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[Senate Hearing 113-853]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 113-853
 
  NOMINATION OF LAUREN McFERRAN TO SERVE AS A MEMBER OF THE NATIONAL 
                         LABOR RELATIONS BOARD

=======================================================================

                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                                   ON

  NOMINATION OF LAUREN McFERRAN TO SERVE AS A MEMBER OF THE NATIONAL 
                         LABOR RELATIONS BOARD

                               __________

                           NOVEMBER 20, 2014

                               __________

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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                       TOM HARKIN, Iowa, Chairman

BARBARA A. MIKULSKI, Maryland         LAMAR ALEXANDER, Tennessee
PATTY MURRAY, Washington              MICHAEL B. ENZI, Wyoming
BERNARD SANDERS (I), Vermont          RICHARD BURR, North Carolina
ROBERT P. CASEY, JR., Pennsylvania    JOHNNY ISAKSON, Georgia
KAY R. HAGAN, North Carolina          RAND PAUL, Kentucky
AL FRANKEN, Minnesota                 ORRIN G. HATCH, Utah
MICHAEL F. BENNET, Colorado           PAT ROBERTS, Kansas
SHELDON WHITEHOUSE, Rhode Island      LISA MURKOWSKI, Alaska
TAMMY BALDWIN, Wisconsin              MARK KIRK, Illinois
CHRISTOPHER S. MURPHY, Connecticut    TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts

                                     
                                  
                                       

                      Derek Miller, Staff Director

        Lauren McFerran, Deputy Staff Director and Chief Counsel

               David P. Cleary, Republican Staff Director

                                  (ii)

  

                            C O N T E N T S

                               __________

                               STATEMENTS

                      THURSDAY, NOVEMBER 20, 2014

                                                                   Page

                           Committee Members

Harkin, Hon. Tom, Chairman, Committee on Health, Education, 
  Labor, and Pensions, opening statement.........................     1
Alexander, Hon. Lamar, a U.S. Senator from the State of 
  Tennessee, opening statement...................................     3
    Prepared statement...........................................     4
Mikulski, Hon. Barbara A., a U.S. Senator from the State of 
  Maryland.......................................................    13
Murray, Hon. Patty, a U.S. Senator from the State of Washington..    13
Burr, Hon. Richard, a U.S. Senator from the State of North 
  Carolina.......................................................    15
Franken, Hon. Al, a U.S. Senator from the State of Minnesota.....    16
Casey, Hon. Robert P., Jr., a U.S. Senator from the State of 
  Pennsylvania...................................................    18
Warren, Hon. Elizabeth, a U.S. Senator from the State of 
  Massachusetts..................................................    19

                                Witness

McFerran, Lauren, nominee to be a member of the National Labor 
  Relations Board, Washington, DC................................     8

                                 (iii)

  

  NOMINATION OF LAUREN McFERRAN TO SERVE AS A MEMBER OF THE NATIONAL 
                         LABOR RELATIONS BOARD

                              ----------                              

                      THURSDAY, NOVEMBER 20, 2014

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:03 a.m. in 
room SD-430, Dirksen Senate Office Building, Hon. Tom Harkin, 
chairman of the committee, presiding.
    Present: Senators Harkin, Alexander, Mikulski, Murray, 
Casey, Franken, Warren, and Burr.

                  Opening Statement of Senator Harkin

    The Chairman. The Senate Committee on Health, Education, 
Labor, and Pensions will please come to order.
    We have convened this hearing to consider the President's 
nomination of Lauren McFerran to fill an impending vacancy on 
the National Labor Relations Board. Ms. McFerran is well known 
to most of us as a senior staffer on this committee, and I look 
forward to her speedy confirmation. She has been nominated to 
fill a vacancy that will result from the departure next month 
of a current Board member, Ms. Nancy Schiffer. And I would like 
to take this opportunity to thank Ms. Schiffer for her 
dedicated service on the Board. She has been a highly respected 
Board member, and I wish her every success in her future 
endeavors.
    The National Labor Relations Board is an agency that is 
absolutely critical to our country, to our economy, and to our 
middle class. Over 75 years ago, Congress enacted the National 
Labor Relations Act guaranteeing American workers the right to 
form and join a union and bargain for a better life. The Act 
sets forth a national policy to encourage collective 
bargaining. A lot of people do not know that. The Act sets 
forth a national policy to encourage collective bargaining. And 
specifically the National Labor Relations Act states,

          ``It is declared to be the policy of the United 
        States to eliminate the causes of certain substantial 
        obstructions to the free flow of commerce and to 
        mitigate and eliminate these obstructions when they 
        have occurred by encouraging the practice and procedure 
        of collective bargaining and by protecting the exercise 
        by workers of full freedom of association, self-
        organization, and designation of representatives of 
        their own choosing for the purpose of negotiating the 
        terms and conditions of their employment or other 
        mutual aid or protection.''

    For union and non-union workers alike, the Act provides 
essential protections. It gives workers a voice in the 
workplace, allowing them to join together and speak up for fair 
wages and benefits and for safe working conditions. These 
rights ensure that the people who do the real work in this 
country have a shot at receiving a fair share of the benefits 
when our economy grows, and with rising income inequality in 
our country, these rights are more important than ever.
    The NLRB is the guardian of these fundamental rights. 
Workers themselves cannot enforce the National Labor Relations 
Act, but they can turn to the Board if they have been denied 
the basic protections provided under the law. In short, the 
Board plays a vital role in vindicating workers' rights. In the 
past 10 years, the NLRB has secured opportunities for 
reinstatement for 22,544 employees who were unjustly fired. And 
it has recovered more than $1 billion on behalf of workers 
whose rights were violated.
    But the Board also provides relief and remedies to our 
Nation's employers. For example, employers can turn to the 
Board for relief if a union commences a wildcat strike or 
refuses to bargain in good faith during negotiations. The NLRB 
has a long history of helping businesses resolve disputes 
efficiently. By preventing or resolving labor disputes that 
could disrupt our economy, the work that the Board does is 
vital to every worker and every business across the Nation.
    That is why it is so important that we maintain a fully 
functional, five-member NLRB. I am proud of the fact that just 
a little over a year ago we were able to confirm members to 
completely fill the Board for the first time in over a decade. 
Now we need to fill a soon-to-be-open seat so that the Board 
can continue to function effectively.
    Ms. McFerran is not the first nominee for this seat. In 
September, this committee approved the nomination of a 
dedicated public servant, Sharon Block. We, both Republicans 
and Democrats, agreed on Ms. Block's reputation and 
qualifications, but her nomination was withdrawn in the face of 
circumstances totally beyond her control. As a result, Ms. 
Block will not have the opportunity to serve on the Board. Ms. 
Block is a tremendous public servant whose qualifications are 
unaffected and undiminished by the present circumstances, and I 
look forward to Ms. Block's future service to our country.
    I am heartened, however, by the President's decision to 
nominate Lauren McFerran. Ms. McFerran currently serves as 
Chief Labor Counsel and Deputy Staff Director of this 
committee, the Senate Health, Education, Labor, and Pensions 
Committee. I am proud to have her as a member of our staff. She 
has served this committee with excellence and great 
professionalism since 2005. And I know firsthand the President 
could not have found a more able successor to Ms. Schiffer. Ms. 
McFerran is an incredibly talented lawyer with deep knowledge 
of labor law. She is a person of sterling integrity and strong 
character, and she will be a great asset to this Board.
    It is my hope that by promptly confirming Ms. McFerran's 
nomination to fill this pending vacancy, we can continue the 
progress that has been made recently and begin a new era where 
orderly transitions on the NLRB are the norm. We should set a 
new precedent of confirming nominees, Democratic and Republican 
alike, in a timely manner.
    I have no doubt that Ms. McFerran will do an excellent job 
in this important position. I look forward to her testimony 
today and to moving her nomination expeditiously through this 
committee and hopefully through the Senate floor.
    I will turn to Senator Alexander for his opening statement.

