new joint employer 

standard under the FLSA in Salinas.23 In this case, Commercial 

Interiors subcontracted with J.I. General Contractors for drywall 

installation on a project. When employees of J.I. General Contractors sued for overtime wages under the FLSA, they named both J.I. 

General Contractors and Commercial Interiors as employers. 

On appeal, the Fourth Circuit ruled Commercial Interiors was a 

joint employer with J.I. General Contractors. The Fourth Circuit 

used a new test to find joint employer status under the FLSA 

where ‘‘two or more persons or entities are not completely disassociated with respect to a worker such that the persons or entities 

share, agree to allocate responsibility for, or otherwise codetermine—formally or informally, directly or indirectly—the essential 

terms and conditions of the worker’s employment.’’ 24 The Court 

identified six factors courts should use in making that finding, including ‘‘[t]he degree of permanency and duration of the relationship between the putative joint employers.’’ 25

Moreover, Salinas states ‘‘one factor alone can serve as the basis 

for finding that two or more . . . entities are ‘not completely disassociated.’ ’’ 26 As such, the Fourth Circuit’s test seems to make 

any relationship or collaboration between two businesses a joint 

employer relationship because the two entities will not be completely disassociated from each other, even if the supposed joint 

employer has no direct authority or control over the other entity’s 

employee. 

This test for joint employer status under the FLSA is even broader than the Browning-Ferris test under the NLRA. One commentator noted, ‘‘No other court, and not even the Obama-era DOL, has 

interpreted joint employment this broadly.’’ 27 While this test only 

applies to cases in the Fourth Circuit, other courts likely will be 

urged to adopt it. 

Consequences of expanded joint employer standards 

Unions have long sought a broader NLRA joint employer test to 

protect ‘‘concerted activity’’ 28 and bring more parties to the bargaining table. Prior to Browning-Ferris, there have been significant 

limits on union activity against non-employers, such as secondary 

10 

29 In a secondary boycott, a union and its members refuse to work for, purchase from, or handle the products of a business with which the union has a dispute. 30 A ‘‘neutrality agreement’’ is a contract between a union and an employer under which the 

employer agrees to support a union’s attempt to organize its workforce. ‘‘Voluntary recognition’’ 

is when employees persuade an employer to voluntarily recognize a union after showing majority support by signed authorization cards or other means. 31GOVERNMENT ACCOUNTABILITY OFFICE, FAIR LABOR STANDARDS ACT: THE DEPARTMENT OF

LABOR SHOULD ADOPT A MORE SYSTEMATIC APPROACH TO DEVELOPING ITS GUIDANCE, GAO–14– 

69 (December 18, 2013). 

boycotts.29 However, if a previously neutral employer (i.e., a 

franchisor or contracting company) is deemed a joint employer, a 

previously illegal secondary boycott would then be NLRA-protected 

concerted activity. This would allow a union to pressure one of the 

employers into a neutrality agreement or voluntary recognition.30

The threat of liability for actions taken entirely by a contractor 

or franchise partner will make larger businesses less likely to work 

with smaller businesses. Under the FLSA, employers will be particularly cautious about avoiding any chance of joint employer liability. Over the past several decades, FLSA litigation has skyrocketed, seeing over a 500 percent increase between 1991 and 

2012.31 Adding another defendant as a joint employer to an FLSA 

case can be an attractive proposition to a plaintiff’s attorney, even 

if that extra defendant was not directly involved in the actions behind the underlying claim. As a result, larger companies will be 

constrained in their willingness and ability to boost the economy 

from the ground up by partnering with smaller, local businesses 

with less of a track record. 

The economic benefits of contract work will be greatly diminished 

by the expanded joint employer standards. For instance, many 

manufacturing plants contract out janitorial work so that they can 

efficiently focus on what they do best, manufacturing. Under the 

new joint employer standard, however, the manufacturing company 

may be liable for the janitorial company’s employment actions and 

would be forced to bargain with the janitorial company’s employees. 

Such a system may not be viable for many employers. 

Expanded joint employer standards under the FLSA and NLRA 

will hurt the franchise model as well. Franchisors may be found to 

be joint employers with their franchisees based on indirect control 

of the franchisees’ operations. This will eliminate the primary benefit of the franchise system, which gives franchisees complete discretion over their workforce while at the same time enjoying the 

advantages of associating with a franchisor’s brand name. With 

franchisors and franchisees now deemed joint employers, the 

franchisor’s potential liabilities will increase, requiring greater involvement in franchisee stores. These added liabilities and responsibilities will reduce franchisees’ independence and increase costs 

for the franchisor. Furthermore, because of these increased liabilities, franchisors will be more restrictive with their franchise sales. 

They will likely require greater experience and resources from new 

franchisees, thereby reducing new small businesses opportunities 

under the franchise model. 

The Committee heard from a variety of business owners about 

the negative impact of expanding joint employer standards. Ed 

Braddy, a Burger King franchisee who owns and operates a restaurant in Baltimore, stated, ‘‘[T]he new joint employer standard 

will destroy smaller restaurant operators like me.’’ According to 

Mr. Braddy, the new standard will result in franchisors repurVerDate Sep 11 2014 18:17 Nov 03, 2017 Jkt 079006 PO 00000 Frm 00010 Fmt 6659 Sfmt 6602 E:\HR\OC\HR379.XXX HR379
11 

32Protecting Local Business Opportunity Act: Hearing on H.R. 3459 Before the House 

Subcomm. on Health, Employment, Labor, and Pensions, Comm. on Educ. and the Workforce, 114th Cong. (Sept. 29, 2015) (written testimony of Ed Braddy at 3). 33 Id. at 4. 34Protecting Local Business Opportunity Act: Hearing on H.R. 3459 Before the House 

Subcomm. on Health, Employment, Labor, and Pensions, Comm. on Educ. and the Workforce, 114th Cong. (Sept. 29, 2015) (written testimony of Kevin Cole at 3). 35 Id. (written testimony of Charles Cohen at 5.) [Hereinafter Cohen Testimony] 36Protecting Local Business Opportunity Act: Hearing on H.R. 3459 Before the House 

Subcomm. on Health, Employment, Labor, and Pensions, Comm. on Educ. and the Workforce, 

114th Cong. (Sept. 29, 2015) (written testimony of Mara Fortin at 6) [Hereinafter Fortin Testimony]. 

chasing franchises, consolidating operations by selecting larger operators, or taking away the independence of franchisees by implementing detailed franchisee and employee policies, making him ‘‘no 

more than a glorified manager in [his] own restaurant.’’ 32 Mr. 

Braddy concluded: 

I am concerned that those who created this new standard believe it will help the ‘‘little guy’’ and put more mandates on large corporations. As a one-store operator in an 

inner-city neighborhood, I can tell you that nothing is further from the truth. The new joint employer standard will 

hurt me, my employees and the neighborhood I support. 

Please restore the definition to require actual, direct, immediate control over the essential terms of employment.33

Kevin Cole, CEO of the Ennis Electric Company and speaking on 

behalf of the Independent Electrical Contractors, testified the new 

joint employer standard would deter those in the construction industry from working with small, start-up subcontractors. Mr. Cole 

stated: 

This new standard . . . prevents us from working with 

certain start-ups or new small businesses that may have 

a limited track record. For example, my company will take 

on certain small businesses as subcontractors, which will 

often times be owned by minorities or women, and help 

mentor them on certain projects. With this new standard, 

I’m now less likely to take on that risk. I am also less likely to bid on federal contracts over $1.5 million, under 

which the Federal Acquisition Regulation (FAR) system 

mandates 1 subcontract with small businesses.34

In his testimony, Charles Cohen, former NLRB Member, echoed 

Mr. Cole’s concern the new joint employer standard would likely 

discourage companies from ‘‘promoting special hiring programs’’ 

and working with underrepresented groups such as veterans.35

Mara Fortin, owner of several Nothing Bundt Cakes franchises, 

testified that due to the Browning-Ferris decision, she could lose 

control of her own business. Ms. Fortin stated: 

My franchisor had nothing to do with hiring my employees or setting their wages and benefits. My franchisor has 

nothing to do with the day-to-day operations of my small 

business. But if they are to be considered a joint employer, 

my franchisor may decide to exert more control over my 

business, relegating me to a middle manager role for 

which I did not sign up.36

12 

37The Save Local Business Act: Hearing on H.R. 3441 Before the House Subcomm. on Health, 

Employment, Labor and Pensions and the Subcomm. on Workforce Protections, Comm. on Educ. 

and the Workforce, 115th Congress (September 13, 2017) (written testimony of Tamra Kennedy 

at 3). 38 Redefining ‘‘Employer’’ and the Impact on Georgia’s Workers and Small Business Owners: 

Hearing Before the House Subcomm. on Health, Employment, Labor, and Pensions, Comm. on 

Educ. and the Workforce, 114th Cong. (Aug. 27, 2015) (written testimony of Fred Weir at 3). 39 Redefining ‘‘Employer’’ and the Impact on Alabama’s Workers and Small Business Owners: 

Hearing Before the House Subcomm. on Health, Employment, Labor, and Pensions, Comm. on 

Educ. and the Workforce, 114th Cong. (Aug. 25, 2015) (written testimony of Steve Carey at 4) 

[Hereinafter Carey Testimony]. 

Tamra Kennedy, owner of several Taco John’s franchises, noted 

the opportunities lost to franchisees when franchisors have to withdraw support over joint employer concerns: 

My franchisor used to provide standard employee handbooks to its franchisees. But due to expanded joint employment liability, the company no longer provides me employee handbooks—even though my brand has the expertise and best practices that would be most helpful for me 

and my employees. Now, I must hire an outside attorney 

to write an employee handbook for me. It cost my business 

$9,000 to have outside counsel prepare my employee handbook. Not to mention, I need my attorneys to update my 

handbook each time the law changes. All told, I need to 

sell hundreds of extra tacos every day to cover this needless expense.37

Fred Weir, a Zaxby’s franchisee, also spoke about the negative 

consequences of new joint employer standards. Mr. Weir stated 

that expanded joint employer standards ‘‘would drain the life from 

the hundreds of thousands of small businesses that operate just 

like mine. The new standard would force operational changes on 

the franchisor, and on franchisees.’’ 38

Among the many concerns raised, business owners were especially alarmed about the loss of flexibility and independence under 

these new standards. CertaPro Paint franchisee Col. Steve Carey, 

USAF, Ret., testified about the potential impact new joint employer 

standards would have on his industry: 

If CertaPro is going to be responsible for the liabilities 

arising out of the operation of the business, and oversight 

of the workforce, why would they hand control over to me? 

Many businesses may feel this way and opportunities for 

local business ownership will decline dramatically. I know 

how fortunate I am to own my business after my long service in the military. While CertaPro provides advice and 

support, I am the decision-maker when it comes to my 

business. The success or failure of my business is, essentially, all on me—and that’s exactly what I signed up for. 

It would be a real shame to take these opportunities away 

from other veterans looking to start their ‘‘second life’’ as 

a local franchise business owner as well.39

Mary Kennedy Thompson of the Dwyer Group noted the broad 

implications of expanding joint employer standards across all sectors of the economy: 

Research from the American Action Forum in April 2017 

projected that the new joint employer standard could reVerDate Sep 11 2014 18:17 Nov 03, 2017 Jkt 079006 PO 00000 Frm 00012 Fmt 6659 Sfmt 6602 E:\HR\OC\HR379.XXX HR379
13 

40 Redefining Joint Employer Standards: Barriers to Job Creation and Entrepreneurship: 

Hearing before the House Comm. on Educ. and the Workforce, 115th Cong. (July 12, 2017) (written Testimony of Tamra Kennedy at 5) [Hereinafter Kennedy Testimony]. 41 Redefining ‘‘Employer’’ and the Impact on Georgia’s Workers and Small Business Owners: 

Hearing Before the House Subcomm. on Health, Employment, Labor, and Pensions, Comm. on 

Educ. and the Workforce, 114th Cong. (Aug. 27, 2015) (written testimony of Kal Patel at 3). 42 Id. (written testimony of Jeffrey Mintz at 1). 

sult in 1.7 million fewer jobs in the entire private sector 

and 500,000 fewer jobs in the leisure and hospitality industry alone. It is imperative that the locally-owned businesses created by the franchise system remain open and 

continue to operate with the full support of their brand. 

The system gives entrepreneurs a leg up because they can 

rely on the proven-to-work tools that we as franchisors 

give them, and that system is currently in jeopardy.40

Kal Patel, a hotel franchisee and past board member of the Asian 

American Hotel Owners Association (AAHOA), testified before the 

HELP Subcommittee about the impact of the NLRB’s BrowningFerris decision. Mr. Patel stated: 

As an hotelier, I have come to depend on the franchise 

model as the most advantageous means to small business 

ownership. Consequently, I am deeply concerned that the 

NLRB’s efforts to expand the definition of joint employer 

status will transfer control of small businesses from independent hotel owners and operators to large corporations. 

An expanded joint employer legal standard intimated by 

the NLRB would compel franchisors to take an active role 

in staffing decisions due to the newly manufactured potential for liability. Franchisees, including the majority of 

AAHOA members, would lose independence in decision 

making and would effectively become employees of the 

franchisor because they would be forced to follow someone 

else’s directives.41

Labor attorney Jeffrey Mintz criticized the NLRB specifically for 

‘‘disturbing the well-established standard applied to determine 

whether a joint employer relationship exists and, more particularly, 

opting for a broader, ambiguous standard’’ that would ‘‘require 

many employers to revisit, analyze and likely revise their current 

business practices which could negatively impact many other businesses and their employees.’’ 42

The threat of expanding joint employer standards under the 

FLSA was also addressed by labor attorneys testifying before the 

Committee. Zachary Fasman, Partner at Proskauer Rose, LLP in 

New York City, noted: 

While there have been numerous decisions on joint employer status under the FLSA, there is no commonly accepted test for joint employer liability under the statute. 

