U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

99–483 2016

RISKY BUSINESS: EFFECTS OF NEW JOINT 

EMPLOYER STANDARDS FOR SMALL FIRMS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT 

AND REGULATIONS 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

MARCH 17, 2016 

Small Business Committee Document Number 114–050 

Available via the GPO Website: www.fdsys.gov 

SBREP-219 with DISTILLER


Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

CHRIS GIBSON, New York 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

CARLOS CURBELO, Florida 

MIKE BOST, Illinois 

CRESENT HARDY, Nevada 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

YVETTE CLARK, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRENDA LAWRENCE, Michigan 

ALMA ADAMS, North Carolina 

SETH MOULTON, Massachusetts 

MARK TAKAI, Hawaii 

KEVIN FITZPATRICK, Staff Director 

EMILY MURPHY, Deputy Staff Director for Policy 

JAN OLIVER, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

SBREP-219 with DISTILLER

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Hon. Cresent Hardy ................................................................................................. 1 

Hon. Alma Adams .................................................................................................... 2 

WITNESSES 

Mr. Vinay Patel, President and CEO, Fairbrook Hotels, Chantilly, VA, testifying on behalf of the Asian American Hotel Owners Association .................. 4 

Mr. Danny Farrar, CEO and Founder, SoldierFit, Frederick, MD, testifying 

on behalf of the Coalition to Save Local Businesses ......................................... 5 

Mr. Harris Freeman, Professor of Legal Research & Writing, Western New 

England School of Law, Springfield, MA ........................................................... 7 

Mr. Kurt Larkin, Partner, Hunton & Williams LLP, Richmond, VA .................. 9 

APPENDIX 

Prepared Statements: 

Mr. Vinay Patel, President and CEO, Fairbrook Hotels, Chantilly, VA, 

testifying on behalf of the Asian American Hotel Owners Association .... 21 

Mr. Danny Farrar, CEO and Founder, SoldierFit, Frederick, MD, testifying on behalf of the Coalition to Save Local Businesses ........................ 28 

Mr. Harris Freeman, Professor of Legal Research & Writing, Western 

New England School of Law, Springfield, MA ........................................... 33 

Mr. Kurt Larkin, Partner, Hunton & Williams LLP, Richmond, VA .......... 40 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

ABC - Associated Builders and Contractors, Inc. .......................................... 62 

AGC - Associated General Contractors of America ....................................... 63 

AHLA - American Hotel and Lodging Association ........................................ 65 

IEC - Independent Electrical Contractors ...................................................... 68 

IFA - International Franchise Association ..................................................... 70 

IWLA - International Warehouse Logistics Association ................................ 78 

National Restaurant Association ..................................................................... 80 

NATSO - National Association of Truckstop Operators ................................ 83 

NFIB - National Federation of Independent Business .................................. 89 

SBREP-219 with DISTILLER

SBREP-219 with DISTILLER

(1) 

RISKY BUSINESS: EFFECTS OF NEW JOINT 

EMPLOYER STANDARDS FOR SMALL FIRMS 

THURSDAY, MARCH 17, 2016 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT AND

REGULATIONS, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2360, Rayburn House Office Building. Hon. Cresent Hardy [chairman of the Subcommittee] presiding. 

Present: Representatives Hardy, Chabot, Kelly, Vela ́zquez, and 

Adams. 

Chairman HARDY. Good morning. Thank you for being here. I 

call this meeting to order. 

Owning your own business and being your own boss is part of 

an American dream. Many Americans pursue that dream by using 

proven business models, like subcontracting and franchising, which 

results in the successful businesses that provide jobs for millions 

of Americans. However, the National Labor Relations Board and 

the Department of Labor are threatening those business models by 

changing their joint employer standards. Being deemed a joint employer has huge ramifications. If two businesses are determined to 

be joint employers, one could be held liable for the other’s compliance with the Federal labor laws. 

Last year, the NLRB issued a decision that changed its 30-yearold joint employer standard. Under the new standard, two companies could be classified as a joint employer based on the mere potential to control the terms of the conditions of employment. In 

January, the Department of Labor issued joint employer guidance. 

The DOL effectively abandons the existing Fair Labor Standards 

Act regulations by declaring that it will apply economic realities 

test to determine if there is a joint employer relationship. These 

ambiguous standards are injecting more uncertainty into a variety 

of business relationships. Because of increased liability, larger companies may try to reduce the risk by asserting more control over 

small businesses that they contract with or ending business relationships. Business models that have provided entrepreneurs with 

the opportunity to live the American dream may no longer be viable. I believe these misguided policy changes are a threat to small 

businesses and need to be reconsidered before significant damage 

is done to this vital sector in the American economy. 

SBREP-219 with DISTILLER

2 

I appreciate all the witnesses being here today. I look forward to 

your testimony, and I yield to Ranking Member Adams for her 

opening remarks. 

Ms. ADAMS. Thank you, Mr. Chair. 

Prior to 1935, workers had few rights to freely engage in activities to improve working conditions or pay. As a result, less than 10 

percent of the population was unionized. With enactment of the 

National Relations Labor Act and creation of the National Relations Labor Board that year, workers’ rights were greatly improved. Union membership tripled by the 1950s. Today, however, 

participation has slipped to nearly pre-NLRA levels, just 12 percent 

of the workforce. This drop in worker organization has coincided 

with a desire by businesses to distance themselves from the workforce through the use of contractors and temporary staffing agencies. Currently, over 3.4 million workers are temporary status, 

while millions more work for contractors. This business-to-business 

arrangement primarily benefits the parent company. They can shift 

the burden of dealing with payroll, benefits, and most importantly, 

compliance with the NLRA, to the contractor. This sharp increase 

in nontraditional employment has coincided with a change in the 

joint employee standard in the early 1980s. At that time, the Republican-led NLFB articulated a new, stricter definition of what 

constitutes a joint employer where the parent company had to have 

direct control over operations, hours, or working conditions to be 

liable for violations of the NLFA. After the ruling, the use of temps 

and contractors grew and workers’ rights suffered. 

In an effort to better protect vulnerable workers, the NLRB recently changed course on how to determine when multiple companies are joint employers. The new test announced in Browning-Ferris no longer requires that both employers actually exercise the authority to control terms and conditions of employment. Instead of 

both our employers within the meaning of the common law and 

share in determining the essential terms and conditions of employment, they will be deemed joint. 

The reaction to the ruling has been mixed. Labor rights experts 

have lauded the decision as a return to the original intent of the 

law. They also contend the shared responsibility under the recent 

decision should result in better oversight and compliance with important labor laws. The impact on workers is particularly important, and I am eager to hear from today’s witnesses on this issue. 

Critics, on the other hand, claim the change will negatively impact 

the small-business community. However, bringing the larger corporation to the bargaining table could provide small businesses 

with support and resources that they would otherwise not have in 

labor disputes before BFI decision. 

I look forward to hearing from our witnesses today regarding this 

concern, and one thing that both sides seem to agree on is that it 

will have an impact on unionizing. With the NLRB indicating the 

previous standard was too restrictive, allowing companies to skirt 

labor laws and collective bargaining rights, unions are likely to be 

embroiled to bring more joint employers to the bargaining table. I 

think we can all agree that it is important for businesses to follow 

applicable labor laws. I hope we can use today’s hearing to explore 

how the BFI case and subsequent developments at the Department 

SBREP-219 with DISTILLER

3 

of Labor will impact both workers and businesses, and I look forward to hearing from the witnesses. I thank you for your participation today. I yield back, Mr. Chair. 

Chairman HARDY. Thank you. 

Okay. If Committee members have any opening statements prepared, I ask that they be submitted for the record. 

I would like to explain how things work around here. You have 

a light in front of you. You will each have 5 minutes to deliver your 

testimony. That light will turn green when you start and with 1 

minute remaining, the light will turn yellow. Finally, at the end, 

it will turn red after the 5 minutes. I would ask you to adhere to 

those rules the best you can. 

Now, I would like to do some introductions for our witnesses. 

First, we have Mr. Vinay Patel, president and CEO of Fairbrook 

Hotels in Chantilly, Virginia. He has received several hospitality 

industry awards, including the Presidential Award by Carlson 

Companies for the Country Inn and Suites for achieving the highest level of operation of excellence. Mr. Patel holds a bachelor of 

science in marketing and business administration from Virginia 

Commonwealth University, and is testifying on behalf of the Asian 

American Hotel Owners Association (AAHOA). Thank you, Mr. 

Patel for being here. 

Up next we have Mr. Danny Farrar, CEO of SoldierFit, a fitness 

company that he co-founded in 2013. Mr. Farrar is an Army veteran who served in Iraq. SoldierFit, which is based in Frederick, 

Maryland, is about to open its fourth location and recently awarded 

two franchises. In addition, SoldierFit was just named as the Eastern region’s finalist for the U.S. Chamber of Commerce Annual 

Dream Big Small Business of the Year Award. He is testifying on 

behalf of the Coalition to Save Local Businesses. Mr. Farrar, thank 

you for your service, and thank you for being here. We appreciate 

everything you do here today. 

With that, I yield to Ranking Member Adams for her introduction of the next witness. 