                 Opening Statement of Senator Alexander

    Senator Alexander. Thank you, Mr. Chairman. Welcome, Ms. 
McFerran.
    I am glad the President withdrew his controversial 
nomination, and I hope his gesture of respect to the Senate is 
a new beginning. Ms. Block, about whom Senator Harkin talked, 
and her fellow appointee, Richard Griffin, were appointed 
unconstitutionally in January 2012. They chose to stay in their 
office and decide hundreds of cases after courts ruled their 
appointments were not legitimate. This created a great deal of 
confusion for the workers and employers who count on the Board 
to fairly and properly adjudicate their disputes. The 436 
decisions issued between January 2012 and July 2013 were made 
invalid by the U.S. Supreme Court's unanimous ruling last 
summer that they were unconstitutionally appointed. Today there 
are 62 of those decisions still pending at the Board.
    As Senator Harkin said, Ms. McFerran serves as Chief Labor 
Counsel and Deputy Staff Director for this committee. Chairman 
Harkin and I have some ideological differences, but no Senate 
committee has produced more legislation than ours has because 
we work together to get a result.
    It is no secret that one of my biggest concerns about the 
National Labor Relations Board has been growing partisanship at 
the NLRB.
    Mr. Chairman, rather than make an extensive statement, I 
would ask consent to put my complete remarks in the record.
    Just to summarize my thoughts, as I look at Ms. McFerran, 
my hope will be that she will strive to be an impartial 
decisionmaker, which is what Board members are called upon to 
be. NLRB was, as the chairman said, created more than 75 years 
ago to be an impartial umpire in labor disputes that threaten 
the free flow of commerce and its decisions affect millions of 
private sector workers. Of course, too often it tilts toward 
the political leanings of the President who appointed the 
members. That is true with Democratic appointees; it is true 
with Republican appointees. But the trend has grown more 
pronounced recently.
    I would like to see more stability at NLRB, and for that 
reason, Senator McConnell and I have introduced legislation 
that would turn the Board from an advocate for one side to an 
umpire, as it ought to be. It would help deal with the problem 
of partisan advocacy. It would deal with the problem of a free-
wheeling general counsel. It would deal with the problem of a 
Board that has been too slow to resolve disputes. Last year, 
109 cases--that is 30 percent of the Board's caseload--were 
pending for more than a year.
    The way it would do that is to have a six-member board, 
three Republicans, three Democrats. Four would make a decision. 
It would rein in the general counsel by allowing businesses and 
unions to challenge complaints filed by the general counsel in 
Federal court. It would encourage timely decisions by saying 
that either party to a case may appeal to a Federal court of 
appeals if the Board fails to act within a year.
    Our bill would offer these solutions without taking away 
any rights or remedies for any employee, business, or union. It 
is something I look forward to working on here in the next 
Congress. That is how important I believe the Board is.
    Ms. McFerran, I look forward to hearing from you your 
thoughts on whether the Nation's workers and employers deserve 
stability from this important agency and why you are the best 
person to provide it.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Alexander follows:]

                Prepared Statement of Senator Alexander

    Thank you Mr. Chairman for holding this hearing on the 
nomination of Lauren McFerran to serve on the National Labor 
Relations Board (NLRB).
    Ms. McFerran's nomination comes after the President last 
week withdrew his nomination of Sharon Block for the NLRB--for 
the second time. I'm glad the President withdrew that 
controversial nomination and I hope his gesture of respect to 
the Senate is part of a new beginning. I opposed Sharon Block's 
nomination twice before this committee. Sharon Block accepted 
an unconstitutional recess appointment. She was appointed by 
the President at a time the Senate was not in recess. This was 
not a matter of perspective, but of fact.
    The D.C. Circuit case said the appointments were 
unconstitutional in January 2013. July 2013, the 4th Circuit 
Court of Appeals weighed in--also finding that the recess 
appointment of Ms. Block violated the constitution. This 
summer, the Supreme Court, in a resounding unanimous decision, 
found that the appointments were unconstitutional. Sharon Block 
and her fellow-appointee Richard Griffin stayed in office for 
18 months and decided hundreds of cases long after it was clear 
that the appointments were likely illegitimate.
    I believe this displayed a troubling lack of respect for 
the constitution, the separation of powers, and the Senate's 
constitutional role to advice and consent. It also created a 
great deal of confusion for the workers and employers who count 
on the Board to properly and fairly adjudicate their disputes.
    The NLRB had hundreds of decisions to re-decide--436 
decisions issued between January 2012 and July 2013 were made 
invalid by the U.S. Supreme Court's unanimous ruling last 
summer. Today, 62 of these decisions are still pending at the 
Board. So some of the mess left by the actions of Sharon Block 
and Richard Griffin remains--and it is something today's 
nominee will be sorting out, should she be confirmed.
    Ms. McFerran currently serves as the chairman's Chief Labor 
Counsel and Deputy Staff Director. While Chairman Harkin and I 
have some ideological differences, no Senate committee has 
produced more legislation than ours in the 113th Congress. So, 
Ms. McFerran, I have a great respect for your boss as we work 
together to get a result, despite some areas where we don't 
necessarily agree.
    It's no secret that one of my biggest areas of concern has 
been the growing partisanship at the NLRB.
    When looking at the nomination of an individual to serve as 
a member of the NLRB, I am interested primarily in whether they 
will serve as an impartial umpire, which is what they are 
called to be. The NLRB was created 79 years ago to act as an 
impartial umpire in labor disputes that threaten the free flow 
of commerce, and its decisions affect millions of private-
sector workers.
    However, the current NLRB has demonstrated a willingness to 
tilt the playing field toward organized labor, showing little 
interest in the rights of employers or individual employees who 
want to exercise their right to not join a union. The NLRB has 
become more and more partisan in recent decades. Policy 
reversals and dramatic shifts are becoming a regular 
expectation with each new administration.
    We need to reverse this trend and move toward providing 
stability to our Nation's workplaces.
    I am looking forward to hearing from you today whether you 
think the Board is an umpire or an advocate, and whether you 
think the proper role of a Board member is to serve as an 
impartial decisionmaker.
    This is such a priority that in September Leader McConnell 
and I introduced legislation called the NLRB Reform Act to turn 
the Board from an advocate for one side or the other to the 
umpire it ought to be.
    There are three significant problems the Board faces today:

    1. This is the biggest problem: Partisan advocacy. Today, 
the majority of the five-member Board is made up of appointees 
who follow the President's political leanings. President Obama 
has appointed 3 labor union lawyers to the Board.
    2. It has a freewheeling advocate for a general counsel. 
The Board's most recent general counsels have been exceeding 
their statutory authority and bringing questionable cases that 
threaten American jobs.
    3. It's too slow to resolve disputes. Last year, 109 
cases--that's 30 percent of the Board's caseload--were pending 
for more than a year.