Some courts rely upon a four factor ‘‘economic reality’’ test; 

others add as many as six or eight factors to that test, others consider whether the putative joint employer can discipline or discharge an employee, while new and novel— 

and different—tests continue to arise in federal courts 

across the country. Employers with multi-state operations 

have no idea what standards will apply to their operations, 

14 

43The Save Local Business Act: Hearing on H.R. 3441 Before the House Subcomm. on Health, 

Employment, Labor, and Pensions and the Subcomm. on Workforce Protections, Comm. on Educ. 

and the Workforce, 115th Congress (September 13, 2017) (written testimony of Zachary D. 

Fasman at 10) [Hereinafter Fasman Testimony]. 44 Redefining Joint Employer Standards: Barriers to Job Creation and Entrepreneurship: 

Hearing before the House Comm. on Educ. and the Workforce, 115th Cong. (July 12, 2017) (written testimony of Roger King at 3). 45Fasman Testimony at 11. 46 NLRB, McDonald’s Fact Sheet, https://www.nlrb.gov/news-outreach/fact-sheets/mcdonalds-fact-sheet. 47Kennedy Testimony at 5. 

or when they may be held responsible—after the fact, if 

the NLRB’s Browning-Ferris standards are applied—for 

another employer’s wage and payroll practices.43

Labor attorney Roger King of the HR Policy Association agreed 

in his testimony: 

Although employer exposure to increased liability as a 

result of the National Labor Relation Board’s (NLRB) recent decision in the Browning-Ferris case has received considerable attention—as it should—the potential for litigation risk is arguably even greater under other federal labor 

statutes such as the Fair Labor Standards Act (FLSA).44

Mr. Fasman also noted: 

H.R. 3441 solves these problems by defining the term 

‘‘joint employer’’ under the NLRA and the FLSA based 

upon the standards applied by the NLRB for 30 years 

prior to Browning-Ferris. The bill would properly limit 

joint employment to situations where the putative joint 

employer ‘‘actually’’ exercises ‘‘significant direct and immediate control’’ over the ‘‘essential terms and conditions of 

employment.’’ 45

Business models affected by the new standards 

A broad range of business arrangements, well beyond the specific 

types at issue in Browning-Ferris, Salinas, and other recent decisions, will be considered joint employer relationships under new 

NLRA and FLSA standards. Franchised businesses, for example, 

are already being affected. Currently, the NLRB General Counsel 

is pursuing nearly 100 complaints against McDonald’s under this 

joint employer theory.46 But as Ms. Thompson noted in her testimony, ‘‘franchises are not the only business model threatened by 

the new standards.’’ 47 A vast scope of businesses are reliant on 

vendor and contractor arrangements that may now be considered 

joint employer relationships. 

In their dissent to the Browning-Ferris decision, NLRB Members 

Philip Miscimarra and Harry Johnson discussed the numerous industries and business relationships that may be affected by the 

Board’s joint employer standard. The number of contractual relationships now potentially encompassed within the majority’s new 

standard appears to be virtually unlimited: • Insurance companies that require employers to take certain actions with employees in order to comply with policy requirements for safety, security, health, etc.; • Franchisors (see below); • Banks or other lenders whose financing terms may require 

certain performance measurements; 

15 

48 BFI, 362 NLRB No. 186, slip op. at 37 (Miscimarra and Johnson, Members, dissenting). 49 Redefining ‘‘Employer’’ and the Impact on Georgia’s Workers and Small Business Owners: 

Hearing Before the House Subcomm. on Health, Employment, Labor, and Pensions, Comm. on 

Educ. and the Workforce, 114th Cong. (Aug. 27, 2015) (written testimony of Jeffrey Mintz at 

7). 50 Redefining ‘‘Employer’’ and the Impact on Alabama’s Workers and Small Business Owners: 

Hearing Before the House Subcomm. on Health, Employment, Labor, and Pensions, Comm. on 

Educ. and the Workforce, 114th Cong. (Aug. 25, 2015) (written testimony of Marcel Debruge at 

4–5). 51 Cohen Testimony at 2. 52 Redefining Joint Employer Standards: Barriers to Job Creation and Entrepreneurship: 

Hearing before the House Comm. on Educ. and the Workforce, 115th Cong. (July 12, 2017) (written testimony of Richard Heiser at 2). 53 Id. 54 Restoring Balance and Fairness to the National Labor Relations Board: Hearing Before the 

House Subcomm. on Health, Employment, Labor and pensions, Comm. on Educ. and the Workforce, 115th Cong. (Feb. 14, 2017) (written testimony of Reem Aloul at 4). 55 Redefining Joint Employer Standards: Barriers to Job Creation and Entrepreneurship: 

Hearing before the House Comm. on Educ. and the Workforce, 115th Cong. (July 12, 2017) (written testimony of Jerry Reese II at 5). 

• Any company that negotiates specific quality or product requirements; 

• Any company that grants access to its facilities for a contractor to perform services there, and then continuously regulates the contractor’s access to the property for the duration of 

the contract; 

• Any company that is concerned about the quality of the 

contracted services; 

• Consumers or small businesses who dictate times, manner, 

and some methods of performance of contracts.48

Testifying before the HELP Subcommittee, Mr. Mintz stated that 

‘‘in addition to franchise businesses, a revised standard would affect relationships and have potential economic consequence within 

supply chains, dealer networks and staffing companies.’’ 49 Labor 

attorney Marcel Debruge further explained to the Subcommittee 

that many automakers rely on the flexibility of temporary workers 

to survive during economic downturns, but they will likely be unable to continue this practice under expanded joint employer standard.50 Former Board Member Cohen testified expanded joint employer standards have ‘‘the potential to apply to a wide variety of 

business relationships in which one employer contracts for the 

work of another business entity’s employees, including outside suppliers and on-site contractors.’’ 51

Richard Heiser, Vice President at FedEx Ground, Inc., noted in 

his testimony that ‘‘on a broader basis, it is important to consider 

how joint employment can affect all businesses—small and 

large.’’ 52 He concluded that ‘‘many businesses are at risk of being 

embroiled in protracted litigation because of another company’s alleged actions.’’ 53

Furthermore, the Subcommittee heard from a diverse group of 

small business owners, all of whom predicted expanded joint employer standards would without a doubt impact their businesses. 

Reem Aloul, owner of a BrightStar Care franchise, testified that expanding joint employer standards could impact ‘‘nearly any conceivable business relationship’’ and the franchise model in particular.54

Jerry Reese II, Director of Franchise Development at Dat Dog, 

noted that joint employer uncertainty could be of especial concern 

to smaller local business like his as they ‘‘may run out of resources’’ 

due to the legal confusion.55

16 

56The Save Local Business Act: Hearing on H.R. 3441 Before the House Subcomm. on Health, 

Employment, Labor and Pensions and the Subcomm. on Workforce Protections, Comm. On Educ. 

and the Workforce, 115th Congress (September 13, 2017) (written testimony of Granger MacDonald at 3). 57 Advice Memorandum regarding Nutritionality, Inc., d/b/a Freshii from Barry J. Kearney, 

Associate General Counsel, NLRB Office of the General Counsel, to Peter Sung Ohn, Regional 

Director, NLRB Region 13 (Apr. 28 2015), https://www.nlrb.gov/case/13-CA-134294. 58Letter from thirteen Members of the House of Representatives to Barry J. Kearney, Associate General Counsel, NLRB Office of the General Counsel (May 8, 2017), http:// 

savelocalbusinesses.com/wp-content/uploads/2017/05/House-Dem-Letter-to-NLRB-5-10-17.pdf. 59Letter from Richard F. Griffin, Jr., NLRB General Counsel, to Rep. Scott H. Peters (June 

27, 2017), http://src.bna.com/qjS. 

Granger MacDonald, a homebuilder, testified about how expanded joint employer standards could greatly impact the construction industry: 

If MacDonald Companies contracted with a painting 

company for a multifamily building in San Antonio, by 

telling the subcontractors when to paint the walls or even 

when the walls would be constructed, we could be found a 

joint employer. To avoid a joint employer finding, would 

we be prevented from scheduling installation of the fire 

sprinklers or cabinets? Would the roof be completed in 

time for the codes inspector to visit? This would be akin 

to ordering a pizza, but allowing the delivery service to 

show up at the driver’s discretion.56

These witnesses represent small, medium, and large businesses 

in urban, suburban, and rural markets around the country that 

provide a variety of services across different industries. Every one 

of them fear expanding joint employer standards would wreak 

havoc on their business. Expanding joint employer standards have 

the potential to affect countless business relationships, and the impact will almost always be negative. 

Proponents of the NLRB’s new joint employer standard have 

often cited an April 2015 non-binding advice memorandum from 

the NLRB general counsel’s office to argue the franchise model will 

not be impacted by Browning-Ferris. In that memo, the general 

counsel’s office stated that Freshii, a fast casual restaurant 

franchisor, was not a joint employer with its franchisees.57 Unlike 

Browning-Ferris, which involved a staffing firm, the Freshii advice 

memorandum involved a franchisor and franchisee. Unions and 

Democrats have claimed this memorandum proves franchises 

should not be concerned about the Browning-Ferris decision or an 

allegedly expanding joint employer standard. The Freshii advice 

memorandum, however, was decided before the Browning-Ferris 

standard was in place and was released as a non-binding advice 

memorandum that has no value as precedent in other cases. 

Thus, franchisors and franchisees across the country remain concerned about the potential effects of Browning-Ferris on the industry. In May 2017, 13 Democrat Representatives wrote a letter to 

the NLRB asking for clarification about the memorandum.58 Specifically, the letter asked if the memorandum can be used as ‘‘a 

blueprint for all franchise systems,’’ notwithstanding BrowningFerris. On June 27, 2017, NLRB General Counsel Richard Griffin 

(D) replied in a one-page letter that the non-binding advice memo 

‘‘speaks for itself’’ and should be read ‘‘in light of’’ subsequent developments including the Browning-Ferris decision.59 Accordingly, 

17 

employers cannot rely on the Freshii memorandum for meaningful 

guidance. 

Needed legislation 

Congress is responsible for establishing and revising, as necessary, standards in federal labor law. The NLRB’s decision in 

Browning-Ferris and court decisions interpreting the FLSA uniquely threaten the independence of small businesses and reduce opportunities for many Americans to own a business. Expanded joint employer standards extend liability to entities that have never been 

considered joint employers previously. Legislation is the appropriate and necessary solution to this issue. The Save Local Business Act returns certainty and predictability back to consumers, 

employees, and employers by reinstating the previous joint employer standard used by the NLRB for decades before BrowningFerris. H.R. 3441 clarifies that two or more employers are considered joint employers under the NLRA and FLSA only if each employer shares and exercises ‘‘actual, direct, and immediate’’ control 

over essential terms and conditions of employment. 

CONCLUSION

H.R. 3441 restores the commonsense joint employer standard 

workers and employers relied on for decades before the NLRB overreached. H.R. 3441 clarifies two or more employers must have actual, direct, and immediate control over employees to be considered 

employers. This is the same standard that existed for more than 

30 years before the NLRB dramatically expanded it—a standard 

that provides stability and legal clarity for employers and employees. Moreover, H.R. 3441 provides much needed uniformity to the 

joint employment standard under the FLSA and provides the certainty employers need to expand their businesses and increase hiring. Joint employment under the FLSA is far from settled law and 

is an area marked by inconsistency and increasing litigation. Without this bill, the patchwork of joint employer standards across the 

country will continue to grow, creating regulatory confusion for job 

creators doing business in multiple states. 

This bill is a proportional response to misguided and unprecedented actions by the NLRB, Obama-era regulators, and activist 

judges. H.R. 3441 maintains existing worker protections while correcting an extreme, partisan, and confusing joint employer scheme 

that makes it harder for individuals to climb the economic ladder. 

The bill ensures an actual employer is the one legally responsible 

for complying with those protections. 

SECTION-BY-SECTION ANALYSIS

The following is a section-by-section analysis of the Save Local 

Business Act reported favorably by the Committee. 

Section 1. Provides that the short title is the ‘‘Save Local Business Act.’’ 

Section 2. Amends the NLRA to allow two or more employers to 

be considered joint employers for purposes of the Act only if each 

shares and exercises control over essential terms and conditions of 

employment and such control over these matters is ‘‘actual, direct, 

and immediate.’’ 

18 

Section 3. Amends the FLSA to allow two or more employers to 

be considered joint employers for purposes of the Act only if each 

shares and exercises control over essential terms and conditions of 

employment and such control over these matters is ‘‘actual, direct, 

and immediate.’’ 

EXPLANATION OF AMENDMENTS

The amendments, including the amendment in the nature of a 

substitute, are explained in the body of this report. 

APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

Section 102(b)(3) of Public Law 104–1 requires a description of 

the application of this bill to the legislative branch. H.R. 3441 restores the long-held standard for determining joint employer status 

under the NLRA that was overturned by a decision of the NLRB 

and provides a uniform joint employer standard under the FLSA. 

UNFUNDED MANDATE STATEMENT

Section 423 of the Congressional Budget and Impoundment Control Act (as amended by Section 101(a)(2) of the Unfunded Mandates Reform Act, P.L. 104–4) requires a statement of whether the 

provisions of the reported bill include unfunded mandates. This 

issue is addressed in the CBO letter. 

EARMARK STATEMENT

H.R. 3441 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of 

House Rule XXI. 

ROLL CALL VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee Report to include for each record vote 

on a motion to report the measure or matter and on any amendments offered to the measure or matter the total number of votes 

for and against and the names of the Members voting for and 

against. 

19 


Insert offset folio 21 here HR379.001

Date: October 4, 20~---

COi\fMITTEE ON EDUCATION AND THE WORKFORCE RECORD OF COMMITTEE VOTE 

Roll Call: __ -~~-- Bill: H.R. 3441 Amendment Number: _____ 2 ____ _ 

Disposition: D_efeate_d ---'------__:___ ----- ----'--

Sponsor/Amendment: Norcross- Amendment regarding the bill's definition of "joint employer." 