Ms. ADAMS. Thank you, Mr. Chair. 

Harris Freeman is a professor of legal research and writing at 

Western New England University School of Law and a visiting professor at the Labor Relations and Research Center at the University of Massachusetts. He has taught labor and employment law 

since 1999, and in 2009, Governor Patrick appointed Professor 

Freeman to the Commonwealth Employment Relations Board, the 

appellant agency body that oversees public sector labor relations in 

Massachusetts. He served on that body until 2016. Professor Freeman’s writings on labor and employment law have appeared in numerous reviews and labor study journals, including the Employee 

Rights and Employment Policy Journal, and Working USA, a journal of labor and society. Mr. Freeman, we welcome you today. 

Chairman HARDY. Thank you. Our final witness is Mr. Kurt 

Larkin, a partner in Hunton and Williams in Richmond, Virginia. 

There he helps businesses of all sizes solve labor and employment 

challenges. Mr. Larkin previously served in the United States 

Army, Judge Advocate General Corps, and received the Meritorious 

Service Medal, the Army Commendation Medal, and the Global 

War on Terrorism Service Medal. He has received a law degree 

SBREP-219 with DISTILLER

4 

from Temple University and his bachelor’s degree from Dickinson 

College. Mr. Larkin, thank you for your service, and thank you for 

being here today. 

With that, Mr. Patel, we will start with you, and we have 5 minutes. Thank you. 

STATEMENTS OF VINAY PATEL, PRESIDENT AND CEO, 

FAIRBROOK HOTELS; DANNY FARRAR, CEO AND FOUNDER, 

SOLDIERFIT; HARRIS FREEMAN, PROFESSOR OF LEGAL RESEARCH AND WRITING, WESTERN NEW ENGLAND SCHOOL 

OF LAW; KURT LARKIN, PARTNER, HUNTON AND WILLIAMS 

LLP 

STATEMENT OF VINAY PATEL 

Mr. PATEL. Chairman Hardy, Ranking Member Adams, members of the Committee, I would like to thank you for the opportunity to testify before you today and to share with you my experience as a small-business owner. I look forward to a constructive 

discussion about how the new joint employer standard will negatively impact my business. 

My name is Vinay Patel. I am a first-generation American and 

proud small business owner from Herndon, Virginia. I am appearing today not only as a hotelier but also as a volunteer board member of the Asian American Hotel Owners Association. AAHOA represents more than 15,000 small business owners who own nearly 

50 percent of all hotels in the United States. 

My story is just like that of thousands of first and second-generation American entrepreneurs. I was born in Malawi, Africa, to parents of Indian origin. My family moved to the United States in 

1980 and bought a small, 27-room motel. We lived at this motel 

and did everything, from cleaning rooms to maintenance, and I 

would pop out of my living room to rent rooms to guests that would 

come in. This is where I learned the most important lessons in life 

of hard work, commitment to family, and community service. After 

graduating from college, we built a second property from the 

ground up, a 15-room Royal Inn Motel, where my wife Tina and I 

ran the motel and did every aspect of the business. 

After running the motel for 2 years, I decided it was time to take 

a risk and grow the company, so I began to look for opportunities 

in franchise hotels. While my ambitions were high, so too were the 

hurdles. Brand after brand turned me down due to lack of experience in franchise properties. After struggling to find a brand partner, Carlson Hotels took a chance on me and I was able to open 

up the first Country Inn Suites in Virginia in 1995, creating 15 

new jobs. Today, I have 11 hotels between Maryland and Virginia 

and work with major brands, including Carlson, Hilton, IHG, 

Wyndham, Choice Hotels, and proud to employ over 150 associates. 

I have explained my history in the hotel industry to show you 

how difficult it is to succeed as a small-business man. For this reason, the new joint employer standards are very concerning. Having 

faced challenges of two unbranded properties to start my career, 

franchising provided me the best business model to expand my operations and create hundreds of jobs. As a franchisee, I pay a license and royalty fee. In return, I display a nationally recognized 

SBREP-219 with DISTILLER

5 

sign on our property and benefit from a wide-reaching marketing 

campaign and a frontline reservation system. 

Most importantly, I own and operate my own small business. I 

take all of the financial risk. I make all of the day-to-day decisions 

at the hotels. The franchise business model is the best vehicle for 

small business ownership in the lodging industry. Changes in this 

model would discourage entrepreneurship and create uncertainty 

between employers and employees. The standard of the employer 

liability that existed for more than 30 years was simple, clear, and 

concisely defined and defined the relationship between employees 

and me. 

Under the new standard, franchisors may be subject to liability 

based on actions of franchisees. As a result, they will likely choose 

to work with larger franchisees and forego small business owners 

like myself. They would have no choice but to exert control over the 

daily operations of my business. I would cease to be an independent small business owner and would be subject to the directives of a large corporation. Ultimately, I would become a de facto 

employee of a corporate brand. 

Most threatening to my business is the Department of Labor’s 

characterization of employer labor. The Administrator’s interpretation directly takes aim at the hospitality industry. It suggests that 

I jointly employ my staff with the franchisor, simply because they 

are wearing shirts bearing the name of the national brand. 

As I mentioned before, the license agreement allows me to use 

the logo for marketing. Ultimately, I employ my team. I sign their 

paychecks, regardless of what logo is on their shirt. In my experience, there is no circumstance in which the national brands dictate 

the tasks of my employees. 

Frankly, if these burdensome circumstances existed when I entered the business, I would not have chosen the entrepreneurship 

path. The new rule threatens my ability to own and operate my 

business, to create and maintain good jobs, and the stability of a 

franchise model. 

Chairman Hardy, Ranking Member Adams, and the distinguished members of the Committee, I thank you for the opportunity to speak today. I urge this Committee to pass legislation 

that would reestablish the traditional joint employer standard that 

has allowed my family to realize the American dream of small business ownership. Thank you. 

Chairman HARDY. Thank you for your testimony. 

Mr. Farrar? 

STATEMENT OF DANNY FARRAR 

Mr. FARRAR. Good morning, Chairman Hardy, Ranking Member 

Adams, and distinguished members of the Subcommittee. My name 

is Danny Farrar, and I am the CEO and co-founder of SoldierFit. 

I am humbled by your invitation to speak on behalf of hundreds 

of small business owners like myself, who are members of the Coalition to Save Local Business. 

Mr. Chairman, I am an 8-year military veteran who served in 

the United States Army, including a combat tour in Iraq; a former 

firefighter and EMT; and a certified personal trainer with over a 

decade of experience. Today, I am a small business owner and enSBREP-219 with DISTILLER

6 

trepreneur. We operate three gyms in Maryland and will soon open 

our fourth. I am also a franchisor. We recently awarded our first 

two franchises to further grow our concept. So while some people 

hear the term franchise or franchisor and think only of major corporations, they can also think of me, my small business, and my 

story, and the story of hundreds of thousands of both franchisors 

and franchisees who are small business owners. 

Together with my friend and one-time mentor, Dave Posin, I cofounded SoldierFit, a fitness company committed to the ideals of 

community, patriotism, and pursuit of the American dream. I am 

also the president and co-founded of Platoon 22, a nonprofit started 

to combat the depression and dislocation that at least 22 veterans 

a day take their own lives. We are helping brave service men and 

women who have charged into combat on behalf of our Nation only 

to return scarred physically, mentally, or both, just as I once was. 

So as you can see, I have held many positions throughout my 

life, and the threat of unlimited, unpredictable joint employer liability is very scary. It threatens everything my partners and colleagues have worked for in order to build our community. 

While today I appear before you as a small business leader, my 

road here was long and challenging. Mr. Chairman, I was adopted 

at age 2. I graduated from high school 146 out of 147. I left for boot 

camp after graduation, and on September 11, 2001, I took the first 

team for the Army into the Pentagon to aid in search and rescue 

for survivors and remains. In the days that followed, I took jobs 

here and there but I soon ended up homeless. I once again turned 

to the military and deployed to Iraq where I completed over 700 

convoy missions. I have been blown up and shot at at just about 

any place you can get blown up and shot at. When I returned home 

I hit rock bottom. I drank, I self-medicated, and ultimately decided 

that my life was not worth living and attempted suicide. Somehow 

I got a second chance. 

Today I lead a company that has been the recipient of several 

small business awards from the U.S. Chamber of Commerce in the 

State of Maryland, as well as I was featured on the cover of Men’s 

Health magazine. I have gone from the kid who barely graduated 

high school to giving the commencement address at one. But Mr. 

Chairman, the National Relations Labor Board threatens everything that I and millions of small-business owners have built. 

When the NLRB decided to change the joint employer liability 

standard in August of 2015, it was a scary moment for local business owners like myself. For decades, the joint employer standard 

had protected businesses like mine from the liability of employees 

over which we have no actual or direct control. That has always 

made sense. But now in adopting this new, ambiguous, indirect, 

and even reserve control standard, the NLRB has made employers 

potentially liable for employees they do not employ. That is nonsense. 