    Our bill provides three fixes:

    1. It ends partisan advocacy. A six-member Board of 3 
Republicans and 3 Democrats and a majority of 4 will require 
both sides to find a middle ground.
    2. It reins in the general counsel. Businesses and unions 
would be able to challenge complaints filed by the general 
counsel in Federal district court, and they will have greater 
transparency about the basis and legal reasoning of charges 
brought by the general counsel.
    3. It encourages timely decisions. First, either party in a 
case before the Board may appeal to a Federal Court of Appeals 
if the Board fails to reach a decision in their case within 1 
year. Second, funding for the entire NLRB would be reduced by 
20 percent if the Board is not able to decide 90 percent of its 
cases within 1 year over the first 2-year period post-reform.
Problems and Solutions
    With each new administration, the pendulum has swung 
farther from the middle. The result is labor policy that 
whipsaws back and forth, taking employers and employees on a 
wild ride.
    Problem: Under the partisan advocacy of today's Board:

    Small factions of employees within single stores have a 
path to forming their own unions: In 2011, the Board suddenly 
adopted a new way to define what makes a local union bargaining 
unit. The Board changed the law so that any group of employees 
with an overwhelming community of interests could become a 
bargaining unit, and therefore a union.
    At the same time, the Board is moving a regulation to limit 
the employer's ability to question which employees should be in 
a bargaining unit. This allows a union to cherry-pick employees 
who will be most likely to support forming a union.
    How has this worked in the real world? The Board recently 
approved a bargaining unit of cosmetic and fragrance employees 
in a Macy's department store. Not the shoe salespeople, not the 
ladies fashion employees, not the juniors department--just 
cosmetic and fragrance.
    Imagine if every department of the Macy's decided to form a 
union. The employer would have dozens of different groups to 
negotiate with, and the different unions would be fighting each 
other over who got the better raises, break rooms and terms of 
employment.
    During this Administration, the NLRB has ruled that common 
employment policies are unfair labor practices, such as:

     Requiring employees to be courteous to customers 
and fellow employees.
     Prohibiting employees from making negative 
comments about the business that employs them on social media.
     Selecting arbitration for employment disputes.

    Our Solution: This bill will solve this by requiring a six-
member board of 3 Republicans and 3 Democrats. Like the Federal 
Election Commission, a majority of 4 will require both sides to 
find a middle ground.
    Problem: The Board's general counsel acting like a 
freewheeling advocate, stretching Federal labor law to its 
limits, and sometimes beyond its limits. For example, the 
general counsel is allowing complaints about conduct of 
restaurant franchisee owners to be filed against the brand 
company.
    For 30 years, under its joint-employer standard, the NLRB 
has taken the position that one business cannot be held liable 
for the employment-related matters of another business unless 
that business had direct control over the employees in 
question.
    Now the general counsel and the Board appear to be 
preparing to change that standard in what can only be an effort 
to help labor unions add more members.
    Imagine being an owner of a local franchise business and 
being told that all the employees that you recruit, hire, 
train, pay, promote, and work alongside day after day are 
actually another company's employees, too.
    This won't just impact fast food--it will endanger the 
businesses of thousands of local franchise owners or 
subcontractors who are building the American dream as small 
business owners. In Tennessee, that's approximately 21,291 
local franchise establishments employing nearly 224,000 workers 
that would be subject to the general counsel's absurd ruling.
    Another example: In 2011, the general counsel moved to stop 
Boeing from building new airplanes at a non-union plant in 
South Carolina.
    The general counsel jeopardized a $1 billion factory and 
hundreds of jobs with this move, but even worse he tried to 
make the case that a unionized American company cannot expand 
its operations into one of the 24 States with right-to-work 
laws, which protect a worker's right to join or not join a 
union.
    The general counsel withdrew the outrageous complaint 
against Boeing, but if it had set a precedent, jobs would have 
fled overseas as manufacturers looked for a competitive 
environment in which to make and sell cars around the world.
    Our Solution: Our bill will allow employers and unions to 
challenge complaints filed against them in Federal court and 
give them new rights to learn the basis and legal reasoning of 
charges filed against them.
    Problem: The NLRB is taking too long to resolve cases. For 
example, the NLRB recently issued a decision in a case 
involving whether CNN subcontractors were employees that had 
been pending for 11 years. (CNN vs. TVS)
    Another case has been pending at the Board for more than 7 
years. The case involves the question of whether an employer 
has to allow labor union organizers access to private property. 
(Roundy's, Inc. vs. Milwaukee Building and Construction Trades 
Council, AFL-CIO)
    Our Solution: We encourage a timely resolution of cases--
first by allowing either party to appeal to a Federal court of 
appeals for a de novo, or fresh, review if the Board fails to 
reach a decision on their case within a year.
    Our bill, the NLRB Reform Act will:

     end partisan advocacy,
     rein in the general counsel, and
     encourage timely decisions.

    And our bill would offer these solutions without taking 
away rights or remedies for any employee, business, or union.
    This bill is something I look forward to working on here in 
the committee next year.
    That's how important I think the Board is, and that's how 
important I think it is that the Board be a stabilizing force 
in our Nation's workplaces, rather than a destabilizing force.
    Ms. McFerran, I look forward to hearing your thoughts on 
whether this Nation's workers and employers deserve stability 
from this important agency, and why you believe you are the 
best person to provide it.
    The Chairman. Thank you, Senator Alexander.
    Now I have the privilege of formally introducing Lauren 
McFerran today. It is rather odd. I am usually turning to her 
here to ask what I should be doing next.
    [Laughter.]
    And now to have you at the table.
    As has been said, Ms. McFerran is presently the Deputy 
Staff Director and Chief Labor Counsel to this committee, which 
she has done for 9 years since 2005.
    Prior to joining this committee, she was an associate at 
the law firm of Bredhoff & Kaiser for 3 years, was a law clerk 
for Chief Judge Carolyn Dineen King of the Court of Appeals for 
the Fifth Circuit.
    She has her bachelor's degree from Rice University in Texas 
and her J.D. from Yale University.
    Let me just add that I have known Ms. McFerran now, 
obviously, for 9 years working on this committee. She is 
everything you could want in a public servant: a keen mind, a 
legendary work ethic, and a very strong sense of justice and 
fairness. I know she will be an excellent addition to the NLRB. 
Lauren, thank you very much for being here and for taking on 
this task. I know you are going to do an excellent job there.
    Your statement will be made a part of the record in its 
entirety, and if you could sum it up in 5 minutes, as you know 
we do around here, I would sure appreciate it. The floor is 
yours.