Kmne 

Mrs. FOXX (NC) (Chairwoman) 

Mr. WILSON (SC) 

Mr. HlJNTER (CA) 

Mr. ROE(TN) 

Mr. THOMPSON (PA) 

Mr. WALBERG (MI) 

Mr. GUTHRIE (KY) 

Mr. ROKlTA (lN) 

Mr. BARLETTA (PA) 

Mr. MESSER (IN) 

Mr. BYRNE (AL) 

Mr. BRAT (VA) I 

Mr. GROTHMAN (Wl) 

Ms. STEFANIK (NY) 

Mr. ALLEN (GA) -----~-

Mr. LEWIS (MN) 

Mr. ROONEY (FL) __ ,_ 

Mr. MITCHELL (MI) 

Mr. GARRETT (VA) 

Mr. SMUCKER (PA) I ---~~---~--

Mr. FERGUSON (GA) 

Mr. ESTES (KS) 

Mrs. HANDEL (GA) 

TOTALS: Aye: _ __12 

I '" v~f,:, N;,nm:& State 

X Mr. SCOTT (VA) (Ranking) 

X Mrs. DAVIS (CA) 

X Mr. GRIJALVA (AZ) 

X Mr. COURTNEY (CT) 

X Ms. FUDGE (OH) 

I X I lr. POLIS (CO) 

X lr. SABLAN (MP) 

X ! 1s. WILSON (FL) 

I X Ms. BONAMlCI (OR) I 

X Mr. TAKANO (CA) 

X Ms. ADAMS (NC) 

I X Mr. DeSAULNIER (CA) 

X Mr. NORCROSS (NJ) --

X Ms. BLUNT ROCHESTER (DE) 

X Mr. KRlSHNAMOORTI !I (IL) 

X I Ms. SHEA-PORTER (Nll) 

X Mr. ESPAILLAT (NY) 

X 

X 

X 

I X 

X 

X 

No: 23 Not Voting: 

Total: 40 I Quomm: 14 I Report: 21 

(23 R -17 D) 

' Aye 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

I X 

I X 

X 

/'\(> 

--

-~-

:-----

----
20 


Insert offset folio 22 here HR379.002

Date: October 4, 2017 

COMMITTEE ON EDUCATION AND THE WORKFORCE RECORD OF COMMITTEE VOTE 

Roll Cal!: 2 Bilt: _H_. __ R __ · 3 __ 4_4_1 _______ Amendment Number: __ ,] __ _ 

Sponsor/Amendment: Fudge· amendment regarding arbitration. 

Name&Stale 0/o v~Y,~, Nu.we & State 

Mrs. FOXX (NC) (Chairwoman) I X Mr. scorr (VA) (Ranking) 

Mr. WILSON (SC) I X Mrs. DAVIS (CA) 

Mr. HUNTER (CA) X Mr. GRIJALVA (AZ) 

Mr. ROE(TN) X :vir. COURTNEY (CT) ---~---------· 

Mr. THOMPSON (PA) X Ms. FUDGE (OH) 

Mr. WALBERG (Ml) X Mr. POLIS (CO) 

Mr. GUTHRIE (KY) X Mr. SABLAN (MP) 

Mr. ROKITA(IN) X Ms. WILSON (FL) , 

Mr. BARLETTA (PA) X Ms. BON AMICI (OR) 

Mr. MESSER(IN) X Mr. TAKANO (CA) 

Mr. BYRNfi(AL) I X I Ms. ADAMS (NC) 

Mr. BRAT(VA) X Mr. DeSAULNIER (CA) 

Mr. GROTHMAN (WI) X Mr. NORCROSS (NJ) 

Ms. STEFANIK (NY) X Ms. BLUNT ROCHESTER (DE) 

Mr. ALLEN (GA) X Mr. KRISIINAMOORTHI (IL) -

Mr. LEWIS (MN) X !Ms. SHEA-PORTER (N1-l) 

Mr. ROONEY (FL) X Mr. ESP AIL LA T (NY) 

Mr. MITCHELL (MI) X I 

Mr. GARRETT (VA) X 

Mr. SMUCKER (PA) X 

Mr. FERGUSON (GA) X 

Mr. ESTES (KS) I X 

Mrs. I !ANDEL (GA) X 

TOTALS: Aye: .... _ _1_~---- No: 23 

Total: 40 I Quorum: 14 I Report: 21 

(23R-17D) 

A yo 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

I X 

X 

X 

X 

I 

---·· --·-

No 

I 

--· 

·-

X 

j---
21 


Insert offset folio 23 here HR379.003

Date: October 4, 2017 

COMMITTEE ON EDUCATION AND THE WORKFORCE RECORD OF COMMITTEE VOTE 

Roll Call: Bill: ~~H~. R_. _34_4_1 ~- Amendment Number: __ , ____ 4 __ 

Sponsor/Amendment: Mr. Scott- Amendment regarding employer liability. 

Name&State v~~~~g Nm:ne & State 

Mrs. FOXX (NC) (Chairwoman) X Mr. SCOTT (VA) (Ranking) 

Mr. WILSON (SC) X Mrs. DAVIS (CA) 

Mr. HUNTER(CA) X Mr. GRIJALVA (AZ) 

Mr. ROE(TN) X Mr. COURTNEY (CT) ··~--·--·---

Mr. THOMPSON (PA) X Ms. FUDGE (OH) 

Mr. WALBERG (MI) X ' Mr. POLlS (CO) 

Mr. GUTHRIE (KY) X Mr. SABLAN (MP) 

Mr. ROKITA (IN) X Ms. WILSON (FL) ··~~-

Mr. BARLETTA (PA) X Ms. BONAMICI (OR) 

Mr. MESSER (IN) ' X Mr. TAKA NO (CA) ~~-· 

Mr. BYRNE (AL) X Ms. ADAMS (NC) 

Mr. BRAT(VA) X Mr. DcSAULNIER (CA) 

Mr. GROTHMAN (WI) X Mr. NORCROSS (NJ) 

Ms. STEFANIK (NY) X Ms. BLUNT ROCHESTER (DE) 

Mr. ALLEN (GA) I X Mr. KRISHNAMOORTHI (IL) 

Mr. LEWIS (MN) X Ms. SHEA-PORTER (NH) 

Mr. ROONEY (FL) X Mr. ESPAILLA T (NY) -----~~----------· 

Mr. MITCHELL (MI) I X 

Mr. GARRETT (VA) I I X 

Mr. SMUCKER (PA) i X I -

Mr. FERGUSON (GA) X 

Mr. ESTES (KS) X 

Mrs. HANDEL (GA) X -· 

TOTALS: Aye: ________ 1 ___ 7_____ _ No: 23 

Total: 40 I Quorum: 14 I Report: 21 

(23 R- 17D) 

Aye 

X 

X 

X 

X 

X 

X 

X 

X 

I X 

I X 

I X 

X 

X 

X 

X 

X 

X 

No v~,~·,~, 

I 

·--

--1---
22 


Insert offset folio 24 here HR379.004

COMMITTEE ON EDUCATION AND THE WORKFORCE RECORD OF COMMITTEE VOTE 

Roll Call: _3_enb_lo_c __ Bill: Amendment Number: -----'5'-~--~-~-

Disposition: _D __ e~_fe_a_te_d~~'------~-~-------'·--·------"------~----- ---~----------~~----------------­

Sponsor/Amendment: Ms. Bonamici -Amendment regarding franchisees. 

N,mw&State ,,,, v~.~~' Nmne& State 

Mrs. FOXX (NC) (Chairwoman) X Mr. SCOTT (VA) (Ranking) 

Mr. W!LSO!\ (SC) X Mrs. DAVIS (CA) 

Mr. HUNTER (CA) X Mr. GRIJALVA (AZ) ----

Mr. ROE(TN) X Mr COURTNEY (CT) 

Mr THOMPSON (PA) X I 1

Ms. FUDGE (OH) I 

Mr. WALBERG (MI) I X !vlr POLIS (CO) 

Mr. GUTHRIE (KY) X · Mr. SABLAN (MP) 

Mr. ROKITA (IN) I X 1 Ms. WILSON (FL) I ----

Mr. BARLETTA (PA) 

~ 1 Ms. BON AMICI (OR) -------~ ---·---

Mr. MESSER (IN) I X I Mr. TAKANO (CA) 

Mr. BYRNE (AL) X : I Ms. ADAMS (NC) 

Mr. BRAT(VA) X Mr. DeSAULNIER (CA) 

Mr. GROTHMAN (WI) X Mr. NORCROSS (NJ) -----·-·--

Ms. STEFANIK (NY) X I Ms. BLUNT ROCHESTER (DE) 

Mr. ALLEN (GA) X Mr. KRISHNAMOORTHI (IL) 

Mr. LEWIS (MN) X Ms. SHEA-PORTER (NH) 

Mr. ROONEY (FL) X Mr. ESPAILLAT (NY) -------- I 

Mr. MITCHELL (Ml) I X 

Mr GARRETT (VA) I X ---··--

Mr. SMUCKER (PA) X I 

Mr. FERGUSON (GA) I X 

Mr. ESTES (KS) X 

Mrs. HANDEL (GA) I X 

TOTALS: Aye: __________ 1 __ 7 ____ _ No: 23 Not Voting: 

Total: 40 I Quorum: 14 I Report: 21 

(23 R- 17 D) 

Aye No 

X 

X 

X 

X 

X 

X i 

X 

X 

X 

X 

X 

X I 

X 

X 

X 

X 

X 

I 

v~;,;,;, 

--
23 


Insert offset folio 25 here HR379.005

Date: October 4, 2017 

COMMITTEE ON EDUCATION AND THE WORKFORCE RECORD OF COMMITTEE VOTE 

Roll Call: ~~3~e~n~bl~o~c_Bill: _H_.R~. 3~4~4~1~ Amendment Number: 6 

a vote of 17 yeas and 23 nays "-- ---·-·--·-····· ~~-~------·~----

Sponsor/Amendment: Mr. Taka no- Amendment regarding pay stubs. 