Mr. Chairman, from the perspective of small business, it appears 

that Washington regulators are attempting to facilitate a corporate 

takeover of Main Street. If regulators make large, primary companies liable for the employment actions of third-party vendors, suppliers, franchisers, or subcontractors over which they have no direct control, large companies may be compelled to exercise more 

SBREP-219 with DISTILLER

7 

control over these small businesses to limit their new liability. Consequently, local business owners may effectively be demoted from 

entrepreneur to middle manager as they are gradually forced to 

forfeit operational control of their stores, clubs, inns, or restaurants 

that they built. Thus, the joint employer means big companies will 

get bigger and small business may run out of business partners 

and ultimately fade away. 

On another note, Mr. Chairman, many local business owners are 

nervous about the implications of joint employer on their future access to capital. The members of this Subcommittee well know that 

the Small Business Administration Loan Guaranty Program is critical for creation of growth of small business, as it was for 

SoldierFit. But as SBA considers changes to its loan approval process, it is important for the agency to keep in mind, however, antismall business federal agencies are changing the definition of joint 

employer and how they may reduce that access to capital. 

I urge the Subcommittee members to protect small businesses’ 

access to SBA loan guarantees. The bottom line on the joint employer as a threat to small business, Mr. Chairman, is this: no one 

can assure me that my business, or anyone else’s business, may not 

run afoul of a vague, joint employer liability standard based on indirect or even unexercised reserved control. That is why I and so 

many small business owners around the country need help. We are 

asking Congress to pass a simple, once in its legislation contained 

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

Mr. Chairman, this country allowed me to achieve the American 

dream, and I found a small business committed to enabling others 

to achieving their American dream. Please protect small businesses 

like mine and give us certainty that federal agencies in Washington are not going to needlessly threaten our business. 

Mr. Chairman, thank you for your leadership on this issue, and 

I would be happy to answer any questions you have. God bless. 

Chairman HARDY. Thank you, Mr. Farrar. 

Mr. Freeman? 

STATEMENT OF HARRIS FREEMAN 

Mr. FREEMAN. Good morning. I would like to thank chairman 

of the Subcommittee, Congressman Cresent Hardy, Ranking Member Congresswoman Alma Adams, and the other members of the 

Subcommittee for this opportunity. I have two points to make this 

morning. 

First, the more inclusive joint employer doctrine adopted by the 

NLRB and Browning-Ferris was an appropriate response to the 

rapid expansion of subcontracting and precarious low-wage work. 

Second, the BFI joint employer standard will do no harm to America’s small businesses even as it provides a potential path to meaningful collective bargaining for a significant sector of the low-wage 

workforce. 

I begin my remarks by focusing on the industrial realities of lowwage temping and franchising arrangements because it is believed 

that BFI will have an impact on employment in these arenas. 

Temporary staffing and franchising account for a disproportionate share of the economic growth since the Great Recession of 

2008. Close to 3 million employees working temp positions and anSBREP-219 with DISTILLER

8 

other 2.8 million working just the fast food sector of franchising. 

And while profits are high in these sectors, poverty-level wages, 

underemployment, extraordinarily high rates of wage theft pervade 

the temporary staffing industry in franchise fast food outlets and 

janitorial services. 

For example, temp workers comprise three-fourths of the 150,000 

workers who load and unload goods at warehouses used by 

Walmart and other big box stores in Chicago. As temps, they experience a large wage penalty, earning $9 an hour, $3.48 lower than 

direct hires. Two-thirds live below the poverty level. Households 

that include fast food franchise workers are four times as likely to 

live below the poverty level. As a result, taxpayers shell out $3.8 

billion a year to subsidize public benefits for these workers. 

This type of systemic inequality and poverty also hurt small 

business owners. Like their employees, many franchise owners— 

not all, but many—are squeezed by big franchisors who impose 

nonnegotiable terms of engagement on franchise owners that tend 

to push down wages, promote costly churning of the workforce, and 

significantly create high failure rates for franchise owners. 

The BFI decision should be understood in this context as a proper exercise of the Board’s statutory authority, and it is in no way 

radical. The basic joint employment test has not changed. It remains a case-specific, fact-intensive inquiry to determine whether 

an employer shares or codetermines the terms and conditions of 

employment. 

What the NLRB did do is return to their traditional joint employer test endorsed by the Supreme Court 50 years ago. This 

closed a loophole created by board rulings in the 1980s. Now, the 

inquiry is broader. The Board no longer is limited to examining 

whether an employer controls employees directly and immediately; 

instead, a traditional, multifactor common law inquiry is used. The 

BFI case illustrates how this works. In a representation case, the 

NLRB found that the recycling center maintained legal control over 

240 long-term temps by issuing precise directives to hire, to fire, 

to control the line speed, and other aspects of the work environment. These directives were given directly by BFI and through the 

supervisors of the temporary staffing agency onsite. 

The terms of the temporary staffing agreement also expressly 

ceded the right to control the workforce to the recycling center. The 

Board concluded that the recycling center was a joint employer because BFI affected the means and the manner by which employment was directed there. 

Nothing in this ruling presents a new or heightened level of legal 

uncertainty for large or small employers that use temps in staffing. 

The NLRB has made it clear that a potential finding of joint employment arises when the structure of staffing arrangements cedes 

to the user firm an extensive level of direct or indirect control over 

the means and manner of work. 

It is also clear that BFI does not predetermine or rig the outcome 

of joint employer inquiry and franchising. This was made clear by 

the General Counsel a year ago in a detailed advice memorandum 

that applied the BFI case to a franchise in Nutritionality. The advice memo concluded that the franchise agreement and directives 

did exercise control over brand and product quality, but in no way 

SBREP-219 with DISTILLER

9 

did it exercise any control over the terms and conditions of the employees at the franchise outlets. The unfair labor practice case was 

dismissed without a hearing. 

A different result may, of course, arise when you have a tightly 

controlled business format franchisee agreement, but the Board has 

not yet addressed and finalized any kind of inquiry into this type 

of scenario, but the Board has provided significant guidance for 

franchisors. The General Counsel has said that they should be exempt from a finding of joint employment if they are only controlling 

work conditions to support brand quality and the brand name. The 

statement of the General Counsel has recognized that not all 

franchisors—in fact, most franchisors—will not be joint employers. 

In conclusion, it is my view that the Board’s revival of the traditional joint employer standard is an appropriate exercise of the 

statutory authority granted to it by Congress, particularly when 

considered in light of the NLRB’s obligation to apply labor law to 

changing economic realities. It is a flexible test for employers and 

it is also positive and allows fair treatment and decent wages for 

low-wage temp workers. 

Thank you for considering my comments. 

Chairman HARDY. Thank you, Mr. Freeman. 

Mr. Larkin, I apologize. As you heard the alarms, we have been 

called to votes on the floor, so we are going to recess for probably— 

reconvene somewhere around 10 til the hour, so I apologize for 

that. We are in recess. 

[Recess] 

Chairman HARDY. We will reconvene this meeting. 

Mr. Larkin, thank you for waiting, and begin with your testimony. You have 5 minutes. 

STATEMENT OF KURT LARKIN 

Mr. LARKIN. Thank you, Chairman Hardy, members of the Subcommittee. 

It is a privilege to be here with you today to talk about an issue 

of critical importance to American small business: the executive 

branch’s ongoing efforts to expand the legal standards for determining if one business is the joint employer of individuals employed by another business. 

For over 30 years, the NLRB adhered to a fairly straightforward 

joint employer standard. The Board treated separate companies as 

joint employers if they shared or codetermined essential terms and 

conditions of employment. The Board would look to whether the 

putative joint employer exercised meaningful control over hiring, 

firing, discipline, compensation, supervision, and direction, and 

whether its control over such matters was direct and immediate. 

This standard was easy for businesses to understand and, more importantly, to plan for. 

But that all changed this past summer. In August of 2015, the 

Board departed from this precedent in a case called Browning-Ferris Industries and announced a test of sweeping scope that could 

redefine the employer-employee relationship across all areas of 

business. Now, under this new test, the Board may find a business 

to be a joint employer where it has the mere potential to control 

the employment terms of another business’ employees, or where it 

SBREP-219 with DISTILLER

10 

exercises such control but only indirectly. This leads to an obvious 

question: if a putative joint employer never actually exercises direct 

control over the employees of another company, how much retained 

or indirect control is sufficient to establish joint employer status? 

Well, the murky guidance provided in the board’s opinion makes 

this question virtually impossible to answer. Now, some have argued that the Browning-Ferris case dealt with a temporary staffing 

firm and its client and that other business models were unaffected 

by the Board’s decision. But the potential control and indirect control standards announced in the case are broad enough to cover virtually any business relationship, including general contractor and 

subcontractor, outsourced service provider and user of outsourced 

service, parent and subsidiary, and franchisor/franchisee. 

The NLRB is not the only federal agency that has waded into the 

joint employer conversation in recent months. This January, the 

Department of Labor’s Wage and Hour Administrator issued formal 

guidance on the joint employer standards under the Fair Labor 

Standards Act and the Migrant and Seasonal Agricultural Worker 

Protection Act. The guidance goes into detail on the concept of 

vertical joint employment, which the DOL defines for the first time 

as when the employee of one company is economically dependent 

on another company, which retained the services of his or her employer. 