          STATEMENT OF LAUREN McFERRAN, WASHINGTON, DC

    Ms. McFerran. Chairman Harkin, Ranking Member Alexander, 
and members of the committee, I thank you for the opportunity 
to appear before you today as a nominee to serve on the 
National Labor Relations Board. For someone in my field, both 
appearing before this committee and being considered for a 
position on the Board are the highest of honors. I am deeply 
grateful and I am humbled to be here.
    I would like to take a moment to introduce and thank my 
family. My husband Sam is here with me today, as well as my 
parents, Tom and Cathy McGarity. I am grateful today, as 
always, for their steadfast love and support. I have spared the 
committee the presence of my children, Brendan and Ryan, who 
are 4 years old and 5 months old, respectively. They are lovely 
children, but sitting quietly is not one of their strong suits. 
I am glad they are at daycare today and I thank the wonderful 
women at their daycare, without whom I certainly would not be 
sitting here today.
    Finally, I realize that this is probably the last time that 
my boss, Chairman Harkin, will hold the gavel for this 
committee. So I hope that members of the committee will permit 
me a moment to speak on behalf of his HELP Committee staff. 
Everyone who knows Chairman Harkin knows that he is a 
tremendous leader, but only those of us who have been lucky 
enough to serve on his staff know what a tremendous boss he is. 
He wears his heart on his sleeve for the issues that he cares 
about, and I can assure you he wears his heart on his sleeve 
for the people who work for him as well.
    I have been blessed to work for two legendary Senators in 
my time on the HELP Committee. I never got the chance to thank 
Chairman Kennedy for all that he did for me. So I am glad to 
have that opportunity now with Chairman Harkin. It has been an 
honor and a privilege to work for you, and I thank you for 
giving me the opportunity to serve.
    It is a bit surreal to be sitting here in this chair in the 
committee room after spending almost a decade sitting in the 
staff chairs behind you. But while the view is different from 
this angle, this room still feels like home to me. I have 
learned so much sitting in this room, and I think that those 
are lessons that will serve me well if I am confirmed to the 
National Labor Relations Board.
    Perhaps the most important lesson that I have learned is 
that even people who have very different viewpoints can agree 
more often than you would think, and even when we disagree on 
some things, we can find common ground on others. Both of the 
chairmen that I have worked for and both of the ranking members 
that they have worked with have shared this philosophy. I 
believe it was Senator Enzi that referred to it as the 80-20 
rule. We focus on the 80 percent that we can agree on and not 
the 20 percent that we do not. As Deputy Staff Director of the 
committee, I am deeply proud to have played even a small role 
in helping this committee to shepherd--in my written remarks, 
it says 20 but with the passage of CCDBG, it is now 21 pieces 
of bipartisan legislation to the President's desk this 
Congress. We do not always agree on everything, but we can 
still get a lot of important work done.
    I think what we often forget about the Board is that they 
operate largely on the same principle. The vast majority of the 
cases that come before the Board are decided unanimously by 
consensus. While there certainly are difficult issues where 
interpretations of the law will differ, those cases are the 
exception, not the norm. The bulk of the cases before the Board 
are not precedent-setting or groundbreaking, but they are 
critically important to the parties involved. And the Board's 
role is to provide an efficient and fair resolution of the 
dispute so that everyone involved can continue working and 
doing business as usual. If confirmed, I would very much look 
forward to working on these cases with my colleagues on the 
Board. These cases are at the core of the important service 
that the Board provides for our country and for our economy.
    A second important lesson I have learned in my time on the 
Hill is about the importance of listening. Some of the most 
significant meetings that I take as a staffer are with 
constituents or other stakeholders who disagree with what my 
boss is doing or who have concerns about a piece of legislation 
he supports. I always learn from these meetings and even when 
we do not come to a place where we eventually see eye to eye, 
my work and the legislation that I am working on usually 
improve as a result of these conversations.
    If confirmed to the Board, I look forward to the 
opportunity to spend a lot of time listening, listening to my 
experienced colleagues on the Board, listening to the many 
stakeholders who care about the Board's work, and especially 
listening to the amazing and dedicated career staff at the 
Board across the country. The NLRB attracts some of the best 
and brightest staff of any agency I have ever worked with. 
These are immensely talented people who dedicate their lives to 
working at the Board because they believe in the importance of 
its mission. I welcome the opportunity to work with them and to 
learn from them, if confirmed.
    Finally, I have learned in my time on this committee the 
critical difference between what you all do sitting up in those 
chairs and what I would do if confirmed to the Board. Your job 
is to advocate for changes in the law that you think will make 
people's lives better. It has been exciting and fulfilling to 
participate in that process for so much of my career. But I 
fully understand that, if confirmed, my job would change 
dramatically. The job of the Board is to interpret and 
implement the law as fairly and efficiently as possible. My 
role model in this work would not be the many talented 
legislators that I have worked with over the years, but instead 
the judge that I was privileged to work for during my time as a 
clerk on the Fifth Circuit Court of Appeals. Judge King--or 
Chief Judge King at the time--she would not want me to leave 
that out. She was a rule of law judge, first, last, and always. 
She never wanted a particular outcome in a case that was before 
her. What she wanted us to do as clerks was to help her get the 
answer right. That is the attitude and the approach that I 
would take if confirmed to the Board.
    Again, I thank you for the opportunity to be considered for 
this critically important position, and I welcome any questions 
that you might have.
    The Chairman. Thank you, Lauren. Ms. McFerran, thank you, 
and thanks for your kind words in my behalf. And let me 
reciprocate by saying that I am personally going to miss 
working with you. But I know you are going to be a great Board 
member at the NLRB.
    We will start 5-minute rounds of questions here.
    Lauren, one of the previous NLRB nominees we had before 
this committee some time ago described himself as not being 
pro-worker or pro-union or pro-employer, but rather being pro-
Act. Do you consider yourself to be pro-Act? And if so, what 
does that mean?
    Ms. McFerran. Thank you for that question.
    I absolutely do consider myself to be pro-Act. Any Board 
member's job is to approach the case before them impartially 
and objectively to resolve the dispute that is before them. It 
is not about who wins or who loses. It is about how that 
dispute should be resolved consistent with the language, the 
goals, and the purposes of the Act. So one's foremost 
consideration as a Board member should always be the Act and 
what it says and what its purposes and goals are.
    The Chairman. A common misconception is that the National 
Labor Relations Act and the Board exist only to protect the 
rights of labor unions and union workers. Can you tell us a 
little bit more about how the Board protects the rights of non-
union employees and how about employers? Why is a fully 
functioning Board critical for employers as well?
    Ms. McFerran. The Board is critical for employers because 
of its primary purpose, which is to provide stability in labor 
relations in this country. And an employer benefits just as 
much as workers do from having a Board that is going to work 
efficiently and effectively to resolve disputes so that 
everyone can go about their business. When an employer has a 
contract with a group of employees and there is a dispute about 
how to interpret that contract, the Board plays a vital role in 
letting everyone say their position, get a decision, and move 
on with their business and with their lives. And the Board's 
role in that respect is absolutely vital to employers as well 
as to workers.
    The Chairman. So you see as a critical role for you and for 
other Board members to work with employers and employees before 
the crisis becomes unmanageable, before it results in strikes 
and other types of things like that. And you see that as a 
proper function and role for the Board.
    Ms. McFerran. Absolutely. And in the statute, one of the 
purposes of the Act is, as I mentioned, to promote stability in 
labor relations. Contracts can provide that kind of stability, 
and when there is a dispute under the contract, the Board is 
there to help things continue to run smoothly.
    The Chairman. I appreciate that because even recently we 
have had some cases of national prominence come up before the 
Board. There was a lot of political fire power on both sides of 
that for a period of time. But you ask people what happened 
today, and they do not really know whatever happened to that. 
Well, what happened is the NLRB sat down with the employers and 
the employees and the unions and got it all worked out and 
everything went ahead. So I think a lot of times people do not 
realize that this is a very powerful and important function of 
the NLRB. I thank you for your comments on that.
    With that, I will now turn to Senator Alexander for the 
questioning.
    Senator Alexander. Thank you, Ms. McFerran.
    Mr. Chairman, I spoke with Ms. McFerran ahead of time and 
from that end, she said the lights were very bright. That might 
be something she had not noticed when she was back here.
    [Laughter.]
    Ms. McFerran, Senator Harkin read from the Act. You talked 
about the Act. You talked about Judge King, I believe it was, 
who liked to read the Act and come to the right result. That is 
very encouraging to me.
    The Act says,

          ``employees shall have the right to join unions,'' 
        but it also says, ``they shall have the right to 
        refrain from forming, joining, or assisting labor 
        organizations to bargain collectively, or for any of 
        those activities.''