Name& SHllc Aye No ¥;;,7,;, Name& St<lte Aye 

~~~--~~~--

Mrs. FOXX (NC) (Chairwoman) X Mr. SCOTT (VA) (Ranking) X 

Mr. WILSON (SC) X Mrs. DAVIS (CA) X 

Mr. HUNTER (CA) I X Mr. GRIJALVA (AZ) X I 

Mr. ROE(TN) X Mr. COURTNEY (CT) X 

Mr. THOMPSON (PA) X Ms. FUDGE (OH) X 

Mr. WALBERG (Ml) I X Mr. POLIS (CO) X 

Mr. GUTHRIE (KY) X Mr. SABLAN (MP) X 

Mr. ROKITA(IN) X Ms. WILSON (FL) X --~---·· 

Mr. BARLETTA (PA) I X Ms. BONAMICI (OR) X 

Mr. MESSER (IN) X ,I Mr. TAKA NO (CA) X 

Mr. BYRNE (AL) X Ms. ADAMS (NC) X 

Mr. BRAT(VA) X Mr. DeSAULNIER (CA) X -- --

Mr. GROTHMAN (WI) X Mr. NORCROSS (NJ) X 

Ms. STEFANIK (NY) I X Ms. BLIJNT ROCHESTER (DE) X ---~~---~--... r-- Mr. ALLEN (GA) X Mr. KRJSHNAMOORTHJ (JL) X 

Mr. LEWIS (MN) X Ms. SHEA-PORTER (NH) X 

Mr. ROONEY (FL) X Mr. ESP AJLLA T (NY) X 

Mr. MITCHELL (Ml) X 

Mr. GARRETT(V A) I X ----~----

Mr. SMUCKER (PA) X -~· 

Mr. FERGUSON (GA) X I 

... 

Mr. ESTES (KS) X -------

Mrs. HANDEL (GA) ' X 

TOTALS: Aye: ~ .. _1/' No: 23 Not Voting; __ ----~-···-·· .. 

Total: 40 I Quomm: I 4 I Report: 2! 

(23R-17D) 

No __ ,;;,_ --~ 

--

·t--r---
24 


Insert offset folio 26 here HR379.006

COMMITTEE ON EDUCATION AND THE WORKFORCE RECORD OF COMMITTEE VOTE 

Roll Call: 3 en bloc Bill: ---~~~Lfj __ Amendment Number: ___ 7 ___ _ 

Disposition: Defeated a vote of 17 yeas and 23 nay~------------ _ -~-~-------

Sponsor/Amendment: Mr. Polis- Amendment regarding bill title. 

:-Jame&Stato: No v;;~,;, & Stnle No 

Mrs. FOXX (NC) (Chairwoman) X Mr. SCOTT (VA) (Ranking) X 

Mr. WILSON (SC) X Mrs. DAVIS (CA) X 

Mr. HlJNTER (CA) X Mr. GRIJALVA (AZ) X -- : 

Mr. ROE(TN) X Mr. COUR'fNEY (CT) X ------

Mr. THOMPSON (PA) X Ms. FUDGE (OH) X 

Mr. WALBERG (Ml) I 

X Mr. POLIS (CO) X 

Mr. GUTHRIE (K Y) X Mr. SABLAN (MP) X 

Mr. ROK!TA(IN) X Ms. WILSON (FL) X 

Mr. BARLETTA (PA) X Ms. BONAM!Cl (OR) X 

Mr. MESSER(IN) X Mr. TAKANO (CA) X 

Mr. BYRNE(AL) X Ms. ADAMS (NC) X 

Mr. BRAT(VA) i X Mr. DeSAULNIER (CA) X 

Mr. GROTH MAN (WI) X Mr. NORCROSS (NJ) X 

Ms. STEFANIK (NY) X Ms. BLUNT ROCHESTER (DE) X 

Mr. ALLEN (GA) ' X 1 Mr. KRISHNAMOORTHI (IL) X -~~--

Mr. LEWIS (MN) X Ms. SHEA-PORTER (NH) X 

Mr. ROONEY (FL) X Mr. ESPAILLA T (NY) X 

Mr. MITCHELL (MI) X I 

Mr. GARRETT (VA) X --···--· 

Mr. SMUCKER (PA) X I 

Mr. FERGUSON (GA) X 

. ESTES (KS) X ' I 

Mrs. HANDEI,(GA) X 

TOTALS: Aye: 17 No: 23 Not Voting: __________ _ 

Total: 40 I Quomm: 14 I Report: 21 

(23 R- 17 D) 
25 


Insert offset folio 27 here HR379.007

Date: October 4, 2017 

COMMITTEE ON EDUCATION AND THE WORKJ<'ORCE RECORD OF COMMITTEE VOTE 

Bill: _H_.R_. 3~4~~1 _ Amendment Number: ~----~---

Disposition: _)\dopted 

Sponsor/Amendment: Mr. Wilson - motion to report the bill to the House with an amendment and with the 

recommendation that the amendment be agreed to, and the bill as amended do pass. 

&Stale Aye v~,~~' Name&S!ate Aye v~,:,;, 

Mrs. FOXX (NC) (Chairwoman) X Mr. SCOTT (VA) (Ranking) X ------ - r------- Mr. WILSON (SC) X I Mrs. DAVIS (CA) X 

Mr. HUNTER(CA) X I Mr. GRIJALVA (AZ) X - Mr. ROE(TN) X Mr. COURTNEY (CT) X 

Mr. THOMPSON (PA) X Ms. FUDGE (Oil) X 

Mr. WALBERG (!vll) X Mr. POLIS (CO) X 

Mr. GUTHRIE (KY) X Mr. SABLAN (MP) X I------ Mr. ROKlTA (IN) X I Ms. WILSON (FL) X --r---

Mr. BARLETTA (Pi\) X Ms. BONAMICI (OR) X --

Mr. MESSER (IN) X Mr. TAKANO (CA) X - Mr. BYRNE(AL) X Ms. ADAMS (NC) I X 

Mr. BRAT (VA) X Mr. DeSAULNIER (CA) X --

Mr. GROTHMAN (WI) X Mr. NORCROSS (NJ) X I 

Ms. STEI'ANIK (NY) X I I Ms. BLUNT ROCHESTER (DE) X 

Mr. ALLEN (GA) X Mr. KRlSHNAMOORTll! (IL) X --·"-· 

Mr. LEWIS (MN) X Ms. SHEA-PORTER (NH) I X I 

Mr. ROONEY (FL) X I Mr. ESPAILLAT (NY) 

Mr. 

Mr. 

GARRETT 

MITCHELL 

(VA) 

(MI) 

X 

X I -:~= ll I 

Mr. SMUCKER (PA) X I 

Mr. FERGUSON (GA) X I - Mr. ESTES (KS) X I I Mrs. HANDEL (GA) X --

TOTALS: Aye: 23 No: --~-_17___ ______ Not Voting: __________ _ 

Total: 40 I Quorum: 14 I Report: 21 

(23 R -17 D) 
26 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

In accordance with clause (3)(c) of House Rule XIII, the goal of 

H.R. 3441 is to ensure a commonsense standard for determining 

whether a joint employment relationship exists. 

DUPLICATION OF FEDERAL PROGRAMS

No provision of H.R. 3441 establishes or reauthorizes a program 

of the Federal Government known to be duplicative of another Federal program, a program that was included in any report from the 

Government Accountability Office to Congress pursuant to section 

21 of Public Law 111–139, or a program related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULE MAKINGS

The Committee estimates that enacting H.R. 3441 does not specifically direct the completion of any specific rulemakings within 

the meaning of 5 U.S.C. 551. 

STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF

THE COMMITTEE

In compliance with clause 3(c)(1) of rule XIII and clause 2(b)(1) 

of rule X of the Rules of the House of Representatives, the Committee’s oversight findings and recommendations are reflected in the 

body of this report. 

NEW BUDGET AUTHORITY AND CBO COST ESTIMATE

With respect to the requirements of clause 3(c)(2) of rule XIII of 

the Rules of the House of Representatives and section 308(a) of the 

Congressional Budget Act of 1974 and with respect to requirements 

of clause 3(c)(3) of rule XIII of the Rules of the House of Representatives and section 402 of the Congressional Budget Act of 1974, the 

Committee has received the following estimate for H.R. 3441 from 

the Director of the Congressional Budget Office: 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, October 27, 2017. 

Hon. VIRGINIA FOXX, Chairwoman, Committee on Education and the Workforce, 

House of Representatives, Washington, DC. 

DEAR MADAM CHAIRWOMAN: The Congressional Budget Office 

has prepared the enclosed cost estimate for H.R. 3441, the Save 

Local Business Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Christina Hawley Anthony. 

Sincerely, 

KEITH HALL, Director. 

Enclosure. 

27 

H.R. 3441—Save Local Business Act 

H.R. 3441 would amend the National Labor Relations Act 

(NLRA) to specify that a person may be considered a ‘‘joint employer’’ only if that person exercises significant control over employees’ essential terms and conditions of employment. If enacted, the 

bill would effectively negate a 2015 ruling by the National Labor 

Relations Board in which the board concluded a joint employer relationship could be established when an employer exercises control 

over employment matters indirectly or has reserved such control by 

contract. 

Implementing the bill would not affect the operations of federal 

and state agencies because the NLRA excludes federal governmental entities as well as states and political subdivisions of states 

from the definition of employer under the act. 

Enacting H.R. 3441 would not affect direct spending or revenues; 

therefore, pay-as-you-go procedures do not apply. CBO estimates 

that enacting H.R. 3441 would not increase net direct spending or 

on-budget deficits in any of the four consecutive 10-year periods beginning in 2028. 

H.R. 3441 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act. 

The CBO staff contact for this estimate is Christina Hawley Anthony. The estimate was approved by H. Samuel Papenfuss, Deputy Assistant Director for Budget Analysis. 

COMMITTEE COST ESTIMATE

Clause 3(d)(1) of rule XIII of the Rules of the House of Representatives requires an estimate and a comparison of the costs 

that would be incurred in carrying out H.R. 3441. However, clause 

3(d)(2)(B) of that rule provides that this requirement does not 

apply when the Committee has included in its report a timely submitted cost estimate of the bill prepared by the Director of the Congressional Budget Office under section 402 of the Congressional 

Budget Act. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (new matter is printed in italic 

and existing law in which no change is proposed is shown in 

roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

NATIONAL LABOR RELATIONS ACT 

* * * * * * * 

28 

DEFINITIONS

SEC. 2. When used in this Act— 

(1) The term ‘‘person’’ includes one or more individuals, labor organizations, partnerships, associations, corporations, legal representatives, trustees, trustees in cases under title 11 of the United 

States Code, or receivers. 

(2) øThe term ‘‘employer’’¿ (A) The term ‘‘employer’’ includes any 

person acting as an agent of an employer, directly or indirectly, but 

shall not include the United States or any wholly owned Government corporation, or any Federal Reserve Bank, or any State or political subdivision thereof, or any person subject to the Railway 

Labor Act, as amended from time to time, or any labor organization 

(other than when acting as an employer), or anyone acting in the 

capacity of officer or agent of such labor organization. 

(B) A person may be considered a joint employer in relation to an 

employee only if such person directly, actually, and immediately, 

and not in a limited and routine manner, exercises significant control over essential terms and conditions of employment, such as hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions, and tasks, or 

administering employee discipline. 

(3) The term ‘‘employee’’ shall include any employee, and shall 

not be limited to the employees of a particular employer, unless the 

Act explicitly states otherwise, and shall include any individual 

whose work has ceased as a consequence of, or in connection with, 

any current labor dispute or because of any unfair labor practice, 

and who has not obtained any other regular and substantially 

equivalent employment, but shall not include any individual employed as an agricultural laborer, or in the domestic service of any 

family or person at his home, or any individual employed by his 

parent or spouse, or any individual having the status of an independent contractor, or any individual employed as a supervisor, or 

any individual employed by an employer subject to the Railway 

Labor Act, as amended from time to time, or by any other person 

who is not an employer as herein defined. 

(4) The term ‘‘representatives’’ includes any individual or labor 

organization. 

(5) The term ‘‘labor organization’’ means any organization of any 

kind, or any agency or employee representation committee or plan, 

in which employees participate and which exists for the purpose, 

in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or 

conditions of work. 

(6) The term ‘‘commerce’’ means trade, traffic, commerce, transportation, or communication among the several States, or between 

the District of Columbia or any Territory of the United States and 

any State or other Territory, or between any foreign country and 

any State, Territory, or the District of Columbia, or within the District of Columbia or any Territory, or between points in the same 

State but through any other State or any Territory or the District 

of Columbia or any foreign country. 

(7) The term ‘‘affecting commerce’’ means in commerce, or burdening or obstructing commerce or the free flow of commerce, or 

29 

having led or tending to lead to a labor dispute burdening or obstructing commerce or the free flow of commerce. 

(8) The term ‘‘unfair labor practice’’ means any unfair labor practice listed in section 8. 

(9) The term ‘‘labor dispute’’ includes any controversy concerning 

terms, tenure or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee. 

(10) The term ‘‘National Labor Relations Board’’ means the National Labor Relations Board provided for in section 3 of this Act. 

(11) The term ‘‘supervisor’’ means any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay 

off, recall, promote, discharge, assign, reward, or discipline other 

employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection 

with the foregoing the exercise of such authority is not of a merely 

routine or clerical nature, but requires the use of independent judgment. 

(12) The term ‘‘professional employee’’ means— 

(a) any employee engaged in work (i) predominantly intellectual and varied in character as opposed to routine mental, 

manual, mechanical, or physical work; (ii) involving the consistent exercise of discretion and judgment in its performance; 

(iii) of such a character that the output produced or the result 

accomplished cannot be standardized in relation to a given period of time; (iv) requiring knowledge of an advanced type in 

a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study 

in an institution of higher learning or a hospital, as distinguished from a general academic education or from an apprenticeship or from training in the performance of routine mental, 

manual, or physical processes; or 

(b) any employee, who (i) has completed the courses of specialized intellectual instruction and study described in clause 

(iv) of paragraph (a), and (ii) is performing related work under 

the supervision of a professional person to qualify himself to 

become a professional employee as defined in paragraph (a). 

(13) In determining whether any person is acting as an ‘‘agent’’ 

of another person so as to make such other person responsible for 

his acts, the question of whether the specific acts performed were 

actually authorized or subsequently ratified shall not be controlling. 

(14) The term ‘‘health care institution’’ shall include any hospital, 

convalescent hospital, health maintenance organization, health 

clinic, nursing home, extended care facility, or other institution devoted to the care of sick, infirm, or aged person. 

* * * * * * * 

FAIR LABOR STANDARDS ACT OF 1938 

* * * * * * * 

30 

DEFINITIONS

SEC. 3. As used in this Act— 

(a) ‘‘Person’’ means an individual, partnership, association, corporation, business trust, legal representative, or any organized 

group of persons. 

(b) ‘‘Commerce’’ means trade, commerce, transportation, transmission, or communication among the several States or between 

any State and any place outside thereof. 

(c) ‘‘State’’ means any State of the United States or the District 

of Columbia or any Territory or possession of the United States. 

(d) ø‘‘Employer’’ includes¿ (1) ‘‘Employer’’ includes any person 

acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency, but does not include any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such 

labor organization. 

(2) A person may be considered a joint employer in relation to an 

employee for purposes of this Act only if such person meets the criteria set forth in section 2(2)(B) of the National Labor Relations Act 

(29 U.S.C. 152(2)(B)). 

(e)(1) Except as provided in paragraphs (2), (3), and (4), the term 

‘‘employee’’ means any individual employed by an employer. 

(2) In the case of an individual employed by a public agency, 

such term means— 

(A) any individual employed by the Government of the 

United States— 

(i) as a civilian in the military departments (as defined 

in section 102 of title 5, United States Code), 

(ii) in any executive agency (as defined in section 105 of 

such title), 

(iii) in any unit of the judicial branch of the Government 

which has positions in the competitive service, 

(iv) in a nonappropriated fund instrumentality under the 

jurisdiction of the Armed Forces, 

(v) in the Library of Congress, or 

(vi) the Government Printing Office; 

(B) any individual employed by the United States Postal 

Service or the Postal Rate Commission; and 

(C) any individual employed by a State, political subdivision 

of a State, or an interstate governmental agency, other than 

such an individual— 

(i) who is not subject to the civil service laws of the 

State, political subdivision, or agency which employs him; 

and 

(ii) who— 

(I) holds a public elective office of that State, political subdivision, or agency, 

(II) is selected by the holder of such an office to be 

a member of his personal staff, 

(III) is appointed by such an officeholder to serve on 

a policymaking level, 

(IV) is an immediate adviser to such an officeholder 

with respect to the constitutional or legal powers of 

his office, or 

31 

(V) is an employee in the legislative branch or legislative body of that State, political subdivision, or agency and is not employed by the legislative library of 