The FLSA regulations do not address this concept. Instead, it is 

addressed in the Migrant Act, a statute with a very narrow and 

specific legislative purpose; to combat the abuse of migrant farm 

labor workers in this country. The DOL’s new guidance cleverly imports that standard into the FLSA and encourages investigators to 

pursue vertical joint employment and wage and hour investigations. The DOL appears to have worked on this guidance in secret. 

They certainly did not solicit the input of the employer community. 

Those in favor of these actions claim that expanded joint employer liability is a good thing; that it will combat against unscrupulous employers who take advantage of the growing contingent 

workforce. That approach assumes, incorrectly in my view, that the 

use of temporary employees is always somehow inappropriate. Regardless, these legal standards make no exception for the scrupulous employer, whatever that might mean, and they sweep with 

a broad brush across all industries and virtually all types of business relationships ensnaring arrangements that are perfectly legal 

and vital to the growth and success of small business in this country. 

And as for the Freshii Board memorandum, Board advice memoranda are nonbinding, have no effect on how the full Board decides 

a later case, and they do not bind the Board’s General Counsel. 

And Freshii was issued prior to the Browning-Ferris decision, making it all but obsolete. Ultimately, uncertainty over how to deal 

with the Board’s new standard, and perhaps the standards of other 

executive agencies, poses a grave risk to small business owners. 

Larger employers may conclude that they are going to be held responsible for the liabilities of their suppliers, subcontractors, or 

franchisees. They must exert more control over their day-to-day operations so that they can be more aware of and seek to mitigate 

these liabilities. Franchisors would become responsible for matters 

SBREP-219 with DISTILLER

11 

like who to hire, when to fire, how much to pay. Their administrative costs would skyrocket. 

On the other hand, small business owners would be relegated to 

middle managers, no longer in control of their ultimate business 

success. These negative effects could cause both sides to reconsider 

their business relationships altogether. And you do not need to 

take my word for it. You have already heard from two small business owners this morning who fear those very outcomes. 

Members of the Subcommittee, on behalf of the employer community, I respectfully submit to you that the Board’s previous joint 

employer standard worked well for over 30 years. It provided management and labor alike with predictability in terms of who was 

the employer of any given group of employees, knowledge that is 

vital to stable bargaining and effective labor relations. The new 

standard shatters that stability and throws both sides into new and 

unprecedented territory. Congress should intervene and return the 

Board’s standard to the well-understood rule that existed prior to 

Browning-Ferris. 

Thank you very much for the privilege of testifying here today. 

Chairman HARDY. Thank you for your testimony. We will begin 

our line of questioning. Again, thank you for being here. With that, 

I will start. 

I would like to address Mr. Larkin first. The critical question 

when it comes to the NLRB is how much control makes you a joint 

employer? When will business know the answers to the question? 

In the meantime, what advice have you been giving to your clients? 

Mr. LARKIN. Well, the critical question, Mr. Chairman, the answer to that, and part of the problem is that there is no more 

bright line standard. So I do not know how to answer that question. I have had considerable reflection on that and our clients have 

had considerable worry about that. The board’s new test provides 

little to no guidance as to what level of retained control, if it is not 

exercised, will be sufficient to make you a joint employer so it is 

virtually impossible to predict what level of control is insufficient 

under the test to make you a joint employer. 

Chairman HARDY. Thank you. Mr. Larkin, also, some folks, including Professor Harris, have pointed to the advice memo that the 

NLRB issued that stated Freshii is not liable as a joint employer 

as an indicator that the standard is not as broad as the community 

thinks and the franchise business should not be concerned. Can 

you elaborate on why the Freshii memo is not comforting to the 

franchise businesses? 

Mr. LARKIN. Yes, sir. As I addressed in my remarks, Labor 

Board advice memoranda are nonbinding. They do not bind the full 

National Labor Relations Board, and even in the Freshii case, the 

General Counsel was free to ignore it if he wanted to, and the full 

Labor Board would not have had to rely on it. So Board memoranda, advice memoranda do not set Board standard. 

As I said, the memo was issued prior to the issuance of Browning-Ferris, so the law on which it relies is now obsolete and replaced by Browning-Ferris. So I do not think it provides any comfort to those in the franchising business. 

Chairman HARDY. Thank you. 

SBREP-219 with DISTILLER

12 

Mr. Patel, you, in your testimony, indicated that if this rule 

would have existed when you started, that you might have looked 

at another business opportunity. Do you think the business climate, other than the one you are doing right now, do you think the 

business climate is discouraging people to start businesses? 

Mr. PATEL. If these same rules were applicable 20, 30 years ago, 

I do not think I would be in business. I mean, forget looking for 

a different business. I do not think there is an opportunity to do 

business in terms of what is out there. If you look at the story that 

the Asian American Hotel Owners Association, many of the people 

that came over many years ago, we talk about it amongst the community and say, I do not think we could do what we did 20, 30 year 

ago today. The regulations that we have, the taxes that are applied 

to us, I do not think you could do what we did 20, 30 years ago 

in today’s environment. 

Chairman HARDY. Thank you. So if franchisors today started 

asserting their control and authority over your business today, how 

would that affect your daily operations? And on the other hand, 

franchisors take away some of that guidance that benefits you. 

Could you currently provide some information on how that affects 

you also? 

Mr. PATEL. Running a business today is not easy. I mean, dealing with customers, dealing with employees, dealing with a lot of 

other issues that are out there, just running a day-to-day business 

is not an easy task. Now you throw in the fact that you have got 

other regulations, not only the governmental regulations but if a 

franchisor comes in and says, hey, you have got to do this, the employee has to do this, or whatever regulations or whatever things 

they put upon us from a franchisee perspective, that is one more 

thing that we have to worry about. Like I said, today’s business is 

not an easy business to operate. That is one more thing that we 

have to worry about and we would not want to. 

Chairman HARDY. Thank you. 

Now turning to Mr. Farrar. SoldierFit has just awarded two 

franchises given the new joint employer standards, and our decision today—are you having a difficult time with the decision today 

or are you having a difficult time with how much or how little guidance to provide your franchisee? 

Mr. FARRAR. On our end, sir, it is scary. Like I said, the law 

is very ambiguous. Where am I going to overstep that bounds? At 

the same time, when that franchisee is coming to us, what are they 

really purchasing? They are purchasing our mistakes if you want 

to be honest about it because we are going to help them navigate 

past the things that we made mistakes on to get to where we are 

presently much, much faster. But if I am sitting there worried 

about how much advice or how much training and when and where 

our company can help with them, then that does give us a moment 

of pause. 

Chairman HARDY. Thank you. 

With that being said, with all the challenges that you have gone 

through, do you think with this decision today, would you have 

started your operation or franchise the same way today? 

Mr. FARRAR. We probably would not have. We have invested already at least $300,000 into this. That is not chump change for a 

SBREP-219 with DISTILLER

13 

small business by no stretch of the imagination. If we are sitting 

down here and all of a sudden we are listed as a joint employer, 

we get 7 percent on what they do. If we all of a sudden have to 

up our back office so that we can actually make sure that we have 

a real finger on the pulse of everything that is happening day to 

day, that is going to cost us a lot of money and the return investment is not there, so it would not make sense. 

Chairman HARDY. Thank you. Thank you for your testimony. 

My time has expired. 

I will yield to Ranking Member Adams. 

Ms. ADAMS. Thank you, Mr. Chair. 

Mr. Freeman, you mentioned that temporary workers experience 

a wage penalty compared to their permanent counterparts. Can 

you explain what a wage penalty is and why it occurs? 

Mr. FREEMAN. Certainly. The use of temporary staffing agencies in large and small employers today is often set up to charge 

the user employer a fee per hour for each temp worker who is deployed to the user-employer’s firm to do the basic work of that firm. 

But the temp worker receives sometimes as little as 60 percent of 

the fee that is paid to the staffing agency. That is a huge profit 

that is made simply for the process of deploying a person to do 

work somewhere else. That is the wage penalty. 

The significance of this today is that in wide swaths of manufacturing, logistics, food processing, all or significant parts of the 

workforce in many facilities. This goes for Nissan plants in Mississippi. It goes for food processing plants in New Bedford, Massachusetts, near where I live. They are temp workers and they are 

there permanently. No one grows up and wants to say, I want to 

work for a temp agency for the rest of my life. That is what we are 

now experiencing. That is the wage penalty. In those situations you 

have the classic potential for joint employment because it is the 

user-employer who is setting up the facility, deploying the managers, deploying the supervisors, that is providing direction, both 

directly and indirectly, for the work that is performed by these 

temp workers. That is what the joint employer standard is set up 

to address. So you can bring the people to the bargaining table 

should workers choose to unionize and have everybody there who 

is responsible for the work conditions. If they are not at the bargaining table and you make a demand for an increase in the wage, 

the temp agency can say, well, I cannot give it to you because the 

wage limit is set by the user employer by contract. That is exactly 

what happened in the BFI case. 

Now, this is a totally different situation than what is facing Mr. 

Farrar and Mr. Patel. I do not think from what they said that they 

are joint employers in any way under the Board standard, and I 

do not think that this changes the modus operandi of their business at all. 