And 24 States, including my own State, have what is called a 
right to work law which says if you work at the Saturn plant, 
which is a UAW partnership, you do not have to belong to the 
UAW to do that, although you may want to. Or if you work at the 
Nissan plant, you do not have to form a union or join a union.
    This Board's general counsel sent a chill through our State 
when he ruled, in effect, that expanding Boeing's manufacturing 
work into South Carolina from Washington might be prima facie 
evidence of an unfair labor practice. That seemed to many of us 
undermining the right to work laws in our State.
    Would you in your decision making uphold the right of 
employees in Tennessee and 24 States to refrain from joining 
the union as the law provides as well as the right to join a 
union?
    Ms. McFerran. As that right is articulated in section 7, 
absolutely.
    Senator Alexander. Senator Burr and I were student 
athletes. He was better than I was. He had a scholarship to 
Wake Forest. I was on the track team at Vanderbilt. But we both 
had that experience. And we went to the Senate floor pretty 
quickly after a decision was made March 26th by the NLRB 
Chicago regional director ruling that Northwestern University 
football players can unionize under the NLRB Act. That raised 
the prospect of Northwestern or Vanderbilt or Wake Forest 
recruiting a $500,000 quarterback or a $400,000 defensive end. 
It would destroy the concept of student athlete.
    I was a member of the Knight Commission in 1991 when I was 
president of the University of Tennessee. This is a group of 
university presidents, Father Hesburgh, the head of North 
Carolina system, and many others. We said this: We reject the 
argument that the only realistic solution to the problems of 
intercollegiate athletics is to drop the student athlete 
concept, put athletes on the payroll, or reduce or even 
eliminate their responsibilities as students. Such a scheme has 
nothing to do with education, the purpose for which colleges 
and universities exist. Scholarship athletes are already paid 
in the most meaningful way possible, with a free education.
    Do you believe that a scholarship athlete at Vanderbilt or 
Wake Forest is an employee of the university?
    Ms. McFerran. Thank you for that question, Senator 
Alexander.
    With respect, because that is an issue that is likely to 
come before me if I were confirmed to the National Labor 
Relations Board, it would be inappropriate for me to prejudge 
the resolution of that particular case. I will freely admit 
that I know very little about college athletics, and I would 
look forward to the opportunity to learn. I would talk to my 
colleagues on the Board. I would read the briefs. I would read 
the law, and I would learn as much as I could before rendering 
any decisions.
    Senator Alexander. I understand your answer, but I would 
hope you would talk to student athletes whether they have been 
scholarship athletes or non-scholarship athletes and who 
realize that if you are, say, at Vanderbilt University, it may 
be worth $75,000 a year if you are a low-income student. About 
40 percent of the students also have a Pell grant to help pay 
for their expenses. In addition to that, many of the athletic 
conferences are moving to change things so that student 
athletes have more coverage for expenses.
    And the other side of the issue is that if you begin to 
move toward too much cost for student athletes at large 
universities, you then begin to undermine student athletes at 
smaller universities who cannot afford that, and you cut out a 
lot of programs, including women's programs which do not make 
enough money to pay for themselves and are supported by men's 
football.
    So it is a complicated area. And all I can say to you is 
when that comes before you, I hope you will think carefully 
about the fact that ``student athlete'' is a valuable concept 
and that the universities are dealing with it and that the 
presidents are in charge of that, and that for the NLRB to move 
into a situation and suddenly destroy that experience for 
thousands and thousands of students would be a terrible mistake 
in my judgment.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Alexander. I cannot help 
just to say how I feel about things like that. I think the 
Ivies have got it right. The Ivy League schools have got it 
right. They just do not give sports scholarships. If I had my 
way, I would do away with all sports scholarships at any 
college anywhere in the United States.
    Senator Alexander. If I could just----
    The Chairman. Sure.
    Senator Alexander. If you live in Ames, IA and you are 6 
foot 7 and you weigh 260 pounds and you can run 40 yards in 5 
seconds, you will get an awfully good academic scholarship to 
Brown.
    [Laughter.]
    And Harvard and Yale.
    The Chairman. Academic scholarship. But still, it has to be 
an academic scholarship, not a sports scholarship. OK, we could 
get into that.
    In order, I have Senator Franken, Senator Burr, Senator 
Murray, Senator Casey, Senator Mikulski.
    Senator Mikulski. I think Senator Murray. Franken is not 
here. It is Murray.
    The Chairman. Senator Murray I guess.
    Senator Murray. Senator Mikulski has asked if she can go 
ahead of me.

                     Statement of Senator Mikulski

    Senator Mikulski. No. I am not going to ask my questions. I 
am going to yield to Senator Murray. But because of the 
negotiations going on with appropriations, Mr. Chairman, I 
wanted to note my presence here and my support for Ms. 
McFerran's nomination. And I think we need a functioning NLRB.
    Thank you very much, and I look forward to working with you 
on this side of the table when we are all at the table. Thank 
you very much.
    The Chairman. Thank you, Senator Mikulski.
    Senator Murray.

                      Statement of Senator Murray

    Senator Murray. Good morning and thank you, Mr. Chairman. I 
really appreciate you scheduling this hearing so quickly so 
that we can process this critical nomination expeditiously.
    Ms. McFerran, let me thank you for being here today and for 
answering the President's request to serve on this really vital 
Board. As you well know, as you talked about in your opening 
statement, from your years here in the Senate with Senators 
Kennedy and Harkin, the National Labor Relations Board is 
absolutely essential to our Nation, our workers, and our 
employers, let alone our financial markets and our very 
economy, all of whom really depend on a full functioning and 
effective Board.
    Mr. Chairman, I also wanted to extend my thanks and respect 
to Sharon Block. She was a true public servant whom I really 
hold in the highest regard, and I really appreciated her 
willingness to serve. I want to express my personal regret 
publicly for how this entire ordeal unfolded. It has really 
saddened me and worried me to see this Board demeaned and 
politicized by some, and I really think she deserved better. 
And every American who, whether they know it or not, is 
impacted by this Board, and deserves better too. I just wanted 
to publicly say that.
    But I am very grateful, Ms. McFerran, that someone of your 
high intellect and strong experience and keen sense of public 
duty and lifelong dedication to our Nation's labor laws is 
before us today. It has been good to work with you here with 
you behind us. I look forward to working with you once again 
when you join the Board.
    Chairman Harkin talked about how this is a Board that is 
good for business and good for employees. And I appreciated 
your answer. But I also presume that in order for the NLRB to 
protect both employees and business, it needs to function 
properly, no political games being played, and get back to 
having orderly transitions. Would you agree with that?
    Ms. McFerran. Absolutely, Senator, and I thank you for the 
question.
    The importance of orderly transitions for Board members is 
both symbolic and practical. Too often in the past, the Board 
has become something of a political football, and there have 
been long gaps or periods of time where seats have been empty 
and there has been the need for recess appointments and 
kerfuffling. We would all rather that not be the case and we 
would all rather there be an orderly and smooth transition 
between Board members both because it signifies the importance 
of what the Board does and the important role that the Board 
plays in our economy and also because it lets the Board do its 
job better.
    I really appreciate the trouble that everyone has gone to 
to try to have an orderly transition here. We are entering what 
I feel like is a new era with the Board with the confirmation 
of the full five members. And starting a new precedent where 
transitions happen for Democrats, for Republicans in an orderly 
manner would be tremendously beneficial to both the Board and 
the administration of the law.
    Senator Murray. And to employees and to businesses. We 
created this Board many years ago long before I was here to 
make sure that that could have a place that we could resolve 
issues expeditiously and in the best manner. So I hope we can 
move this forward quickly.
    I did want to ask you if you could just explain how the 
Board is a voice in the issue of ensuring fair pay for all 
workers.
    Ms. McFerran. Absolutely. One thing that many people do not 
realize about the National Labor Relations Act is it does not 
just protect union workers and unions and employers. The Board 
protects every worker in this country. Section 7 rights, the 
right to join together collectively to speak up for better 
wages and working conditions is a right that every American has 
regardless of whether they are represented by a union or not. 
So in situations where there has been, for example, unequal pay 
for women, unequal pay for people with disabilities, two 
workers who come together and say we think this is not fair, we 
think this is not right--they are protected in that activity by 
the National Labor Relations Act even if they have no idea what 
a union is and have never signed a union card. It is a 
critically important function that the Board plays and it is 
something that I hope every American can be aware of.
    Senator Murray. Again, thank you for being here. Thank you 
for accepting this nomination and for your willingness to serve 
your country. I wish you the very best and I encourage our 
colleagues to quickly get this confirmation through.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Murray.
    Senator Burr.