such State, political subdivision, or agency. 

(3) For purposes of subsection (u), such term does not include any 

individual employed by an employer engaged in agriculture if such 

individual is the parent, spouse, child, or other member of the employer’s immediate family. 

(4)(A) The term ‘‘employee’’ does not include any individual who 

volunteers to perform services for a public agency which is a State, 

a political subdivision of a State, or an interstate governmental 

agency, if— 

(i) the individual receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the 

services for which the individual volunteered; and 

(ii) such services are not the same type of services which the 

individual is employed to perform for such public agency. 

(B) An employee of a public agency which is a State, political 

subdivision of a State, or an interstate governmental agency may 

volunteer to perform services for any other State, political subdivision, or interstate governmental agency, including a State, political 

subdivision or agency with which the employing State, political 

subdivision, or agency has a mutual aid agreement. 

(5) The term ‘‘employee’’ does not include individuals who volunteer their services solely for humanitarian purposes to private nonprofit food banks and who receive from the food banks groceries. 

(f) ‘‘Agriculture’’ includes farming in all its branches and among 

other things includes the cultivation and tillage of the soil, dairying, the production, cultivation, growing, and harvesting of any agricultural or horticultural commodities (including commodities defined as agricultural commodities in section 15(g) of the Agricultural Marketing Act, as amended), the raising of livestock, bees, 

fur-bearing animals, or poultry, and any practices (including any 

forestry or lumbering operations) performed by a farmer or on a 

farm as an incident to or in conjunction with such farming operations, including preparation for market, delivery to storage or to 

market or to carriers for transportation to market. 

(g) ‘‘Employ’’ includes to suffer or permit to work. 

(h) ‘‘Industry’’ means a trade, business, industry, or other activity, or branch or group thereof, in which individuals are gainfully 

employed. 

(i) ‘‘Goods’’ means goods (including ships and marine equipment), 

wares, products, commodities, merchandise, or articles or subjects 

of commerce of any character, or any part or ingredient thereof, but 

does not include goods after their delivery into the actual physical 

possession of the ultimate consumer thereof other than a producer, 

manufacturer, or processor thereof. 

(j) ‘‘Producer’’ means produced, manufactured, mined, handled, or 

in any manner worked on in any State; and for the purposes of this 

Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed in producing, manufacturing, mining, handling, transporting, or in any other manner 

working on such goods, or in any closely related process or occupation directly essential to the production thereof, in any State. 

32 

(k) ‘‘Sale’’ or ‘‘sell’’ includes any sale, exchange, contract to sell, 

consignment for sale, shipment for sale, or other disposition. 

(l) ‘‘Oppressive child labor’’ means a condition of employment 

under which (1) any employee under the age of sixteen years is employed by an employer (other than a parent or a person standing 

in place of a parent employing his own child or a child in his custody under the age of sixteen years in an occupation other than 

manufacturing or mining or an occupation found by the Secretary 

of Labor to be particularly hazardous for the employment of children between the ages of sixteen and eighteen years or detrimental 

to their health or well-being) in any occupation, or (2) any employee between the ages of sixteen and eighteen years is employed 

by an employer in any occupation which the Secretary of Labor 

shall find and by order declare to be particularly hazardous for the 

employment of children between such ages or detrimental to their 

health or well-being; but oppressive child labor shall not be deemed 

to exist by virture of the employment in any occupation of any person with respect to whom the employer shall have on file an unexpired certificate issued and held pursuant to regulations of the Secretary of Labor certifying that such person is above the oppressive 

child labor age. The Secretary of Labor shall provide by regulation 

or by order that the employment of employees between the ages of 

fourteen and sixteen years in occupations other than manufacturing and mining shall not be deemed to constitute oppressive 

child labor if and to the extent that the Secretary of Labor determines that such employment is confined to periods which will not 

interfere with their schooling and to conditions which will not 

interfere with their health and well-being. 

(m) ‘‘Wage’’ paid to any employee includes the reasonable cost, as 

determined by the Secretary of Labor, to the employer of furnishing 

such employee with board, lodging, or other facilities, if such board, 

lodging, or other facilities are customarily furnished by such employer to his employees: Provided, That the cost of board, lodging, 

or other facilities shall not be included as a part of the wage paid 

to any employee to the extent it is excluded therefrom under the 

terms of a bona fide collective-bargaining agreement applicable to 

the particular employee: Provided further, That the Secretary is authorized to determine the fair value of such board, lodging, or other 

facilities for defined classes of employees and in defined areas, 

based on average cost to the employer or to groups of employers 

similarly situated, or average value to groups of employees, or 

other appropriate measures of fair value. Such evaluations, where 

applicable and pertinent, shall be used in lieu of actual measure of 

cost in determining the wage paid to any employee. In determining 

the wage an employer is required to pay a tipped employee, the 

amount paid such employee by the employee’s employer shall be an 

amount equal to— 

(1) the cash wage paid such employee which for purposes of 

such determination shall be not less than the cash wage required to be paid such an employee on the date of the enactment of this paragraph; and 

(2) an additional amount on account of the tips received by 

such employee which amount is equal to the difference between the wage specified in paragraph (1) and the wage in effect under section 6(a)(1). 

33 

The additional amount on account of tips may not exceed the value 

of the tips actually received by an employee. The preceding 2 sentences shall not apply with respect to any tipped employee unless 

such employee has been informed by the employer of the provisions 

of this subsection, and all tips received by such employee have been 

retained by the employee, except that this subsection shall not be 

construed to prohibit the pooling of tips among employees who customarily and regularly receive tips. 

(n) ‘‘Resale’’ shall not include the sale of goods to be used in residential or farm building construction, repair, or maintenance: Provided, That the sale is recognized as a bona fide retail sale in the 

industry. 

(o) HOURS WORKED.—In determining for the purposes of sections 

6 and 7 the hours for which an employee is employed, there shall 

be excluded any time spent in changing clothes or washing at the 

beginning or end of each workday which was excluded from measured working time during the week involved by the express terms 

of or by custom or practice under a bona fide collective-bargaining 

agreement applicable to the particular employee. 

(p) ‘‘American vessel’’ includes any vessel which is documented or 

numbered under the laws of the United States. 

(q) ‘‘Secretary’’ means the Secretary of Labor. 

(r)(1) ‘‘Enterprise’’ means the related activities performed (either 

through unified operation or common control) by any person or persons for a common business purpose, and includes all such activities whether performed in one or more establishments or by one or 

more corporate or other organizational units including departments 

of an establishment operated through leasing arrangements, but 

shall not include the related activities performed for such enterprise by an independent contractor. Within the meaning of this 

subsection, a retail or service establishment which is under independent ownership shall not be deemed to be so operated or controlled as to be other than a separate and distinct enterprise by 

reason of any arrangement, which includes, but is not necessarily 

limited to, an agreement, (A) that it will sell, or sell only, certain 

goods specified by a particular manufacturer, distributor, or advertiser, or (B) that it will join with other such establishments in the 

same industry for the purpose of collective purchasing, or (C) that 

it will have the exclusive rights to sell the goods or use the brand 

name of a manufacturer, distributor, or advertiser within a specified area, or by reason of the fact that it occupies premises leased 

to it by a person who also leases premises to other retail or service 

establishments. 

(2) For purposes of paragraph (1), the activities performed by any 

person or persons— 

(A) in connection with the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, the 

mentally ill or defective who reside on the premises of such institution, a school for mentally or physicially handicapped or 

gifted children, a preschool, elementary or secondary school, or 

an institution of higher education (regardless of whether or not 

such hospital, institution, or school is operated for profit or not 

for profit), or 

(B) in connection with the operation of a street, suburban or 

interurban electric railway, or local trolley or motorbus carrier, 

34 

if the rates and services of such railway or carrier are subject 

to regulation by a State or local agency (regardless of whether 

or not such railway or carrier is public or private or operated 

for profit or not for profit), or 

(C) in connection with the activities of a public agency. 

shall be deemed to be activities performed for a business purpose. 

(s)(1) ‘‘Enterprise engaged in commerce or in the production of 

goods for commerce’’ means an enterprise that— 

(A)(i) has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, 

selling, or otherwise working on goods or materials that have 

been moved in or produced for commerce by any person; and 

(ii) is an enterprise whose annual gross volume of sales made 

or business done is not less than $500,000 (exclusive of excise 

taxes at the retail level that are separately stated); 

(B) is engaged in the operation of a hospital, an institution 

primarily engaged in the care of the sick, the aged, or the mentally ill or defective who reside on the premises of such institution, a school for mentally or physically handicapped or gifted 

children, a preschool, elementary or secondary school, or an institution of higher education (regardless of whether or not such 

hospital, institution, or school is public or private or operated 

for profit or not for profit); or 

(C) is an activity of a public agency. 

(2) Any establishment that has as its only regular employees the 

owner thereof or the parent, spouse, child, or other member of the 

immediate family of such owner shall not be considered to be an 

enterprise engaged in commerce or in the production of goods for 

commerce or a part of such an enterprise. The sales of such an establishment shall not be included for the purpose of determining 

the annual gross volume of sales of any enterprise for the purpose 

of this subsection. 

(t) ‘‘Tipped employee’’ means any employee engaged in an occupation in which he customarily and regularly receives more than $30 

a month in tips. 

(u) ‘‘Man-day’’ means any day during which an employee performs any agricultural labor for not less than one hour. 

(v) ‘‘Elementary school’’ means a day or residential school which 

provides elementary education, as determined under State law. 

(w) ‘‘Secondary school’’ means a day or residential school which 

provides secondary education, as determined under State law. 

(x) ‘‘Public agency’’ means the Government of the United States; 

the government of a State or political subdivision thereof; any 

agency of the United States (including the United States Postal 

Service and Postal Rate Commission), a State, or a political subdivision of a State; or any interstate governmental agency. 

(y) ‘‘Employee in fire protection activities’’ means an employee, 

including a firefighter, paramedic, emergency medical technician, 

rescue worker, ambulance personnel, or hazardous materials worker, who— 

(1) is trained in fire suppression, has the legal authority and 

responsibility to engage in fire suppression, and is employed by 

a fire department of a municipality, county, fire district, or 

State; and 

35 

(2) is engaged in the prevention, control, and extinguishment 

of fires or response to emergency situations where life, property, or the environment is at risk. 

* * * * * * * 

(36) 

1 Employees on Nonfarm Payrolls by Industry Sector and Selected Industry Data, Bureau of 

Labor Statistics (last accessed Jul. 7, 2017), available at https://www.bls.gov/news.release/ 

empsit.t17.htm. 2Michael Grabell, ‘‘The Expendables: How the Temps Who Power Corporate Giants are Getting Crushed,’’ ProPublica (June 27, 2013), available at 3https://www.propublica.org/article/theexpendables-how-the-temps-who-power-corporate-giants-are-getting-crushe 3Katz and Krueger, ‘‘The Rise and Nature of Alternative Work Arrangements in the United 

States, 1995–2015,’’ National Bureau of Economic Research Working Paper 22667, (Sept. 2016), 

available at www.nber.org/papers/w22667. 4 Id. 

MINORITY VIEWS 

INTRODUCTION

The Save Local Business Act (H.R. 3441) dismantles longstanding 

legal protections for employees under the National Labor Relations 

Act (NLRA) and the Fair Labor Standards Act (FLSA). It does so 

by allowing employers who jointly determine working conditions to 

evade responsibility for collective bargaining, and to avoid liability 

for wage theft, child labor, and equal pay violations committed by 

subcontractors and intermediaries over which they exercise control. 

Despite the bill’s pro-business title, H.R. 3441 disadvantages 

franchisees by leaving them on the hook for decisions directed by 

their franchisors. All Democratic members of the Committee opposed H.R. 3441 during the October 4, 2017 markup. 

BACKGROUND

In recent years, employers have increasingly moved away from 

direct hiring of employees to the use of permatemps and subcontracting to reduce labor costs and liability. For many workers, the 

name on the door of the building where they work may not be the 

name of the company that signs their paycheck. Approximately 

three million Americans are employed by a temporary staffing 

agency on any given day, performing work on behalf of a client 

company that directs the employee’s work but does not write the 

employee’s paycheck.1 Since the end of the recession in mid-2009, 

one study found that almost one-fifth of all job growth has been 

through temp agencies.2 Another recent study found that 94% of all 

new jobs between 2005 and 2015 involved alternative work arrangements—including temporary help agency workers, on-call 

workers, contract workers, and independent contractors.3 The largest increase involved the percentage of workers hired out through 

contract companies, increasing from 1.4 percent in 2014 to 3.1 percent (of all employment) in 2015.4

As direct hire arrangements give way to increased use of subcontractors, permatemps, or employee leasing arrangements, accountability for compliance with labor and employment laws is at 

risk of being undermined if companies can shield themselves from 

liability by contracting out while retaining contractual control over 

the terms and conditions of employment. As the National EmployVerDate Sep 11 2014 18:17 Nov 03, 2017 Jkt 079006 PO 00000 Frm 00036 Fmt 6604 Sfmt 6604 E:\HR\OC\HR379.XXX HR379