Ms. ADAMS. Thank you. Is it not the case that common law 

agency provides for both direct and indirect control over terms and 

conditions of employment, and is that not what was decided by the 

BFI case? 

Mr. FREEMAN. Yes. The BFI case, as I said earlier, is neither 

radical or new. It restates the standard that was established in the 

Boire v. Greyhound case back in 1965 and is merely a return to a 

SBREP-219 with DISTILLER

14 

standard that recognizes that the right to control, and whether 

that right be exercised directly or indirectly, is part of what constitutes the legal standard for control under the common law agency test. There is nothing exceeding that that is in the Board standard. Retaining that right to control by contract is a critical aspect 

of what an employer does when they draw up a contract with, for 

example, a temporary staffing agency. 

I see nothing unusual about this, and in situations where you are 

not in a position to contract to have that kind of control, you are 

not a joint employer. The problems that I identified here, the problems of low wages in situations where there might be joint employment, these problems were not created by the joint employment 

doctrine. These problems are created by larger economic forces that 

the Board is now exercising its authority to try to set up a situation to give workers the opportunity should they so choose to engage in meaningful bargaining to affect terms and conditions that 

are created by more than one business entity that they work for. 

Ms. ADAMS. Okay. Let me ask you, Congress is now considering 

H.R. 3459, Protecting Local Business Opportunity Act. It has been 

reported out of the Education and Workforce Committee on a party 

line vote. The bill would limit a joint employer to only those who 

have actual direct and immediate control. It is argued that this bill 

would protect the independence of franchisees as independent business owners. But is it not possible that the bill would actually have 

the perverse effect of weakening the independence of franchisees? 

Mr. FREEMAN. Well, certainly, because what that does, it completely eliminates the possibility of a franchisor ever being a joint 

employer and taking responsibility for terms and conditions of employment that it is creating through the franchising agreement it 

has with a franchisee. This is going to free up the franchisor to increase the degree of control it may have over franchisees. I do not 

think that is what franchisees would want. I think this, as you say, 

may have a rather perverse effect and may do exactly the opposite 

of what some of the bill’s sponsors intend. I do not think it is a 

good idea. I think it is much better to have these things adjudicated on a case-by-case, fact-specific basis. 

Ms. ADAMS. Thank you, sir. I am out of time. Thank you. 

Chairman HARDY. I will now turn the time over to Mr. Kelly 

for questions for 5 minutes. 

Mr. KELLY. I thank the witnesses for being here, and Mr. 

Farrar and Mr. Larkin, thank you for your service to our country. 

I generally joke with my JAG officers, though. I do not know if I 

count that or not being a lawyer myself, Mr. Larkin, but thank you 

for your service. 

Mr. LARKIN. I have heard that before. 

Mr. KELLY. Small businesses are so critical to this Nation, and 

that is why I love being on this Committee. Mr. Farrar and Mr. 

Patel, I pay attention to you because you have owned small businesses, and unless you have owned a small business, you cannot 

from the academia world understand what goes on in a small business. But I would venture to say that in your first couple of years 

in small business, can either of you comment to whether or not you 

worked at below or at no minimum wage as an owner of a franSBREP-219 with DISTILLER

15 

chise? Either a franchise or a franchisee, can you comment on your 

earning as the actual owner of that franchise or franchisee? 

Mr. PATEL. During my first couple years, me and my wife were 

on the property 24 hours. So if you divide up the hours and the 

amount of salary we took in or the profits we took in from the business, we were negative below minimum wage. So, again, I think 

many small business owners face the same issue in terms of, as far 

as minimum wage that we really earn, especially with the fact that 

we put a lot of hours behind that business, whether it be 24—whatever hours we put out there, but it is definitely below what we 

have there. 

Mr. FARRAR. I was homeless, so yes, sir. At the end of the day, 

if you own a business, that is your passion. You do not just say, 

hey, I am going to start this, and 5 o’clock it is over. Owning a 

small business takes a toll, not only on yourself but on your family 

as well. So I am working 24 hours a day. 

Mr. KELLY. They like to talk about the temporary workforce, 

but can you guys, Mr. Patel and Mr. Farrar, I want a short answer 

to this, but can you tell me what your most important investment 

in your company being successful is? 

Mr. PATEL. For us, it is human capital. People. 

Mr. KELLY. People, right? 

Mr. PATEL. I mean, again, a really quick, simply analogy on this 

is today in the hotel business it is becoming a commodity. You can 

go to a Holiday Inn, you can go to the Hampton Inn. A room is a 

room. The breakfast is breakfast. The only way we differentiate our 

properties to the competition is through our people. We need the 

ability to manage our employees at our own hotels. That is the only 

way we can get a competitive advantage compared to the next hotel 

over. 

Mr. KELLY. Mr. Farrar? 

Mr. FARRAR. We have a saying in SoldierFit, whose company? 

It is our company. It is everybody’s company. I do not even make 

the most in my company. The truth of the matter is if you start 

a business, you are doing it for passion. You are going to take care 

of the people that help your dream along. 

Mr. KELLY. It goes back to my thing, those people, you make 

sure that they are invested in your company. You are going to pay 

them as well as you can. Sometimes there are sacrifices, but it 

comes down to if they are not committed, temps do not give you 

that same commitment, do they? 

Mr. FARRAR. Negative. 

Mr. KELLY. Okay. And as a franchisee, Mr. Patel, do you prefer 

hiring temps or do you prefer hiring people who have an investment in your company who want to see it grow and want to grow 

with you? 

Mr. PATEL. We hire our own people. We actually purchased a 

hotel a couple years ago in Baltimore and the previous owner had 

temp people there. After we took it over we just did our own employees. It is just better to manage your own people. 

Mr. FARRAR. On our end, sir, we have over 60 employees. We 

have hired outside of our company nine times. Out of our personal 

trainers, only two were outside the company. Ninety-eight percent 

SBREP-219 with DISTILLER

16 

of our trainers started off as members in our company, then got 

their certification, and then became trainers. 

Mr. KELLY. Finally, I think there was a comment and I do not 

think that it would apply to you as a franchisee or franchisor, but 

can you tell me if we do this on a case-by-case basis, how much 

money you were going to pay to people like Mr. Larkin over there 

to represent you, and does that make prices go up for the consumer, and also make your wages lower because you have less 

money to pay the employees that you currently hire because you 

are defending lawsuits one by one? 

Mr. PATEL. Most small businesses like us, we do not have inhouse attorneys. We do not have people to do that sort of stuff for 

us. We are busy running our operations. So for us to hire somebody 

outside would be a killer. 

Mr. KELLY. NLRB, I am sure if you make the wrong decision 

based on what you think is right and that you had good intentions 

and you intended to do right, I am sure they do not fine you if you 

had good intentions and you made a mistake that was honest and 

truthful that they did not answer. They do not fine you, do they? 

Absolutely, they fine. 

Mr. Chairman, I yield back. 

Chairman HARDY. The gentleman yields. 

I now turn the time over to Ms. Vela ́zquez, the ranking member 

on the Small Business Committee. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Mr. Freeman, we have heard that the BFI decision is going to 

significantly impair the franchisor-franchisee business model. What 

do you have to say about the argument that the BFI joint employer 

test will impair this business model? 

Mr. FREEMAN. Well, the core of my response to that would 

present a different frame on what the NLRB has said about franchising than is presented by Mr. Larkin. The NLRB has twice 

made statements in the General Counsel’s amicus brief and the 

BFI case and in the advice memo in Nutritionality, that is very 

clearly indicated that franchisors are there to protect their brand 

and to protect the product quality. When they are exercising direct 

control over aspects of a franchisee enterprise to that end that the 

Board is not going to pursue any kind of joint employer doctrine 

to hold the franchisor responsible at all. 

Now, it is true that these are advice memos, but the General 

Counsel ultimately chooses to prosecute. In Nutritionality, the case 

was dismissed and it never had to go to the Board. Now, there may 

be some cases, certainly not the kind of case that I hear from Mr. 

Patel and Mr. Farrar where new levels of technology have created 

the ability of franchisors to exercise tremendous amounts of control 

in a franchise enterprise. The Board has a responsibility, when you 

have new technology changes in the actual industrial landscape of 

our Nation, to take a look at this and engage in a fact-specific inquiry to see whether there might be a problem. That is going on 

in the McDonald’s case right now, and we will see what happens. 

But that certainly seems to be a far cry from the situation of many 

other franchisors. So I am not concerned about overreach here. We 

have plenty of contractors and subcontractors that have been 

unionized, that engage in all kinds of business processes that have 

SBREP-219 with DISTILLER

17 

never been subject to joint employment over the history of the 

Board’s operation. 

Ms. VELA ́ ZQUEZ. Thank you. 

I think there is universal agreement that union organizing is 

likely to increase following the BFI decision. How is that going to 

impact small business contractors and franchisors? 

Mr. FREEMAN. Well, we have many small business individuals 

that are subcontractors and contractors who have unionized 

workforces. In fact, if you look in the construction industry, we 

have established a very vital middle class for construction workers 

through the unionization of major sections of commercial construction. I think it has been a benefit to our Nation. It has been a benefit to the contractors who have greater workforce stability and a 

much stronger workforce. I think that kind of stability would be a 

positive thing in a place like the fast food franchises where right 

now you have workers who are attempting to make a living in a 

situation that is netting them poverty-level wages and placing a 

burden upon the taxpayer. So in those situations, we may see 

unionization. 