                       Statement of Senator Burr

    Senator Burr. Thank you, Mr. Chairman.
    Ms. McFerran, I heard what you just said. This is the 
responsibility of the National Labor Relations Board to protect 
those workers. Is it the responsibility of the Labor Relations 
Board to determine who their employer is or is it who pays 
their salary?
    Ms. McFerran. Thank you for that question, Senator.
    The issue of how you define who an employer is under the 
Act is one that is very likely to come before me if I am 
confirmed as a Board member. So I would not want to prejudge 
that issue. I would be called on to interpret that definition 
if I was----
    Senator Burr. This is a really, really important thing. And 
I did not ask you to make a ruling on the joint employment 
matter. What I asked you was, ``is the person that the NLRB is 
responsible to protect employees from, the company that pays 
their check.''
    Ms. McFerran. Again, the question of who meets the 
definition of an employer under the Act is actually always a 
very fact-specific inquiry too. It is going to very much depend 
on the circumstances on the ground. There is a number of terms 
and conditions of employment that can implicate that question. 
So it is a difficult question to answer in the abstract.
    Senator Burr. Let me tell you why this is important. 
Senator Alexander is right. I think the NLRB determination as 
it related to college scholarships is just ludicrous. But if 
you apply what the general counsel at NLRB is trying to do 
relative to joint employment, not only would the school be 
liable but the donors would be liable, the donors who gave to a 
college fund to fund the scholarships of the athletes. And I 
might say to Senator Harkin that it would be extremely easy to 
extrapolate this under that definition to say the academic 
scholarships that were awarded--those students are protected 
from the university and the university would also then, under 
this ruling, I think be extended to the donors to the 
university who would be potentially liable for the conditions 
that those students are under. This has incredible, incredible 
impact.
    I have just one question of you. Do you believe there are 
any limitations to what the NLRB can do to determine how many 
people who do not actually pay the check are in the chain of 
liability for an employee?
    Ms. McFerran. If the issue were to come before me as a 
Board member, all I can pledge to you is that I would consider 
it with a very open mind. I would look at the arguments 
presented to me in the case. I would review the record. I would 
consult with my colleagues, and I would review the issue with a 
completely open mind.
    Senator Burr. I appreciate that. Since I have a minute 53 
left, I will continue to editorialize a little bit.
    We have disagreements with determinations made by not just 
NLRB but other Government agencies, and when it is a Republican 
administration, I have just as many problems with some of them 
as Tom does as a Democrat--we go back and forth.
    Where we are headed does not pass the smell test. It is 
going so far outside of what the public believes to be the 
responsibility of the NLRB. The claimed responsibility of 
Government that somebody that is not involved in the 
management, the contracting of an employment relationship, the 
payment of a check, the funding of the check is somehow in the 
chain of liability if in fact their employer makes the wrong 
decision has implications to economic growth that could be 
devastating in this country. It could have implications to 
higher education that means no student--no student--receives a 
scholarship. It is further than what Senator Alexander raised 
and that is that if this were to be enacted and student 
athletes under scholarship could unionize, I can tell you who 
the loser is. It is female sports. Because the money will flow 
out of Division 1 football, and it is Division 1 football that 
pays all of the scholarships for women. It is the only 
profitable sport out there other than ACC basketball by the 
way.
    [Laughter.]
    And I point that out to make the strong point that Senator 
Alexander and I feel, but also to say for gosh sakes, 
understand the implications of what you are getting ready to do 
because when you do this, you will never reverse it fully and 
the impact across our economy--and the U.S. economy is I think 
the greatest entrepreneurial, innovative economy in the world. 
And every day there is somebody coming out with something. 
Without the capital to create a network of businesses in 50 
States, they franchise. And if you now say if you franchise, 
you are just as liable as the franchisee as the person that 
franchises from you even though you have no responsibilities to 
pay their employees, to manage their employees, to make the 
decisions on their employees, but you are in the chain of 
responsibility as it relates to the Labor Relations Board, I 
can tell you what is going to happen. We are going to kill 
franchise businesses in this country. And that right now is the 
employment engine of America. I want to rev it up. I do not 
want to kill it.
    I thank you for being here. I thank the chairman.
    The Chairman. Thank you, Senator Burr.
    Senator Franken.

                      Statement of Senator Franken

    Senator Franken. Ms. McFerran, good to see you. And I too 
want to thank you for agreeing to serve on the NLRB, which was 
created to protect Americans' rights. Over the years, though, 
vacancies on the Board have threatened the NLRB's ability to 
operate, which has a real impact on the lives of workers and 
employers.
    Thank you also for your service to this committee. You have 
significant working experience on Capitol Hill to find 
consensus on both sides of the aisle. You have experience as a 
practicing lawyer at a law firm working on labor issues. In 
your testimony you referenced Senator Enzi's 80/20 rule, which 
is the idea that when working together, we should focus on the 
80 percent we can agree on not the 20 percent we do not. 
Sometimes I call it the 64 percent rule because I think 80 
percent of the time we agree on 80 percent. That was my attempt 
at a math joke.
    [Laughter.]
    I think you bring a wonderful perspective to the NLRB.
    Could you expand on how your experience working on 
bipartisan legislation here in the Senate on this committee has 
prepared you to find common ground with other members of the 
NLRB?
    Ms. McFerran. Absolutely, and thank you for the question.
    When I first came here as a staffer in 2005, I was assigned 
to work on a bill that was kind of midway through the 
development process called the Genetic Information 
Nondiscrimination Act. And it was a bipartisan bill and a 
bipartisan process. I learned a lot as a new staffer from being 
part of that process. I learned that sometimes when you want to 
do things in a bipartisan manner, things are going to take a 
little longer and that it is worth taking that time. I learned 
that sometimes if you do not have to reach an area of conflict, 
you do not have to reach an area of conflict and you focus on 
what you can agree on. I learned that nobody is going to get 
everything they want in the context of a negotiation. Every 
side is going to have to give so that we can find common ground 
and find a product we can all agree on.
    I was really excited to be part of what was a pretty 
groundbreaking piece of legislation at that point and will 
always be proud that I was able to help get it to the 
President's desk.
    Senator Franken. I have asked previous nominees about the 
case of Susie Stetler from Elk River, MN who worked as a school 
bus driver. In 2012, the Board issued a decision, but her case 
has been in legal limbo as a result of the D.C. Circuit's Noel 
Canning decision. Today Ms. Stetler is still waiting on a 
decision on her case and for $40,000 in back pay. I am sure 
there are many similar cases currently at the Board.
    What effect do you think having a fully confirmed NLRB will 
have for individuals like Ms. Stetler and others with 
backlogged cases? What do you think will be the consequences 
for workers and employers if the NLRB does not have a fully 
confirmed Board?
    Ms. McFerran. Thank you for that question.
    The importance of orderly transitions on the Board and 
maintaining a full component of Board members hopefully will 
help the Board in increasing the speed of its case processing. 
Nobody likes long delays in case processing. Nobody benefits 
from that. And that certainly is an issue that if I were lucky 
enough to be confirmed to the Board, appropriate to my role as 
a Board member, I would like to take a look at and work on. But 
certainly having a fully confirmed Board that has orderly 
transitions between members is a key part of that process.
    Senator Franken. Thank you.
    The NLRB plays an important role in making sure that 
workers are able to exercise their collective bargaining 
rights. And according to the Pew Research Center, 64 percent of 
Americans agree that labor unions are necessary to protect 
working people. But in part due to broken election processes, 
union membership has declined. Today only 7 percent of private 
sector workers are represented by unions. This is important 
because being able to exercise collective bargaining rights in 
the workplace helps support middle-class jobs. According to the 
Economic Policy Institute, workers covered by a collective 
bargaining contract earn almost 13 percent more than those not 
covered, and union workers are more likely to have paid leave 
and other benefits that help put them on stronger financial 
footing compared to non-union workers.
    Given the challenges that our economy is currently having 
and has had recovering from the recent recession and the 
frustratingly stagnant wage growth for middle-class workers, 
can you talk just a little bit about the role the NLRB plays in 
our Nation's economy?
    Ms. McFerran. Absolutely.
    Again, one of the purposes of the National Labor Relations 
Act is to promote stability in labor relations, and when you 
have a contract in place and a functional relationship between 
an employer and workers where they know they can get those 
disputes resolved, where they all know what the rules of the 
game are, I think it can promote really good relationships 
between labor and management and the Board plays a critical 
role in helping that. And good relationships between labor and 
management often lead to smooth performance of an economy.
    Senator Franken. Thank you. Thank you, Mr. Chairman.
    The Chairman. Senator Casey.