37 

5Joint Employment Explained: How H.R. 3441 Legalizes a Corporate Rip-Off of Workers, National Employment Law Project (Sept. 8, 2017), available at http://nelp.org/publication/joint-employment-explained-how-hr-3441-legalizes-corporate-rip-off-workers/. 6 362 NLRB No. 186 (2015). 

7 H. Rept. 114–355—Protecting Local Business Opportunity Act (Dec. 1, 2015). 8 Under section 2(2) of the NLRA, an employer ‘‘includes any person acting as an agent of an 

employer, directly or indirectly, but shall not include the United States or any wholly owned 

Government corporation, or any Federal Reserve Bank, or any State or political subdivision 

thereof, or any person subject to the Railway Labor Act, as amended from time to time, or any 

labor organization (other than when acting as an employer), or anyone acting in the capacity 

of officer or agent of such labor organization.’’ Under the FLSA, an employer ‘‘includes any person acting directly or indirectly in the interest of an employer in relation to an employee and 

includes a public agency, but does not include any labor organization (other than when acting 

as an employer) or anyone acting in the capacity of officer or agent of such labor organization.’’ 

29 U.S.C. §203(d) (emphasis added). 

ment Law Project notes, under current law, ‘‘joint employer liability doesn’t bar companies from outsourcing; it simply means that 

the companies cannot also outsource responsibility for their workers when they control the conditions of their work.’’ 5

Congressional efforts to narrow joint employer liability over the 

past two Congresses were spurred by two events. First, on December 19, 2014, the National Labor Relations Board’s (NLRB or 

Board) General Counsel alleged that McDonald’s USA is a joint 

employer with its franchisees in a complaint alleging unlawful retaliation against employees who protested for better wages as part 

of the ‘‘Fight for $15 and a Union.’’ This case remains pending before an administrative law judge. Secondly, on August 27, 2015, the 

NLRB reinstated its traditional joint employment standard in its 

Browning Ferris 6 decision, which found that a waste-management 

company jointly controlled the employment conditions of its subcontracted workers. That case is on appeal to the D.C. Circuit Court 

of Appeals. 

In response to these events, in the 114th Congress the Education 

and the Workforce Committee reported the Protecting Local Business Opportunity Act (H.R. 3459) by a margin of 21–15, with all 

present Democrats opposing.7 That bill sought to narrow the legal 

standard for a joint employer only under the NLRA. 

Committee Republicans introduced H.R. 3441 on July 27, 2017, 

following the July 12, 2017 Committee hearing entitled, ‘‘Redefining Joint Employer Standards: Barriers to Job Creation and Entrepreneurship.’’ That bill narrows the legal standard for a joint 

employer under both the NLRA and the FLSA. A legislative hearing was held on September 13, 2017, and a Committee markup was 

held on October 4, 2017. 

DESCRIPTION OF H.R. 3441, THE SAVE LOCAL BUSINESS ACT

Labor and employment laws have long held that when more than 

one employer controls or has the right to control the terms and conditions of employment, whether directly or indirectly, they may be 

liable as ‘‘joint employers.’’ 8 H.R. 3441 amends the NLRA and the 

FLSA by adding a new, narrow definition for ‘‘joint employer’’ to 

the existing definition of ‘‘employer’’ under each law and eliminates 

indirect control as indicia of joint employment. 

H.R. 3441 confers joint employer status on a company if it ‘‘directly, actually, and immediately . . . exercises significant control 

over essential terms and conditions of employment.’’ Specifically, 

the bill identifies a non-exclusive list of nine essential terms and 

38 

9Testimony of Michael Rubin, before a joint hearing of the Subcommittee on Workforce Protections and the Subcommittee on Health, Employment, Labor and Pensions Regarding H.R. 

3441 (Sept. 13, 2017) (emphasis added). 

conditions: ‘‘hiring employees, discharging employees, determining 

individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions, 

and tasks, or administering employee discipline.’’ Under this legislation as reported from Committee, a company can have indirect 

control over all of nine of these terms and conditions, and so long 

as it exercises that control through a subcontractor or intermediary, the company is immune from liability under the NLRA or 

the FLSA. 

H.R. 3441 CREATES A ROADMAP FOR EMPLOYERS TO ELIMINATE JOINT

EMPLOYER LIABILITY

H.R. 3441’s definition of a joint employer is so narrow that any 

entity can arrange its relationships with staffing agencies or subcontractors to avoid liability. Because the bill requires that a joint 

employer control the ‘‘essential terms and conditions of employment,’’ and describes nine of those terms, an entity may no longer 

be a joint employer under the bill as long as it delegates at least 

one of the nine listed terms to another entity, no matter how much 

control it retains. Further, because a joint employer must exert 

control ‘‘directly, actually, and immediately’’ under the bill, an entity can convey all employment directions through an intermediary 

without ever being considered a joint employer. 

Michael Rubin, an attorney at Altshuler Berzon LLP who has 

litigated joint employer cases involving wage theft, testified at the 

legislative hearing on this very point: 

In practical effect, this means there will be no more 

‘‘joint employment’’ under the FLSA or NLRA, because 

once an FLSA or NLRA employer . . . delegates any significant control over any terms or conditions of its workers’ 

employment, it ceases to exercise ‘‘direct’’ control over 

those terms and conditions and is no longer a potential 

‘‘joint employer’’ under the bill’s definition.9

H.R. 3441 MAY LEAVE EMPLOYEES COMPLETELY WITHOUT RECOURSE

FOR VIOLATIONS WHEN MULTIPLE EMPLOYERS CONTROL WORKING

CONDITIONS

As originally drafted and introduced, H.R. 3441 provided that if 

one company controls some of the enumerated terms and conditions 

and another company controls the others, then each company could 

argue in their defense that they are not an employer because they 

do not control all nine terms. A court could find that neither company is a joint employer, and thus that neither company is liable 

as an employer. The bill provided no guidance on how to resolve 

this problem. 

At the September 13, 2017 legislative hearing on H.R. 3441, 

Ranking Member Scott raised this concern with Michael Rubin. 

Mr. Scott: [I]f you have a Fair Labor Standards Acts violation and somebody comes in and says, ‘‘I’m not an employer under this definition,’’ and then the other guy comes 

39 

in and says, ‘‘I’m not an employer under this definition either,’’ is it possible that nobody is responsible? 

Mr. Rubin: Wow. In fact, as I look at the language of the 

Act, that is possible. Imagine this circumstance: Company 

A is in charge of hiring. Company A and B share responsibility for firing. And company B also sets wages. The worker says, who is my employer under this definition? Well, 

does either company, A or B, control the essential terms, 

which are then listed? There are 9 of them in the conjunctive? No. So in that case there may be no employer. 

Mr. Scott: So if there’s a finding that I wasn’t paid overtime, nobody owes it? 

Mr. Rubin: Neither company is a joint employer and arguably neither is an employer at all . . . [T]his language 

explodes uncertainty to the point where every single case, 

where any element, any term or condition of employment 

is shared, there’s going to be litigation over whether either 

company would be [liable]. 

During the markup, Committee Republicans attempted to alleviate this concern through an Amendment in the Nature of a Substitute (ANS), but in doing so rendered the bill even more ambiguous. The ANS modified the bill primarily by changing the ‘‘and’’ 

to an ‘‘or,’’ so that the nine essential terms and conditions are now 

listed in the disjunctive. These changes are set forth below. The 

relevant text to be changed is in bold italics and the new text is 

bold and underlined. 


Insert offset folio 44 here HR379.008
40 

10Opening Statement of U.S. Representative Tim Walberg, at a joint hearing of the Subcommittee on Workforce Protections and the Subcommittee on Health, Employment, Labor and 

Pensions regarding H.R. 3441 (Sept. 13, 2017). 11 U.S. House of Representatives Committee on Education and the Workforce, Markup of H.R. 

3441, pp. 20–21 (Oct. 4, 2017). 12 362 NLRB No. 186 (2015). 

The changes in the ANS do not remedy the problem. The ANS 

states that a person is a joint employer only if such person ‘‘exercises significant control over essential terms and conditions of employment.’’ Since the bill retains a list of nine ‘‘essential’’ terms and 

conditions that the person must control, the problem remains that 

a person who does not control all of the nine terms and conditions 

may not face any liability under the NLRA or the FLSA, regardless 

of how much control they possess. Even if the NLRB or courts interpreting the NLRA or FLSA avoid this plain reading of H.R. 

3441, the bill still provides no guidance over how many of the essential terms and conditions a person would need to control in 

order to be a joint employer. 

Committee Republicans have promoted the need for this legislation because they contend it will provide needed clarity. Subcommittee Chairman Walberg stated: 

‘‘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.’’ 10

At the October 4th markup, Ranking Member Scott tried to identify whether the bill provides improved clarity by asking the bill’s 

sponsor, Representative Byrne, exactly how many of the nine listed 

terms and conditions a party would need to control. Mr. Byrne replied that this would depend on the ‘‘facts of each individual case’’ 

and how a judge or the NLRB analyzes those facts. Mr. Scott replied: ‘‘I think we are right back where we started from. We don’t 

know what it means, whether you are an employer or joint employer or not.’’ 11 This exchange exposed the fallacy of the Majority’s argument, and demonstrates that this bill opens the door for 

uncertainty. 

H.R. 3441 CRIPPLES WORKERS’ FREEDOM TO NEGOTIATE FOR BETTER

WAGES AND BENFITS WHEN THERE ARE JOINT EMPLOYERS

When workers organize unions, the NLRA guarantees them the 

right to collectively bargain for better wages and working conditions without fear of retaliation. Where multiple entities control the 

essential terms and conditions of employment, this right is rendered futile if workers cannot bargain with all those entities controlling wages and working conditions. The new definition of a joint 

employer under H.R. 3441 is so narrow that it effectively writes the 

concept out of law. 

Committee Republicans have criticized the NLRB’s 2015 Browning Ferris decision, which reinstated the traditional joint employer 

standard the Board used prior to 1984.12 In this case, the NLRB 

found that a client employer (BFI) and its staffing agency 

(Leadpoint) were joint employers and had a joint duty to bargain 

with the Teamsters union. BFI operates a municipal recycling facilVerDate Sep 11 2014 18:17 Nov 03, 2017 Jkt 079006 PO 00000 Frm 00040 Fmt 6604 Sfmt 6602 E:\HR\OC\HR379.XXX HR379
41 

13Letter from Susan K. Garea, Esq., Beeson Taylor and Bodine, to Chairman Foxx and Ranking Member Scott, submitted for the record at the July 12, 2017 hearing before the Committee 

on Education and the Workforce entitled ‘‘Redefining Joint Employer Standards: Barriers to Job 

Creation and Entrepreneurship’’ (Jul. 10, 2017). 14 As articulated by the Supreme Court in Nationwide Mutual Insurance Co. v. Darden, 503 

U.S. 318 (1992), determining an employment relationship under common law depends on ‘‘the 

hiring party’s right to control the manner and means’’ by which the worker accomplishes the 

project. 15 Congressional Record, Senate, at 1575–1576 (1947), reprinted in 2 Legislative History of the 

Labor Management Relations Act, 1947, 51 (1948), and House Conf. Rep. No. 510 on H.R. 3020 

at 36 (1947) reprinted in 1 Legislative History of the Labor Management Relations Act, 1947, 

at 540 (1948). 16The Restatement of Agency is a set of principles issued by the American Law Institute, intended to clarify the prevailing opinion on how the law of agency stands. 

ity in Milpitas, California, but contracted with Leadpoint to hire 

workers sorting recyclable materials under a cost reimbursement 

contract. BFI contractually capped the maximum wage that 

Leadpoint could pay at a rate that could not exceed what BFI paid 

its own workers. BFI also reserved and exercised the right to overrule any of Leadpoint’s personnel decisions and assigned shifts to 

the workers through Leadpoint’s supervisors. When the Teamsters 

sought to organize 240 Leadpoint workers, it named BFI as the 

joint employer with Leadpoint in a petition for a union election. 

Susan K. Garea, an attorney who represents the workers in 

Browning Ferris, explains: 

These workers want to negotiate better wages and working conditions in exchange for their back-breaking labor. 

Many concerns brought these workers to the Teamsters including their low wages and distress over the speed and 

safety of the work. These concerns cannot be addressed by 

negotiating with the temporary staffing agency. BFI must 

be at the table to negotiate over the speed of the streams, 

the number of workers per line or breaks, wages, safety 

protocols and other major terms and conditions of employment. Leadpoint has literally no control over these core 

terms and conditions of employment.13

The NLRB’s traditional joint employer test asks: (1) whether 

there is a common law employment relationship, and (2) whether 

the employer possesses sufficient control over employees’ essential 

terms and conditions of employment to permit meaningful collective bargaining. In examining whether there is a common law relationship, the NLRB uses the standard that Anglo-American courts 

have applied for centuries to determine whether there is a ‘‘masterservant’’ relationship.14 The NLRB considers both the employer’s 

‘‘right to control’’ in addition to its actual exercise of control. That 

control may be either direct or indirect, such as through the other 

joint employer as an intermediary. 

The Board’s traditional joint employer test as articulated in 

Browning Ferris is consistent with the legislative history of the 

Taft-Hartley Act, which states that the definition of an employment 

relationship should be governed by the common law principles of 

agency.15 Under the Restatement of Agency § 2(1), an employer is 

one who ‘‘controls or has the right to control the physical conduct 

of the other in the performance of the service.’’ 16 In contrast to this 

centuries-old test, H.R. 3441 creates a completely new test, requirVerDate Sep 11 2014 18:17 Nov 03, 2017 Jkt 079006 PO 00000 Frm 00041 Fmt 6604 Sfmt 6602 E:\HR\OC\HR379.XXX HR379
42 

ing that the joint employer’s control must be ‘‘direct, actual, and 

immediate.’’ 

The practical effect of this bill is to suppress wages for hundreds 

of thousands of permatemps, such as the Leadpoint workers, by 

making it easier for putative employers to avoid their bargaining 

obligations under the NLRA. This point is illustrated in the chart 

below, which shows that at recycling plants in the vicinity of BFI’s 

facility, employees covered by a collective bargaining agreement 

earn between $19 and $30 per hour, plus health and retirement 

benefits. The subcontracted Leadpoint workers only make $12.50 

per hour, with no benefits. 

43 

17Susan K. Garea, Esq., Beeson Taylor and Bodine, and Teamsters Local 350 (Aug. 29, 2017). 

WAGES AND BENEFITS OF MUNICIPAL WASTE SORTERS IN SAN FRANCISCO BAY AREA REPRESENTED BY TEAMSTERS LOCAL 350 COMPARED WITH LEADPOINT SORTERS 

AT THE BROWNING FERRIS INDUSTRIES (BFI) FACILITY (AUGUST 2017) 17

Recology 

(San Francisco) 

South San Francisco 

Scavenger Company 

California Waste 