I also think that we are facing situations in the manufacturing 

food processing center where you have a lot of temping, where we 

could radically improve the situation of the workforce and make 

the business more stable, increase the buying power of the workforce to increase business overall in the United States, and I think 

that the BFI standard makes that more possible than was the case 

under the old standard that the Board reversed. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. Farrar, I understand your concern about protecting your 

brand in the franchise agreement. But if a franchisor prescribes 

rules that could violate the NLRA at the franchisee level, should 

the parent company be held accountable? 

Mr. FARRAR. If I understand your question correctly, you are 

asking me should we be able to impose these rules and regulations? 

But again, it goes back to we do not know what the rules and regulations are. It has not been spelled out clearly. We do not know. 

So you could very easily come up with something and say that we 

were the ones that we overstepped our bounds, and that is what 

is scary about it. We do not know how best to help the franchisee. 

Literally, that is why they purchased the franchise, it is because 

they wanted some mentorship. We do not know when it is going 

to be considered that we overstepped our bounds and now we are 

directly doing anything with them. So it is frightening. 

Ms. VELA ́ ZQUEZ. Mr. Freeman, do you care to comment on his 

assertion? 

Mr. FREEMAN. I think that we now have some very clear guidance, given the statement in the advice memo and given the General Counsel’s statements about franchising, that make it clear 

what level of control would have to be exercised by a franchisor before there would be even an investigation of joint employment that 

could go to a hearing. We now have cases that have been dismissed 

without hearing; that is without the kind of expense of that extensive litigation. So I do not see this as a real problem. I think that 

when you do have a situation of extensive joint employer control, 

SBREP-219 with DISTILLER

18 

all employers in America should be held liable to labor standards 

as they are to all other legal standards. 

I would finally say that as someone who has been involved in adjudicating labor disputes for a long time, we have many aspects of 

labor law that are situations that involve the application of complex standards to any given fact situation. 

Chairman HARDY. Wrap it up as quick as you can. Your time 

is expired. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. FREEMAN. This is nothing new. 

Ms. VELA ́ ZQUEZ. I yield back. Thank you. 

Chairman HARDY. I would like to thank you all for being here. 

I really appreciate it. 

Just one comment that I would like to make. I have spent 40 

years in the construction industry, know it very well, understand 

it very well, watched many studies over the years. So with statements like that are made sometimes frustrate a guy like me, because the studies are out there that showed that these union operators, construction workers, have not necessarily benefited the taxpayer. Yes, it has benefited their pockets and the administrations 

of unions over the years. That is why unions continued to decline. 

It is actually proven that school projects in Ohio, they actually 

showed that they had 12 to 15 percent savings when it was gone 

out to competitive bid versus union mandate-type projects. In Nevada, we have had studies that show the $4.7 billion spent on 

schools, that we could have probably done another 25 to 35 percent 

more schools if it had not have gone under the prevailing wage 

workforce. So is that a savings to the taxpayers? 

With that, I would like to give everybody just 2 more minutes to 

wrap up and make a comment. So I am going to start with Mr. 

Larkin first, if you do not mind. It will come from the other side. 

Anything that you missed that you might like to bring forward. 

Mr. LARKIN. Sure. A couple of things, specifically, on this franchise question, and the guidance that has come down from the 

General Counsel in the Freshii memo, the idea that merely protecting your brand and your product quality will not make you a 

joint employer. Well, who is going to make that decision? The 

NLRB. And they have told us that they are going to make that decision on a case-by-case basis using a standard that is literally unintelligible. My clients ask me, how much control do I have to exercise before I can be a joint employer? My honest answer to them 

today is, I do not know. And I do not like giving that advice. But 

that is the advice that I am giving right now. 

The problem with the standard is that its application is in the 

eye of the beholder and the fact that there has only been one decision, this Browning-Ferris decision and the next big joint employer 

decision may not come for a while, that is not the end of the inquiry. The real problem, as you have heard today, is the potential 

chilling effect that this may have on the franchise that never 

opens, on the employees who are never hired, because someone, 

whether it is a franchisor, a franchisee, a large general contractor 

who decides to insource a specialty trade rather than outsource it, 

whatever the case may be, it is that business owner who makes the 

decision not to go into business with another business because they 

SBREP-219 with DISTILLER

19 

do not want to be the next guinea pig before the Board. That is the 

problem that I think this standard creates for all of us on the employer side, and that is what we are grappling with. 

Chairman HARDY. Thank you. 

Mr. Freeman, 2 minutes. 

Mr. FREEMAN. Thank you, Chairman Hardy. 

I think today we have a situation in the United States where we 

have seen tremendous prosperity that has been achieved by 

franchisors and major corporations. We see small business owners 

squeezed, and we also see it may be hard to run a small business 

today. I certainly appreciate what these gentlemen are saying to 

my left. But it is also hard to be a worker today in this economy, 

especially working in low-wage sectors, and franchising is among 

them. And in areas of manufacturing and food processing and logistics where temping is widespread, it is hard to be a worker. These 

workers are not able to make a living wage. When you are working 

full-time and you are still forced to go to the government to get 

benefits, we have a social problem of inequality that needs an answer from many different parts of our government and our business community. One of those answers is giving workers a voice, 

giving them an opportunity to exercise their bargaining power in 

the labor market, to sit down across the table from those individuals who are setting the terms and conditions of employment and 

engaging in a conversation to explain what they need to make a 

living and what they need to do their job correctly. 

In that regard, I think that the success of unions in raising the 

wages and living standards of their members, when unions were 

large, extended well beyond the unionized workforce and created a 

higher standard of living for all workers, whether they were unionized or not. The shrinkage of union representation, particularly in 

a low-wage economy, is hurting all workers, and I think it is also 

hurting the opportunities that small businesses have to grow and 

to maintain their workforces. 

So I have a somewhat different view of the importance of the National Labor Relations Act and improving the situation and the 

business climate and the living standards of workers in America. 

Chairman HARDY. Thank you for being here. 

Mr. Farrar? 

Mr. FARRAR. This whole morning we have talked about the benefit to the employees, and the fact of the matter is small business 

is the largest employer in the United States. When we look at what 

has happened over the past several years, franchising has outpaced 

organic startups continuously. If we are going to move forward and 

make sure that we still have stability in the economy, I want to 

move forward on something a little bit stronger than I think. I 

want to know exactly what is the ruling? What is the law? When 

do I become a joint employer? And when I am not? I appreciate you 

all’s time. 

Chairman HARDY. Thank you for being here. 

Mr. Patel? 

Mr. PATEL. Thank you for inviting us today. 

The biggest success factor in our business is people. We talk 

about franchisor or franchisee and, you know, all the benefits from 

franchisors. So when they say, well, they do this, they do that, the 

SBREP-219 with DISTILLER

20 

franchisor can tell me what kind of soap I can put in my room. It 

is a tangible item put in, you know, a certain type of soap. It is 

tangible item to put in X-kind of sheets. It is a tangible items to 

put in X-kind of doughnuts or for a breakfast item. But when you 

start dealing with people, it is difficult. You have different people 

in all different places all over the world, and so dealing with people 

is very difficult. When the franchisor comes in and has any kind 

of impact on my ability to manage the people, that makes it hard 

for us. I feel like my last point would be to say the people is how 

we want to manage our hotel. That is what makes us different, and 

so we just cannot have any kind of issues or legislation that impacts my ability to manage my staff members and my hotel. 

Chairman HARDY. Thank you. I would like to thank all the witnesses for being here today. I appreciate your attendance and hearing your words of wisdom. Today’s hearing has really highlighted 

the confusion and I think the challenges that these new joint employer standards are creating for a wide variety of small businesses. We are going to continue our work here with our colleagues 

and continue this Committee to educate the workforce and address 

these problems. 

I ask unanimous consent for the members to have 5 days to submit their statements and the supporting materials for the record. 

Any objection? 

Without objection, so ordered. This hearing is now adjourned. 

[Whereupon, at 11:35 a.m., the Subcommittee was adjourned.] 

SBREP-219 with DISTILLER

21 

A P P E N D I X 

Testimony of Vinay Patel 

President and CEO of Fairbrook Hotels 

Before the House Committee on Small Business 

Subcommittee on Investigations, Oversight and Regulations 

‘‘Risky Business: Effects of New Joint Employer Standards for Small 

Firms’’ 

March 17, 2016 

SBREP-219 with DISTILLER

22 

I. Introduction 

Chairman Hardy, Ranking Member Adams, Congressman Knight 

and Members of the Committee, I would like to thank you for the 

opportunity to testify before you today and to share with you my 

experiences as a small business owner, entrepreneur and job creator. I look forward to a constructive discussion about how the new 

joint employer standard created by the National Labor Relations 

Board (NLRB) and the permeations of this new regime across various government agencies will dramatically affect my business, my 

employees and our ability to continue to provide top service in the 

hospitality industry. 