                       Statement of Senator Casey

    Senator Casey. Mr. Chairman, thank you very much. We are 
grateful that Lauren McFerran is before us today and we are 
grateful for your service on this committee, I guess under two 
chairmen. And we are grateful for that.
    I wanted to talk to you a little bit about public service 
and about how important it is that one have experience in 
public service and experience working in a bipartisan fashion. 
I am always reminded, when we have hearings about the NLRB, 
about the foundational determinations that were made back in 
the 1930s and thereafter about why we have a National Labor 
Relations Act and the Board itself. And I may, before we are 
done, quote from the findings of the original Act about the 
purpose of the statute, one of them being to promote commerce 
so that we have labor-management relations or labor-management 
circumstances that will promote commerce. But we do not have a 
lot of time for the recitation of the history.
    I wanted to ask you how you believe your, what I would 
argue, substantial and significant public service in the Senate 
on this committee working on very difficult issues in a status 
where you were on the minority staff and then you were also in 
the majority--how that experience will help you on the NLRB to 
be able to fashion the kind of compromises that are going to be 
important but also how that experience informs your ability to 
reach a bipartisan consensus where you can.
    Ms. McFerran. Absolutely and again thank you for the 
question.
    Two answers to that question actually spring to mind, and I 
hope I do not sound too self-serving when I say that one of the 
lessons that I have learned here on the Hill is the importance 
of good staffing. What I would be very, very fortunate to have 
at the Board is an amazing career staff of dedicated public 
servants. And they would be my first and most helpful resource 
in any question that was presented to me. These are people who, 
as I mentioned in my opening statement--brilliant people who 
have dedicated their lives to serving at this agency and to 
helping make this law function. And I have deep respect for the 
work that they do, for their service to this country, and I 
would use them as my primary resource.
    Obviously, I would approach questions at the Board with an 
open mind and not with any prejudgment based on my policy work 
here on the Hill. Certainly the experiences that I have had on 
the Hill working collaboratively would illuminate my work 
there. One thing that I have learned in my role as Deputy Staff 
Director of the committee is that even when you do not agree on 
the substance of something necessarily, it is really important 
to have a visible, functioning, and cooperative process for 
this committee. And we have always tried, even when we agree 
and we do not agree, to have all of our practices and 
procedures of this committee work in a smooth, efficient, and 
bipartisan manner. And certainly that is something I would 
bring to the Board. There are going to be cases we disagree on 
but let us work together. Let us respect the process. Let us 
follow our own rules and let us do it right.
    Senator Casey. The other question I have for you is the 
role that the Board plays in two related issues, two very 
important issues for our country. One is the role that the 
Board can play in advancing economic growth and the related 
issue, of course, of strengthening the middle class which has 
taken a real beating over the last generation. Anything you can 
say about the impact of Board determinations and decisions on 
economic growth for the middle class.
    Ms. McFerran. Yes, absolutely.
    Again, the role that the Board plays for the economy in 
promoting stable labor relations is absolutely critical. And 
for workers, the Board is the only recourse that they have to 
enforce their rights under the National Labor Relations Act. 
There is no private right of action under the Act. So the Board 
obviously plays an absolutely essential role in ensuring that 
workers who have engaged in protected activity under the 
statute can have their rights vindicated in the same way there 
are rights for employers under the Act and the Board is their 
only recourse as well in certain circumstances to, for example, 
stop a wildcat strike or something like that. So it is the only 
entity that both sides can sometimes go to to make sure that 
they are heard and to make sure that their disputes are 
resolved.
    Senator Casey. Thank you very much.
    The Chairman. Thank you, Senator Casey.
    Senator Warren.