Solutions (San Jose) 

South Bay Recycling 

(San Carlos) 

BFI direct-hire 

workers (grandfathered sorter) 

(Milpitis) 

Leadpoint Sorters at 

BFI Facility 

(Milpitis) 

Hourly Wages ............................................................................................................................... $30.11 $22.88 $23.52 $24.60 $19.20 $12.50 Health Care Contribution/Hour .................................................................................................... 12.31 11.96 11.96 11.96 11.96 ............................Pension Contribution/Hour .......................................................................................................... * 4.85 3.18 6.3 3.15 ............................Retirement Security Plan Contribution/Hour ............................................................................... * 3.8 ............................ 3.8 ............................ ............................

Total ................................................................................................................................... $42.42 $43.49 $38.66 $46.66 $34.31 $12.50 

* Note: Recology SF has a defined benefit of $4,583.33/month. 

44 

18 Browning Ferris, 362 NLRB No. 186 (2015) (internal citations omitted). 19 29 U.S.C. § 203(g). 20 United States v. Rosenwasser, 323 U.S. 360, 363 (1945) (quoting 81 Cong. Rec. 7,657 (1938) 

(remarks of Sen. Hugo Black). 21 Bruce Goldstein, Statement on H.R. 3441 (Oct. 2, 2017), available at: http://democratsedworkforce.house.gov/imo/media/doc/ 

ESPAILLAT_FWJ%20Statement%20H.R%203441%20JtEmployer.pdf. 22 Id. 

The growing use of permatemps, coupled with the specific facts 

of the Browning Ferris case, provided ample reasons for the NLRB 

to return to its traditional joint employer standard. As the NLRB 

stated in that decision: 

[T]he primary function and responsibility of the Board 

. . . is that of applying the general provisions of the Act 

to the complexities of industrial life. If the current jointemployer standard is narrower than statutorily necessary 

and if joint-employment arrangements are increasing, the 

risk is increased that the Board is failing in what the Supreme Court has described as the Board’s responsibility to 

adapt the Act to the changing patterns of industrial life.18

H.R. 3441 EMPOWERS JOINT EMPLOYERS TO EVADE LIABILITY FOR

WAGE THEFT AND CHILD LABOR VIOLATIONS UNDER THE FLSA, AS

WELL AS VIOLATIONS OF THE EQUAL PAY ACT

The Fair Labor Standards Act sets minimum wage, overtime, 

and child labor standards, and has long held that a single individual may be employed by two or more employers at the same 

time. The FLSA defines ‘‘employ’’ as ‘‘to suffer or permit to 

work.’’ 19 Its definition is the ‘‘broadest definition [of employ] that 

has ever been included in any one act.’’ 20 It is more encompassing 

than the definition of ‘‘employer’’ under the NLRA. 

Congress developed the ‘‘suffer or permit to work’’ definition from 

several state laws. At the time, state legislatures had adopted a 

broad definition of employment to impose employer status on larger 

businesses that claimed ignorance when their labor intermediaries 

violated child labor laws. The state laws defined employers as entities that directly or indirectly employed a worker and defined the 

word ‘‘employ’’ more broadly than the common law ‘‘control or right 

to control test’’, but instead as ‘‘to suffer or permit to work.’’ To 

‘‘suffer’’ in this context means to acquiesce in, passively allow, or 

to fail to prevent the worker’s work.21 As noted by Bruce Goldstein, 

President of Farmworker Justice: 

This broad definition imposed liability on a company 

that had the power to prevent the work of the worker from 

happening and denied the business the ability to hide its 

head in the sand about what was happening in its business, including where it utilized labor contractors or other 

intermediaries which were considered employers of those 

workers.22

45 

23 United States v. Silk, 331 U.S. 704, 713 (1947). 24 In Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947), meat boners who worked 

on the premises of a slaughterhouse were hired by another employer under contract with the 

slaughterhouse. The Supreme Court held that the slaughterhouse was a joint employer for the 

purpose of minimum wage obligations under the FLSA because the boners’ work was ‘‘part of 

the integrated unit of production’’. 25 704 F.2d 1465 (1983). 26 1 Ellen C. Kerns et al., The Fair Labor Standards Act, § 3–65. 27 848 F.3d 125 (4th Cir. 2017). 28 Id. at 150. 

The courts have found that a joint employment relationship can 

be found by assessing the economic realities between an employee 

and a putative joint employer. Consideration of these economic realities is consistent with the approach used by courts to determine 

employment status generally.23 In Rutherford Food Corporation v. 

McComb, the U.S. Supreme Court held that an employment relationship ‘‘does not depend on . . . isolated factors but rather upon 

the circumstances of the whole activity.’’ 24

In the Ninth Circuit case Bonnette v. California Health & Welfare Agency,25 the court set four factors to be used when establishing joint employment relationships. Courts examine whether 

the alleged employer: 

1. Had the power to hire and fire employees, 

2. Supervised and controlled employee work schedules or 

conditions of employment, 

3. Determined the rate and method of payment, and 

4. Maintained employment records.26

Bonnette was the standard for the economic realities test used for 

determining joint employment under the FLSA, and was translated 

to many other circuits. Since the case was decided in 1983, several 

circuit courts have amended and added to this list of factors based 

on the facts of the case. Courts have found joint employment relationships under the FLSA with respect to labor contractors, farming companies, and in sectors ranging from the janitorial sector to 

garment manufacturing. Courts have not found a franchisor to be 

a joint employer under the FLSA. 

The Majority contends that there is a need to legislate a change 

to the definition for joint employer under the FLSA based on recent 

Fourth Circuit decision Salinas v. Commercial,27 which the Majority Views characterize as adopting ‘‘an expansive new joint employer standard.’’ In the Salinas case, residential drywall workers 

who worked for a subcontractor in Maryland brought a claim for 

violations of the FLSA. Their subcontractor disappeared; the Court 

deemed the subcontractor defunct. The workers brought a claim 

against the general contractor as a joint employer. The Salinas decision applied a six factor test to assess whether there was an employment relationship between the prime contractor and the subcontractor’s employees. The court found that the general contractor 

provided both direct supervision and supplied tools and equipment 

for performing the work. The Fourth Circuit’s test was ‘‘designed 

to capture the economic realities of the relationship between the 

worker and the putative employer’’ and is well within the bounds 

of the FLSA.28

H.R. 3441 dramatically narrows who is liable as a joint employer 

under the FLSA and would allow low-road companies to benefit 

46 

29Joint Employment Explained: How H.R. 3441 Legalizes a Corporate Rip-Off of Workers, National Employment Law Project (Sept. 8, 2017), available at http://nelp.org/publication/joint-employment-explained-how-hr-3441-legalizes-corporate-rip-off-workers/. 30Testimony of Michael Rubin, before a joint hearing of the Subcommittee on Workforce Protections and the Subcommittee on Health, Employment, Labor and Pensions regarding H.R. 

3441 (Sept. 13, 2017). 31 29 U.S.C. § 206(d). 

from workers’ labor while shirking any responsibility to them simply by using an intermediary contractor.29 H.R. 3441 would open 

the door to widespread wage theft in many growth industries, and 

reverse decades of judicial precedent and congressional intent. As 

noted by Michael Rubin in his testimony before the September 13th 

legislative hearing on this bill, ‘‘The bill completely abandons [the 

FLSA’s] longstanding definition and the decades of case law applying it to circumstances where two companies co-determine and 

share responsibility for their workers’ terms and conditions of employment.’’ 30

To illustrate this, Michael Rubin described an FLSA case he litigated: 

In a case we settled a few years ago in Southern California, hundreds of hard-working warehouse workers were 

employed in four warehouses, loading and unloading 

trucks for deliveries to Walmart distribution centers 

throughout the country. Walmart owned the warehouses 

and all of their contents. It contracted with a subsidiary of 

Schneider Logistics, Inc. to operate the warehouses. 

Schneider, in turn, retained two labor services subcontractors who hired the warehouse workers. By contract, all responsibility for legal compliance rested solely with those 

two labor services subcontractors. Yet Walmart and 

Schneider had kept for themselves the contractual right to 

control almost every aspect of those warehouse workers’ 

employment, directly and indirectly. 

The violations we found in those warehouses were egregious. But the only reason the workers were eventually 

able to obtain relief—through a $22.7 million settlement 

that resulted in many class members receiving tens of 

thousands of dollars each as compensation—was because 

the warehouse workers had demonstrated a likelihood of 

success in proving that Walmart and Schneider, as well as 

the staffing agencies, were the workers’ joint employers. 

The two staffing agencies were undercapitalized . . . Only 

because the federal courts focused on the actual working 

relationships in those warehouses, as other courts have 

done in other joint-employer cases under the NLRA and 

FLSA, were the workers able to retain compensation for 

past violations, to obtain higher wages and significant benefits, and to have deterred future violations.31

At the September 13th legislative hearing, Representative 

Takano asked what these workers’ remedy would be under this bill. 

Mr. Rubin’s response: ‘‘They would have no remedy at all. Their 

only recourse would be against the labor services contractor, who’’ 

could only pay 7.5% of the total settlement amount. 

47 

32 Bruce Goldstein, Statement for the Record on H.R. 3441 (Oct. 2, 2017), p. 3., available at 

http://democrats-edworkforce.house.gov/imo/media/doc/ESPAILLATFWJ%20Statement%20 

H.R%203441%20JtEmployer.pdf. 

Amending the FLSA’s definition of employer also hinders workers’ abilities to bring equal pay claims when multiple employers are 

responsible for the violation. More than 50 years ago, President 

Kennedy signed the Equal Pay Act of 1963 (EPA) into law. The 

EPA amended the FLSA to prohibit sex-based wage discrimination 

between men and women in the same establishment who perform 

jobs that require substantially equal skill, effort, and responsibility 

under similar working conditions.31 Because the EPA is a part of 

the FLSA, the same definitions of ‘‘employer,’’ ‘‘employ,’’ and ‘‘employee’’ apply. Thus, narrowing the scope of who is considered a 

joint employer under the FLSA may impact the ability to bring 

equal pay claims under the EPA. 

H.R. 3441 WILL CREATE UNCERTAINTY REGARDING JOINT EMPLOYER LIABILITY UNDER THE MIGRANT AND SEASONAL AGRICULTURAL WORKER PROTECTION ACT

H.R. 3441 will also create uncertainty for farmworkers, who are 

among our nation’s most vulnerable workers. The Migrant and Seasonal Agricultural Worker Protection Act (MSPA), the principal 

labor statute protecting agriculture workers, establishes wage, 

health, safety, and recordkeeping standards for seasonal or temporary farmworkers. Joint employment standards under this law 

and the FLSA are vital to protecting the rights and protections afforded to these workers. 

Frequently, farmworkers are recruited, hired, supervised, or 

transported by intermediaries, who are often referred to as farm 

labor contractors (FLC). Farm operators utilizing FLCs maintain 

control over working conditions, as Bruce Goldstein, President of 

Farmworker Justice, points out in his statement to the Committee: 

The economic reality is that few farm operators will risk 

their profitability and the survival of their business by delegating all responsibility to a labor contractor. Most farm 

operators who engage labor intermediaries exercise substantial decision-making regarding the impact of subcontracted workers on their business . . . In most cases, there 

is shared responsibility among the farm operator and the 

labor contractor so that the workers on the farm ensure 

the profitability of that business.32

Despite this shared responsibility, farm operators may contend 

that the FLC’s they engage are the farmworkers’ sole employer responsible for compliance. FLCs are thinly capitalized and often cannot afford to pay court judgements for violations. Under the MSPA, 

joint employer liability helps ensure covered workers have adequate avenues for redress. 

In 1982, the Committee on Education and Labor incorporated the 

FLSA’s broad definition of ‘‘employ’’ into the MSPA for the direct 

purpose of adopting the FSLA’s joint employer doctrine. Congress 

believed this standard was the ‘‘central foundation’’ of MSPA’s protections and necessary to ‘‘reverse the historical pattern of abuse 

48 

33 H. Rep. No. 97–885, 97th Cong., 2d Sess., 1982. 34 Id. at 6. 35 29 C.F.R. § 500.20(h)(5)(i). 36Letter from the Signatory Wall and Ceiling Contractors Alliance to Speaker Paul Ryan and 

Minority Leader Nancy Pelosi (Oct. 5, 2017), available at http://democrats-edworkforce. 

house.gov/imo/media/doc/SWACCA%20ltr%20of%20opposition%20-%20H.R.%203441.pdf. 37 Id. 

and exploitation of migrant and seasonal farm workers.’’ 33 According to the committee report, the joint employer standard is ‘‘the indivisible hinge between certain important duties imposed for the 

protection of migrant and seasonal workers and those liable for any 

breach of those duties.’’ 34

The MSPA regulations make it clear that the terms ‘‘employer’’ 

and ‘‘employee’’ have the same meaning under both the FLSA and 

the MSPA. As the MSPA regulations read, ‘‘[j]oint employment 

under the Fair Labor Standards Act is joint employment under the 

MSPA.’’ 35 This means where a farmworker is economically dependent on a farm operator, he or she may be jointly employed by the 

FLC and the farm operator. 

While H.R. 3441 does not directly amend the FLSA’s definition 

of ‘‘employ,’’ by creating a new, extremely narrow definition of 

‘‘joint employer’’ under the FLSA, H.R. 3441 upends the FLSA’s 

joint employer framework upon which the MSPA relies. It is unclear how this legislative change would impact the application of 

joint employment liability under the MSPA, creating significant uncertainty for our nation’s migrant and seasonal farmworkers. 

THE SAVE LOCAL BUSINESS ACT WOULD HURT LAW ABIDING CONTRAC- TORS BY FORCING THEM TO COMPETE ON AN UNLEVEL PLAYING

FIELD

H.R. 3441 forces law abiding construction contractors to compete 

on an unlevel playing field, because it allows unscrupulous competitors to be free from joint employer liability when they use subcontractors who can cut project costs by engaging in wage theft. 

For this reason, the Signatory Wall and Ceiling Contractors Alliance (SWACCA), an association of construction contractors, opposes 

H.R. 3441. They recently wrote: ‘‘The joint employment doctrine is 

an important means for forcing these unscrupulous contractors to 

compete on a level playing field and to be held accountable for the 

unlawful treatment of the workers they utilize.’’ 36

H.R. 3441 would exempt these unscrupulous contractors from liability by enabling them to exert even more control over the workers’ terms and conditions while facing no liability for wage theft or 

overtime claims under the FLSA. As SWACCA noted, ‘‘H.R. 3441 

would create a standard that would surely accelerate a race to the 

bottom in the construction industry and many other sectors of the 

economy. It would further tilt the field of competition against honest, ethical businesses.’’ 37