My name is Vinay Patel, I am first generation American and 

proud small business owner from Herndon, Virginia. I am appearing today not only as a hotelier, but also as volunteer board member of the Asian American Hotel Owners Association (AAHOA). 

AAHOA represents more than 15,000 small business owners who 

own over 20,000 properties amounting to nearly 50% of all hotels 

in the United States. Our members employ more than 600,000 

American workers and account for nearly $10 billion in payroll annually. 

AAHOA is also a member of the Coalition to Save Local Businesses (CSLB), which is a diverse group of locally owned, independent small businesses, associations and organizations dedicated 

to protecting all sectors of small business and preserving the traditional joint employer legal standard at the federal and state levels. 

My story is like that of thousands of first and second generation 

Americans and entrepreneurs from all across the country. Over the 

last three decades, my family and I have spent our careers developing a livelihood as hotel owners and operators. Our company has 

enjoyed significant growth recently; however, our success is the result of years of sacrifice, hard work and relentless dedication to our 

family and to our business. 

I was born in Malawi, Africa, to parents who emigrated there 

from India. Entrepreneurship has always been a calling for my 

family. In Malawi, my father operated a small hardware store before political unrest forced us to leave. In 1980, we came to Greensboro, North Carolina, and lived with family members who were in 

the hotel business. We learned what we could from them and eventually set out to run our own property. My family settled in Richmond, Virginia, and we not only owned and operated the twentyseven room Royal Inn Motel, but we also lived at the property. Operating any hotel, even a small one, is a twenty-four hour-a-day 

business. At that time, my parents, brother and I comprised the entire staff. We served the front desk, cleaned rooms, maintained the 

property, and accounted for all of the marketing and financial planning. I learned the most important lessons in my life, of hard work, 

commitment to family and community service, during these formative years. While most kids played sports, or learned music in high 

school, my brother and I were responsible for running our motel 

during nights and on weekends. 

SBREP-219 with DISTILLER

23 

In 1992, I began college at Virginia Commonwealth University, 

as a commuting student, so I could continue to help with the family 

business while I was pursuing my degree. After graduation, we 

built a second property from the ground up, a fifteen room motel 

on the other side of Richmond, that we also called the Royal Inn. 

By then, I was married, and my wife Tina and I were now the sole 

operators of a new business. For two years, we did nothing but run 

every aspect of the hotel, from housekeeping, maintenance, guest 

services and ultimately business planning. 

With this tremendous firsthand experience in the lodging business, I decided it was time to take an even greater risk in an effort 

to grow the company and create a better life for my family. I began 

to look for opportunities to expand our operations from independent 

motels, to franchised properties that came with the advantages of 

a national brand. While my ambitions were high, so too were the 

hurdles. I found a parcel of land in Stafford, Virginia, and laid 

plans to build a fifty-five room hotel, with the idea of raising a 

franchise flag. However, brand after brand turned me down. Most 

brands will only accept franchisees who have demonstrated a successful and profitable history in the business. My experiences at 

the Royal Inn were not significant enough for brands to take a 

chance on me. In some cases, brands would not even come out to 

the property to see our plans, so we even created a video proposal 

to show them how we intended to proceed. 

After suffering many demoralizing defeats in my attempt to open 

a franchised hotel, I was fortunate to find the right partner. While 

I was seeking to open a new property, Country Inn was seeking to 

expand on the East Coast. We ultimately came to an agreement 

and I opened the first Country Inn in the Commonwealth of Virginia in 1995. Here too, my wife, kids and I lived on the property 

and attended to every aspect of the business to save money and to 

ensure the best customer service. My wife was the head of housekeeping, maintenance and operations and I was the general manager. Two years later, we sold the property and sought additional 

opportunities to expand the business. 

In 1999, we found a larger market and built a Country Inn near 

Dulles International Airport, and the success of these businesses 

has allowed us to grow considerably over the past nearly two decades. Our experiences in learning every aspect of the business, 

from the ground up, provided the discipline to expand at a reasonable pace and to survive the recession, which hit the hospitality industry particularly hard. Now, our company, Fairbook Hotels, owns 

eleven hotels in Maryland and Virginia, and we work with several 

franchise brands including Carlson, Hilton, Wyndham and Choice 

hotels. We are also proud to employ over 150 employees from the 

local communities. 

The single most important aspect of our business is human capital. Our associates are what make us great. We care about our employees and are committed to helping them realize their full potential, knowing that the needs of the company are best met by meeting the needs of our people. We feel that the dedication to our assoSBREP-219 with DISTILLER

24 

ciates will bring us loyalty from our guests, our financial stakeholders and the communities in which we live and serve. 

It is for this reason the new standard by which to determine employer liability set by the National Labor Relations Board and subsequently adopted by additional administrative agencies is particularly disturbing. I have explained my family’s history in the hotel 

industry in great detail in this testimony to illustrate how incredibly difficult it is for an entrepreneur and an immigrant to succeed 

as a small businessman. Therefore, I am alarmed by the reckless 

actions of the NLRB to begin this destructive regime and now the 

Department of Labor (DOL) to expand upon it. I have no doubt 

that forging this path to regulate business relationships will dismantle the franchise model, foreclose entrepreneurship opportunities for small businesses and transform franchisees into managers 

and employees from independent owners and operators. 

II. Franchising in the Lodging Industry 

Having owned and operated two unbranded properties to start 

my career, I thoughtfully considered the best opportunities to grow 

my business. Unquestionably, franchising provided the best business model to expand our operations and in doing so, we have created hundreds of great jobs and invested in the local communities 

our hotels serve. 

Having read the directives by the NLRB and the DOL, I am convinced that the bureaucrats who are creating these mandates have 

never run a business and clearly do not understand the franchise 

model. If they had, they would understand it is inconceivable to 

conflate a franchisee with a franchisor, from any perspective. 

As a franchisee, I am responsible to pay a licensing fee and royalties from the top line. In return, I receive the benefits of displaying a nationally recognized sign at my property, take advantage of a wide-reaching marketing campaign and frontline reservations software to ensure efficiencies in running my business and a 

user-friendly platform for our customers to book rooms. 

Most importantly however, I continue to own and operate my 

own small business. I am responsible for taking all of the financial 

and career risks involved with starting, maintaining and growing 

the business. I am responsible to secure financing for the endeavor 

and the capital to furnish the property. Ultimately, it is my livelihood that is tied to the success or failure of the enterprise, not that 

of some large corporation. 

Moreover, when choosing how best to grow, I embrace competition and will always seek the best deal for my business interests. 

It is for this reason, I am not beholden to working exclusively with 

one brand, or one franchisor. I will review the market in which I 

have interest and study the type of properties most likely to succeed. Subsequently, I will reach out to the particular franchisor to 

apply for a license. Once we have agreed, we will sign a franchise 

agreement that outlines our mutual obligations. 

SBREP-219 with DISTILLER

25 

As the hotelier, I am solely responsible for the daily operations 

of the business. My interactions and my staff’s interactions with 

brand representatives are quite infrequent and limited to ensuring 

the quality standards set for the nationally recognized product remain consistent from one property to the next. In no way does the 

brand direct the responsibilities or functions of my employees. As 

their employer, it is my responsibility to establish working conditions including duties, wages, benefits, promotions, discipline and 

accommodating for workers’ needs and personal situations. 

I am also proud of my record not only as a successful entrepreneur, but also as a successful job creator and employer. With 

every hotel we buy or build, we create good American jobs. Not 

only for those employees who come to work in my hotels, but also 

in many secondary industries like architecture, interior design and 

construction. 

For those employees who come to work in our hotels, we value 

building long term relationships and developing successful hospitality professionals. In the lodging industry, competition in ubiquitous. In order to set our properties apart and to create return 

customers, we must provide exceptional customer service. To accomplish this, we must have associates and employees who are passionate about their work and enjoy working for our company. We 

take great pride in compensating our workers well and creating an 

environment in which our employees have every opportunity to advance. There are many examples at our properties where housekeepers have ascended to lead their departments, or desk attendants have become general managers. The lodging industry is 

unique in its position to create advancement opportunities and provide a platform for workers to develop and enhance their professional skills through varied responsibilities. 

The franchise business model is the most effective and efficient 

vehicle for small business ownership within the lodging industry 

and in countless other sectors across the country. Changes in this 

model will undeniably discourage entrepreneurship and create considerable uncertainty between employers and employees across the 

industry. 

III. The New Joint Employer Standard 

Under the previous standard of employer liability that existed for 

more than thirty years, an employer was determined by the control 

he had over the working conditions of his employees. This standard 

was simple, clear and certain. Employers and employees came to 

depend on this understanding to concisely define our relationship. 

Under the new standards sought and created by the NLRB, 

franchisors may be subject to liability based on the actions or inactions of franchisees. As a business owner, I am extremely confident 

in my ability to run by business; however, as I have experienced 

throughout my career, franchisors are particularly risk averse and 

will not simply accept additional liability. Instead, they will likely 

choose only to work with few, large franchisees and foreclose new 

SBREP-219 with DISTILLER

26 

opportunities for small business owners like me, in an effort to 

mitigate liability from a lesser established business partner. They 

will also have no choice but to exert control over the daily operations of my businesses under our existing contracts. In doing so, 

I would cease to be an independent small business owner and I 

would be subject to the directives of a faceless corporation—ultimately, I would become a de facto employee of the corporate brand. 