                      Statement of Senator Warren

    Senator Warren. Thank you, Mr. Chairman, and welcome, Ms. 
McFerran.
    Before I begin my questions, I want to join others to take 
a moment to acknowledge Sharon Block, the previous nominee for 
the NLRB, and to thank her for her willingness to serve. Ms. 
Block has served this country at the Department of Labor, at 
the EEOC, at the National Endowment for the Humanities, and as 
senior labor and employment counsel. She is currently the 
senior counselor to Secretary Perez at the Department of Labor. 
She is a dedicated public servant, and I am disappointed that 
her nomination has been blacklisted by the Republicans. She did 
not get blacklisted because of the quality of her opinions, the 
quality of her work, but because she once served on the Board 
as part of a recess appointment that was perfectly legal and 
supported by decades of precedent and circuit court opinions at 
the time that it was made.
    I understand that the Supreme Court later decided to change 
the law and invalidate her appointment to the Board, but I have 
no idea why the Republicans seem to think that this dedicated 
public servant should be blocked from further service to this 
country simply because of a technical change in the law that 
has nothing to do with Ms. Block's experience, her 
qualifications, or her dedication to this country.
    And frankly, I think it is this kind of political nonsense 
that makes it easy to understand why good people would refuse 
to serve in any position that requires Senate confirmation, and 
I hope this is not a sign of how the Republicans intend to 
treat other qualified nominees in the new Congress. So under 
these very difficult circumstances, I am very pleased that Ms. 
McFerran is willing to serve.
    The benefit of going last in the questions is that people 
have already had a chance to ask you many things that are 
important. The one that I want to give you is the chance to 
summarize. Ms. McFerran, you served on the HELP Committee for 
many years, which means you have been on the other side of 
this. You have vetted many nominees. So let me just ask you 
about what you think are your best qualifications for serving 
in this role and what you think you will bring to it.
    Ms. McFerran. Thank you very much and thank you for your 
kind words about Ms. Block.
    I have learned so much from the people sitting in this 
room, from the members that I have been privileged to work for, 
from the brilliant fellow staffers that I have been absolutely 
privileged to work with, and from the people who have come to 
visit me, I think maybe most of all from the people who have 
come to visit me. A lot of people think that every meeting we 
take here is with some high-powered lobbyist or some big 
interest group, and every Iowan and every Massachusetts 
resident who has walked in my door and shared their problem and 
their story with me reminds me that when I am going to the 
Board, I am solving real problems for real people. And it is 
not about me. It is not about making grandiose policy 
statements. It is about solving those problems for those people 
and helping make their lives better. And that is what I would 
try to bring with me to the Board.
    Senator Warren. Thank you very much. I think that is an 
eloquent statement for what it is that government should always 
be about. So thank you very much. I trust that your nomination 
will not be controversial, and I hope that we get you quickly 
confirmed in this spot.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Warren.
    Senator Alexander.
    Senator Alexander. Ms. McFerran, I wanted to just comment 
about the joint employer standard a little bit and take this 
opportunity before you are a member of the NLRB. I will not ask 
you to comment on a case that might be before you, but I assume 
you would agree that buying a local franchise of a national 
brand is one of the main pathways to business ownerships for 
thousands of Americans.
    Ms. McFerran. I actually am not much of an expert on 
formations of business ownership, but if someone were to 
present that evidence to me before the Board, I would 
absolutely consider it.
    Senator Alexander. I would suggest that it is. I know in 
our State, for example, there are 21,291 local franchise 
establishments employing about 224,000 workers. And for a 
person without a lot of capital who wants to get started, a 
chance to be a franchisee is a chance to begin to make your way 
up the economic ladder and realize the American dream.
    For 30 years, the NLRB has taken the position that one 
business cannot be held liable for the employment-related 
matters of another one. That is called the ``joint employer 
standard.'' But on July 29th of this year, the NLRB general 
counsel authorized complaints against McDonald's USA, a 
franchisor, to hold it responsible as a joint employer for 
actions of local franchise business owners.
    There are about 770,000 small business employers in America 
that own franchises. And what this could lead to saying by the 
NLRB is that if there is an unfair labor practice by one of 
those small business franchisees, that the franchisor, or brand 
company, would be liable. As Senator Burr indicated, that 
liability could be so great that it would wipe out the 
opportunity for a person to be a franchisee and destroy that 
opportunity for small business.
    Tasty Delight is a frozen yogurt business in Franklin, TN. 
It has 100 local franchise business locations across the 
country. Let us take an example of a Tasty Delight franchise. 
At some point, you might have to decide as a member of the NLRB 
whether the company in Franklin should be responsible for an 
unfair labor practice by a local franchise business in St. 
Louis, MO. But to make decisions like that, you would have to 
begin to consider to what extent the franchisor controls what 
goes on in St. Louis. Does that have to do with what uniform 
the employees wear, the prices they charge for yogurt, the 
advertising they post around town, how long the operating 
manual is, what level of detail it includes?
    I raise this simply to underscore what a breathtakingly 
important step it would be if the NLRB were suddenly to decide 
that a franchisor is responsible for the actions of a 
franchisee when it considers unfair labor practices. And I 
would hope that if a case like that comes before you, that you 
would be very careful in considering how these actions by the 
Board might chill this opportunity for literally hundreds of 
thousands of Americans to own a small business franchise.
    Ms. McFerran. I would.
    Senator Alexander. That is all I have, Mr. Chairman.
    The Chairman. I do not mean to get too involved in this, 
but again it is a question.
    I always wondered if you asked someone who worked in a 
McDonald's serving hamburgers, if you asked that person who do 
you work for, they would say McDonald's. They would not say Joe 
Smith or Lamar Alexander or somebody else who might own that 
franchise. They work for McDonald's.
    Plus, there is some evidence--I do not know how much--that 
in a lot of these franchises that McDonald's actually is 
involved more heavily than what they say. One person who mops 
floors and does other maintenance work in Kansas City said the 
company executives visit as often as six times a year to tell 
the franchisee how to run their business and what to do and 
keep the standards up, I guess, so McDonald's looks good.
    I do not know. I just do not know what the facts are in the 
case on this. I was looking at some of the stuff that Senator 
Burr gave me. It is interesting to note that since November 
2012, 181 cases involving McDonald's were filed with the NLRB. 
68 were found to have no merit; 43 moved forward. Investigation 
is still pending on others. So it is obviously not a clear-cut 
kind of thing. This is something again where it will go through 
the process.
    I think there is always some confusion about how the NLRB 
operates. I just wrote it down here again for my own knowledge 
that the general counsel is really not part of the NLRB. He is 
not on the Board.
    Ms. McFerran. That is right.
    The Chairman. The general counsel is sort of like what I 
think of, Senator, as a prosecutor. Well, the prosecutor has 
regional directors out there that may make findings, and then 
the general counsel can then get involved to settle the 
disputes, to work with the businesses to try to get it solved 
before it slips out of control. But then, sometimes the general 
counsel can bring a charge, and that goes to an administrative 
law judge. The administrative law judge makes the decision. 
Well, one side or the other, if they do not like it, can appeal 
it to the NLRB, and that is where the judges of the NLRB look 
at what the ALJ did. And as I am told, the NLRB can affirm, 
overturn, or modify whatever the administrative law judge did, 
and again, either party to that can then take it to the Federal 
courts. That is just sort of the process.
    I think the fact that some were dismissed out of hand and 
some were pending, 68 were found to have no merit, 43 moved 
forward, it is, it seems to me, again fact-based. What are the 
facts of the situation? I can see some franchisees where there 
is a lot of distance between the franchisor and the franchisee 
and they are not involved in making sure their name is good and 
how they act and how they portray themselves to some that are 
heavily involved. So somewhere in there, there is probably a 
gray area. I have no idea where that gray area is, but that is 
why you have judges and that is why you have administrative law 
judges to make those decisions.
    I think that rather than prejudging it, let the system 
work. It is like that Boeing case that was mentioned earlier. I 
referred to it. I just did not mention it by name. But that was 
settled. That was all settled. So the system worked. But, boy, 
before it was settled, we had all kinds of political 
commentaries on it and people doing this political thing and 
going to do this and going to do that. But the system worked. 
And that is why I think we should not be prejudging something. 
Let the judges do their work. Let it go through the system. If 
at the end of all of this, we do not like what the district 
court did or the Federal or the Supreme Court did, we can 
change the law. That is why we have this system set up, and I 
think so far it seems to have worked pretty darned well for all 
these years.
    That is just my observation. That is all.
    Senator Alexander. The only thing I would add to that, if I 
may, Mr. Chairman, is it is such an important question. I think 
we ought to be the ones who change it if it is changed. I think 
it ought to be a matter for Congress. There are 770,000 small 
business owners who call themselves franchisees in the United 
States. These are hardworking, independent small business 
people. And if you take a company--let us say Ruby Tuesday that 
has 800 or 900 restaurants in the United States. If we meddle 
around too much and confuse the liability too much, then all 
the Ruby Tuesday restaurants in the country will be owned by 
Ruby Tuesday and there will not be that opportunity 800 times 
over for a franchise in a small town to own the restaurant. And 
the same for McDonald's and the same for Burger King and the 
same for all the others.
    So there is a good reason to keep a clear, distinct line 
between a franchisor and a franchisee. And it is an enormously 
important engine for economic growth and advancement up the 
ladder in the United States. So I would prefer that if there is 
any change, that we make it, not the NLRB.
    The Chairman. Fair enough. Fair enough.
    I just remembered a court case we studied in law school--
now, for me that has been a long time ago--about piercing the 
corporate veil, about how companies were hiding behind the 
corporate veil. And there was a famous Supreme Court case, 
which I cannot remember. Someone is going to tell me as soon as 
this hearing is over with. That case said you cannot hide 
behind this false veil of being a corporate entity. You still 
are liable.
    And it seems to me that franchisees probably have a 
spectrum, those where the franchisor is very heavily involved 
in what the franchisee does, on the other hand, probably not 
involved at all. So somewhere in there, there are these gray 
areas in there.
    I assume that at some point the Congress and the Senate 
will probably want to address this, depending on how it goes. I 
do not know. Maybe everybody will be happy with the outcome of 
this when they finally make their decision and work it out. 
Maybe everybody will say that is fine. We do not know that yet. 
I just say let the system work. I do not mean to go on about 
this.
    I just want to say thank you. Thank you so much for your 
public service. Thank you so much, Lauren, for your work on 
this committee for all these years. You have just been 
wonderful. As I said, we are going to miss you, but we know you 
are going to perform admirably on the National Labor Relations 
Board.
    I might just say for the record I have a picture with 
Brendan, but I do not with Ryan yet.
    [Laughter.]
    Ms. McFerran. We will work on that.
    The Chairman. I have to see Ryan before I leave here.
    Ms. McFerran. Thank you.
    The Chairman. Thank you very much.
    The record will be open for 5 days for comments. And 
questions for the record are due on Tuesday, November 25th.
    I have not checked with Senator Alexander yet. We are going 
to work out a time to have a markup on this when we come back 
after Thanksgiving, but sometime shortly after we come back 
from Thanksgiving.
    Thank you very much.
    With that, the hearing will stand adjourned.
    [Whereupon, at 11:10 a.m., the hearing was adjourned.]

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