H.R. 3441 EMPOWERS FRANCHISORS TO DICTATE FRANCHISEES’ EM- PLOYEE RELATIONS, WHILE LEAVING FRANCHISEES EXCLUSIVELY ON

THE HOOK WHEN THERE ARE VIOLATIONS

Committee Republicans have claimed that this bill protects the 

franchising business model because the NLRB’s Browning Ferris 

decision created legal uncertainty which hinders the growth of that 

49 

38Press Release, Committee on Education and the Workforce (Jul. 27, 2017), available at 

https://edworkforce.house.gov/news/documentsingle.aspx?DocumentID=401928. 39 Browning Ferris, 362 NLRB No. 186 n.120 (2015) (‘‘The dissent is simply wrong when it 

insists that today’s decision ‘fundamentally alters the law’ with regard to the employment relationships that may arise under various legal relationships between different entities: ‘lessor-lessee, parent-subsidy, contractor-subcontractor, franchisor-franchisee, predecessor-successor, creditor-debtor, and contractor-consumer.’ None of those situations are before us today . . . As we 

have made clear, the common-law test requires us to review, in each case, all of the relevant 

control factors that are present determining the terms of employment.’’). 40Karla Walter, ‘‘The So-Called ‘Save Local Business Act’ Harms Workers and Small Businesses,’’ Center for American Progress (Oct. 3, 2017), available at https:// 

www.americanprogressaction.org/issues/economy/reports/2017/10/03/168754/called-savelocal-business-act-harms-workers-small-businesses/ (citing IHS Markit Economics, ‘‘Franchise 

Business Economic Outlook for 2017’’ (2017), available at https://www.franchise.org/sites/default/files/Franchise_Business_Outlook_Jan_2017.pdf; IHS Economics, ‘‘Franchise Business 

Economic Outlook for 2015’’ (2015), available at: https://www.franchisefacts.org/assets/files/ 

FranchiseBizOutlook2015.pdf. 41See Nutritionality, Inc., d/b/a/ Freshii, Case 13–CA–134294 et al., Advice Memorandum 

(Apr. 28, 2015), available at http://apps.nlrb.gov/link/document.aspx/09031d4581c23996. 

model. The Majority has also claimed that this legislation would 

protect the independence of small franchisees by ensuring that 

franchisors would not feel compelled to take control of franchisees’ 

labor relations in order to limit their own potential liability. Committee Republicans contend that the current standard ‘‘threatens to 

upend small businesses, undermine their independence, and put 

jobs and livelihoods at risk.’’ 38

These arguments have no merit. 

First, no franchisor has ever been found to be a joint employer 

with its franchisees under the NLRA or the FLSA. The Browning 

Ferris decision explicitly stated that it did not affect the franchise 

model, and the decision has not had any documented effect on the 

industry’s growth.39 Indeed, the franchise industry flourished in 

the decades before the NLRB narrowed its joint employer standard 

in 1984, using a standard identical to the one articulated in Browning Ferris. Franchise employment actually grew by 3 percent in 

2015, the year Browning Ferris was decided, and by 3.5 percent in 

2016. This rate is faster than the growth of franchising employment in the year prior to Browning Ferris.40

Second, the NLRB takes a reasoned, case-by-case approach when 

assessing whether any company, including a franchisor, is a joint 

employer. For example, the NLRB’s General Counsel recently determined that Freshii’s, a fast-casual restaurant franchisor, would 

not be deemed to be a joint employer with its franchisees, because 

its control was limited to maintaining brand standards and food 

quality.41 The threshold for joint employment liability is control 

over labor-management relationships. Control over brand standards does not cross that threshold. 

Testimony at a September 29, 2015 legislative hearing before the 

Subcommittee on Health, Employment, Labor and Pensions debunked the Majority’s claim that the Browning Ferris standard has 

undermined franchisees’ independence from their franchisors. Two 

franchisee witnesses—a Burger King franchisee and a Nothing 

Bundt Cakes franchisee—testified to this fear that franchisors 

would take over their employee relations in order to limit the 

franchisors’ joint employer liability. However, in response to questioning, both testified that they have absolute and total control 

over their employment policies, and that their respective 

franchisors do not exercise control over their business operations. 

50 

42Testimony of Mara Fortin before the Subcommittee on Health, Employment, Labor and Pensions of the Committee on Education and the Workforce, H.R. 3459, Protecting Local Business 

Opportunity Act (Sept. 29, 2015), pp. 21 (Serial No. 114–28). 43Testimony of Ed Braddy before the Subcommittee on Health, Employment, Labor and Pensions of the Committee on Education and the Workforce, H.R. 3459, Protecting Local Business 

Opportunity Act (Sept. 29, 2015), pp. 84 (Serial No. 114–28). 

Mara Fortin (owner and operator of Nothing Bundt Cakes franchises) testified: 

I hire my own workers, set their wages, benefit packages, et cetera. I manage my inventory and I purchase 

equipment. I pay taxes as my own small business with my 

own employer identification numbers. And I help my employees when they are in need of assistance. My franchisor 

plays no part in any of these key functions that only a true 

and sole employer performs.42

In an exchange between Representative Guthrie and Ed Braddy, 

a Burger King franchisee testifying on behalf of the International 

Franchise Association, Mr. Braddy was asked: 

Representative Guthrie: Do you or do [sic] the franchisor 

hire and fire and determine the work of your employees? 

Mr. Braddy: I schedule interviews every other Wednesday. I sit down with eight people every other Wednesday. 

Even though I am not hiring, I do the interviews because 

I always like to have a waiting list of people who want to 

work. So I do all the hiring. I don’t allow my managers or 

my assistants to terminate anyone because I want to make 

sure that once I let someone go it is for a good reason. 

Mr. Guthrie: But it is you as the business owner, not 

the—what role does the franchisor play in any of your— 

those issues? 

Mr. Braddy: None at all.43

Based on this testimony, nothing in the Browning Ferris decision 

could establish that these franchisors are exercising sufficient control to be deemed a joint employer with their respective 

franchisees. 

Third, H.R. 3441 does not reduce franchisees’ exposure to liability. A franchisee is an employer under the NLRA and the FLSA 

and will always have liability under current law. The question is 

whether the franchisor also shares liability as a joint employer, if 

it shares control over its franchisees’ employee relations. This bill 

insulates franchisors from potential liability as a joint employer if 

they exercise control through their franchise agreement; moreover, 

this liability shield empowers franchisors to exercise indirect control over franchisees while leaving franchisees exposed to liability. 

If the franchisor mandates a policy that could violate the NLRA or 

the FLSA—such as firing workers who try to form a union—then 

the franchisee may be forced to choose between abiding by their 

franchisor’s direction or compliance with the law. 

The current joint employer standards under the NLRA and the 

FLSA therefore benefit franchisees who want autonomy to manage 

their employment practices, because franchisors who involve themselves in their franchisees’ labor relations will risk incurring a bargaining obligation or liability under the NLRA and FLSA. That poVerDate Sep 11 2014 18:17 Nov 03, 2017 Jkt 079006 PO 00000 Frm 00050 Fmt 6604 Sfmt 6602 E:\HR\OC\HR379.XXX HR379
51 

44 Alexander J.S. Colvin, ‘‘The Growing Use of Mandatory Arbitration,’’ Economic Policy Institute (Sept. 27, 2017), available at http://www.epi.ogv/publication/the-growing-use-of-mandatory-arbitration/. 

tential liability will incentivize franchisors to distance themselves 

from control over their franchisees’ labor relations. 

COMMITTEE DEMOCRATS OFFERED AMENDMENTS TO FIX FLAWS IN H.R. 

3441

Democrats offered the following seven amendments to the 

Amendment in the Nature of a Substitute to H.R. 3441, which was 

introduced by Representative Byrne (AL) as the base text at the beginning of the markup. 

Amendment #1—Strikes the bill’s definition of a ‘‘joint employer’’ 

under the NLRA and replaces it with the traditional common 

law test articulated in Browning Ferris, and strikes the bill’s 

definition of ‘‘joint employer’’ under the FLSA 

Representative Norcross (NJ) offered an amendment to adopt the 

NLRB’s traditional common law test for determining who is a joint 

employer. The Norcross amendment would ensure that workers can 

meaningfully collectively bargain where more than one employer 

exercises control over the terms and conditions of employment. The 

amendment also strikes the bill text regarding the definition of a 

joint employer under the FLSA. 

The amendment was rejected 17 to 23, with all Democrats voting 

in favor of the amendment. 

Amendment #2—Prevents disputes under the bill from being subject 

to a pre-dispute arbitration agreement 

Representative Fudge (OH) offered an amendment that states 

that the provisions of this bill would not be subject to the terms 

of a pre-dispute arbitration agreement between an employee and 

the alleged employer, unless the arbitration agreement is pursuant 

to a collective bargaining agreement. The Fudge amendment would 

ensure that workers have full due process rights to hold employers 

responsible when they violate the NLRA or the FLSA. Over the 

past few decades employers have increasingly conditioned job offers 

on an employee’s agreement to waive their right to seek recourse 

in the courts for employment related disputes and to submit such 

disputes solely to a private arbitrator. Employee win rates are far 

lower in mandatory arbitration than they are in federal or state 

courts, according to a report by the Economic Policy Institute.44

The amendment was rejected 16 to 23, with all Democrats 

present voting in favor of the amendment. 

Amendment #3—Prevents the bill from applying in cases when multiple employers control the terms of employment, but no person 

meets the test as an ‘‘employer’’ as set forth in H.R. 3441 

Ranking Member Scott (VA) offered an amendment to clarify 

that when there is a violation of the NLRA or the FLSA involving 

joint employers, but neither entity is deemed to be an ‘‘employer’’ 

under the criteria set forth in H.R. 3441, then the bill’s provisions 

cannot be applied by a court. Representative Scott noted: 

52 

45Statement of the Representative Byrne, Committee Markup Transcript (Oct. 4, 2017), p.57. 46Statement of Ranking Member Scott, Committee Markup Transcript (Oct. 4, 2017), pp.58– 

59. 

I think it is clear under the amendment [in the nature 

of a substitute] that it is possible that nobody has total, direct control over the employment. It could be shared, and 

if it is shared everybody gets to escape liability. I do not 

think that is fair to the employee, and if that is not a possibility, then the provisions in the amendment would not 

make any difference. If it is a possibility, then the amendment fixes it. 

The author of the bill, Representative Byrne, opposed the amendment saying it is ‘‘totally unneeded,’’ and that ‘‘there is no unclear 

thing about this at all.’’ 45 Mr. Scott replied: ‘‘I would just say that 

if there is no chance that you could end up with no employer, then 

you should not be afraid of this amendment.’’ 46

The amendment was rejected 17 to 23, with all Democrats voting 

in favor of the amendment. 

Amendment #4—Holds a franchisor jointly and severally liable if a 

franchisee takes an action at the direction of a franchisor and 

such action violates the NLRA or the FLSA 

Representative Bonamici (OR) offered an amendment that states 

that when a franchisee takes an employment-related action at the 

direction of a franchisor and such action violates the NLRA or the 

FLSA, the franchisor shall be jointly and severally liable for such 

violation. The Bonamici amendment would ensure that small businesses, such as franchisees, are not treated unfairly under this legislation. 

The amendment was rejected 17 to 23, with all Democrats voting 

in favor of the amendment. 

Amendment #5—Prevents provisions of the bill from applying unless the employee receives regular paystubs 

Representative Takano (CA) offered an amendment that states 

that the provisions of H.R. 3441 would not apply unless the employee receives regular paystubs that correspond to the work performed by the employee during an applicable pay period. The 

Takano amendment would ensure that workers have the tools to 

fight back against wage theft. 

The amendment was rejected 17 to 23, with all Democrats voting 

in favor of the amendment. 

Amendment #6—Renames H.R. 3441 the ‘‘Wage Theft Immunity 

Act’’ 

Representative Polis (CO) offered an amendment to rename this 

bill the ‘‘Wage Theft Promotion Act’’ given that this legislation eviscerates worker protections under the NLRA and the FLSA by 

eliminating longstanding avenues for workers to recover stolen 

wages or to secure recourse for unfair labor practices from employers who jointly control terms of employment., According to a recent 

report from the Economic Policy Institute, 2.4 million workers in 

the 10 most populous States lost $8 billion annually from minimum 

53 

47David Cooper and Teresa Kroeger, ‘‘Employers Steal Billions from Workers’ Paychecks Each 

Year,’’ Economic Policy Institute (May 10, 2017), available at http://www.epi.org/publication/ 

employers-steal-billions-from-workers-paychecks-each-year-survey-data-show-millions-of-workersare-paid-less-than-the-minimum-wage-at-significant-cost-to-taxpayers-and-state-economies/. 

wage violations alone.47 That is an average of 3,300 annually per 

year-round worker. 

The amendment was rejected 17 to 23, with all Democrats voting 

in favor of the amendment. 

Amendment #7—An Amendment in the Nature of a Substitute to 

enact the Raise the Wage Act (H.R. 15), a bill to raise the minimum wage to $15 per hour 

Representative Wilson (FL) offered a substitute that increases the minimum wage to $15 per hour by 2024. Today’s minimum 

wage workers earn less per hour, adjusted for inflation, than their 

counterparts did 50 years ago even though productivity has more 

than doubled over that same time period. Raising the minimum 

wage to $15 an hour by 2024 will lift pay for nearly 30 percent of 

the American workforce and reverse the growing trend in income 

inequality between those at the top and everyone else. 

The amendment was ruled non germane. 

CONCLUSION

H.R. 3441 enables unscrupulous employers to avoid their legal 

responsibilities under the NLRA and FLSA, while denying employees recourse for violations of law and inflicting collateral damage 

to adversely impacted businesses. We urge the full House of Representatives to reject this legislation. 

The following organizations have opposed H.R. 3441: AFL CIO; 

Center for American Progress; Economic Policy Institute; Farmworker Justice, International Brotherhood of Teamsters; International Union, United Automobile, Aerospace and Agricultural 

Implement Workers of America (UAW); National Employment Law 

Project; North America’s Building Trades Unions (NABTU); Service 

Employees International Union (SEIU); Signatory Wall and Ceiling 

Contractors Alliance; United Brotherhood of Carpenters and Joiners of America; United Farm Workers of America (UFW); United 

Food and Commercial Workers International Union (UFCW); and 

the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union 

(USW). 

ROBERT C. ‘‘BOBBY’’ SCOTT, 

Ranking Member. 

SUSAN A. DAVIS. 

RAU ́ L M. GRIJALVA. 

JOE COURTNEY. 

MARCIA L. FUDGE. 

JARED POLIS. 

GREGORIO KILILI CAMACHO

SABLAN. 

FREDERICA S. WILSON. 

SUZANNE BONAMICI. 

MARK TAKANO. ALMA S. ADAMS. 

54 

MARK DESAULNIER. DONALD NORCROSS. LISA BLUNT ROCHESTER. RAJA KRISHNAMOORTHI. CAROL SHEA-PORTER. ADRIANO ESPAILLAT. 

Æ