Worse and most threatening to my business however, is the recent absurd characterization of employer liability from the Department of Labor. In the Wage and Hour Division (WHD) Administrator’s Interpretation (AI) No. 2016-1, the DOL discounts the importance of employer status being defined by the direct control over 

working conditions and instead seeks to create a regime based on 

an ambiguous standard of ‘‘economic realities,’’ that is fabricated on 

twisted logic and a mangled understanding of reality. 

In the AI, the WHD Administrator directly and unabashedly 

takes aim at the hospitality industry in general and the hotel business specifically. In the first footnote, the AI putatively determines 

the existence of joint employer status within the hotel businesses 

simply because employees may wear shirts bearing the name of a 

national brand. As I explained earlier, the license agreement I sign 

with a brand permits me to use a brand name as a marketing tool 

to attract customers to a nationally recognized product or program. 

Ultimately, I employ my employees and I am the one who signs the 

front of their paycheck, regardless of what logo is embroidered on 

an employee’s shirt. In my experience, there is no circumstance in 

which the national brand dictates the tasks performed by my employees—yet the WHD Administrator is keen to grossly oversimplify the nature of my business. 

It is critical to understand that, in our company, we have a very 

positive and collaborative working environment. This means we 

compensate our employees well and can accommodate for their specific needs. Because of this personal connection, I am in a position 

to understand an employee’s individual circumstances and provide 

flexibility in compensation, scheduling, responsibilities and opportunities for advancement. I fear this flexibility will disappear if 

franchisors were forced to take control over the daily operations 

and staffing decisions became subject to a rigid standardized formula from the corporate headquarters. 

The WHD Administrator and AI further denigrate tens of thousands of hardworking small business owners by dismissing all of 

the efforts necessary to create a business and develop a workforce 

in designating us as mere ‘‘intermediaries’’ between employees and 

another corporate entity. This characterization implies hoteliers 

are already essentially employees of the corporate brand. I assure 

you, the struggles my family have endured and challenges we have 

overcome are those of entrepreneurs, business owners and employers—titles we wear with pride. 

I also understand that the witch hunt for joint employers does 

not end at the NLRB, or Department of Labor, but rather there 

may be a concerted effort by other federal administrative agencies, 

like the Occupational Safety and Health Administration (OSHA) to 

SBREP-219 with DISTILLER

27 

develop liability for franchisors based on health and safety inspections of franchisees. The collusion between agencies to impute legal 

obligations onto franchisors will only drive a wedge into our industry and create difficulty for me to operate my business. 

Frankly, if these burdensome circumstances existed when I entered the business, I likely would have chosen another avenue for 

entrepreneurship. The intrusion by bureaucrats in Washington, 

DC, threatens my ability to own and operate my business, to create 

and maintain good jobs and the stability of the franchise business 

model across the United States. 

For more than thirty years, my family and I have built a successful business as entrepreneurs, and over the course of a few short 

months, government officials at the NLRB, DOL and OSHA have 

created a regulatory mechanism to destroy our way of life. 

IV. Conclusion 

Chairman Hardy, Ranking Member Adams and distinguished 

members of the Committee, I thank you for the opportunity to 

speak with you today and for your highlighting this escalating attack on entrepreneurs and small business owners. 

The NLRB’s new joint employer standard and subsequent cases 

before the Board have and will undoubtedly affect how independent 

business owners and operators interact with our employees and 

business partners. I fear the new standard will create conditions of 

liability unsustainable for franchisors and they will ultimately take 

control over the employment decisions and daily operations of franchised businesses. 

In an apparent effort to expedite this process, the DOL and other 

agencies have created a new standard of joint employment based 

on manufactured jargon, artificial business models and guidelines 

that lack any semblance of consistency or certainty. These actions 

undermine the ability for entrepreneurs like me to grow our businesses, create sustainable, local jobs and invest in our communities. 

I urge this committee to investigate the motivations behind this 

coordinated assault on small business and to pass legislation that 

will reestablish the traditional joint employer standard that has allowed my family and me to realize the American Dream of small 

business ownership. 

Thank you. 

SBREP-219 with DISTILLER

28 

Good morning Chairman Hardy, Ranking Member Adams, and 

distinguished members of the Subcommittee. My name is Danny 

Farrar, and I am the CEO and Founder of SOLDIERFIT. It is an 

honor to be in Washington today before you, and I am humbled by 

your invitation to speak on behalf of the hundreds of small business owners like myself who are members of the Coalition to Save 

Local Businesses. The CSLB is a diverse group of locally owned, 

independent businesses, associations and organizations that is devoted to protecting small businesses by restoring the ‘‘joint employer’’ legal standard based on ‘‘direct control’’ in federal labor 

law. I also am a member of the International Franchise Association, the world’s oldest and largest organization representing franchising worldwide. I appreciate the opportunity to tell you my story 

and explain how the issue before us today will impact small businesses like mine. 

When the National Labor Relations Board (NLRB) decided to 

change the joint employer liability standard in August 2015, it was 

a scary moment for local business owners like me. For decades, the 

joint employer standard has protected businesses like mine from liability for employees over which they do not have actual or direct 

control. That has always made sense. But now, in adopting this 

new ambiguous indirect control standard, the NLRB has made employers potentially liable for employees they do not employ. This 

new standard jeopardizes countless business partnerships in numerous industries. Any legal doctrine that is based on ‘‘indirect’’ 

and even unexercised, ‘‘reserved’’ control, such as this one, is so unclear and unpredictable that no one can assure small businesses 

that their operations are not in violation. That’s why I, and so 

many small business owners around the country, are so concerned. 

We are being forced to try to grow and operate under such great 

uncertainty because of this new standard. 

So Mr. Chairman, I’m not asking for much today. I’m simply asking this Subcommittee and the Congress to protect local businesses. 

Specifically, I’m asking to reinstate the very successful joint employer legal standard that the NLRB chose to change in its August 

2015 decision in Browning-Ferris Industries. The simple, one-sentence legislation contained in H.R. 3459, the Protecting Local Business Opportunity Act, is the solution that can protect small businesses like mine and give us certainty that federal agencies are not 

going to threaten our businesses in the future. I urge every member to support the bill. 

MY SMALL BUSINESS STORY 

Mr. Chairman, I am a small business owner and an entrepreneur. By working extremely hard and expending immeasurable 

time and energy, I founded a successful company that has three locations and we are opening a fourth very soon. But Mr. Chairman, 

I also am a franchisor; we recently awarded our first two franchises 

to further grow our concept. And the threat of unlimited, unpredictable joint employer liability is very scary. It threatens everything 

my partners and colleagues have worked to build in our community. 

SBREP-219 with DISTILLER

29 

So while some people may hear the term ‘‘franchise’’ or 

‘‘franchisor’’ and think only of major corporations, they can also 

think of me, my small business, and my story, and the story of 

hundreds of thousands of both franchisors and franchisees who are 

small business owners. 

Together with my friend and mentor, Dave Posin, I co-founded 

SOLDIERFIT, a fitness company committed to the ideals of community, patriotism, and the pursuit of the American Dream. In just 

over 5 years, our company has grown to 3 corporate locations in 

Maryland, soon to be 4, and we have recently awarded our first 2 

franchise locations. I also am the founder and president of 

Platoon22, a non-profit I started to combat the depression and dislocation that leads 22 veterans a day to take their own lives. I am 

an eight-year military veteran who served in the U.S. Army, including a combat tour in Iraq, a former firefighter and EMT, and 

a certified personal trainer with over a decade of experience. As 

you can see, I’ve held many positions throughout my life. While 

today I appear before you as a successful business leader, my road 

here was long and challenging. 

My story begins when I was 2 years old and my great aunt and 

uncle adopted me. I was different from my adopted family. I had 

a different personality, and so from a very young age, I was 

deemed lazy and worthless. The negative experiences of my early 

childhood would set a tone that plagued me for many years afterwards. 

By the time I graduated from high school, where I graduated 

146th out of 147 kids, I had very few options for my future. At a 

time when so many of my peers were beginning their adult lives 

full of hope for the future, I began a different journey, one that 

would be plagued with misery, contempt and trauma. 

I left for boot camp after graduation and, shortly thereafter, my 

adoptive mother died of breast cancer. Six months after that, my 

brother took his own life. 

On September 11, 2001, I took the first Army Team into the Pentagon to begin the process of searching for remains. With every 

step I took, my anger grew. I wanted to be deployed to avenge that 

day, but my unit was not eligible. I ended up leaving the service. 

I took jobs here and there, with one at a fitness club where I met 

my SOLDIERFIT co-founder, Dave Posin. I ended up getting fired 

while Dave got promoted to General Manager. With no job, no income, and horrible credit, I ended up homeless. Dave helped me 

find couches to sleep on so I could survive, so to speak. 

With no clear goals for my future, I once again turned to the 

military. One month later, I was in Iraq, where I completed more 

than 700 convoy missions. I’ve been blown up and shot at just 

about anywhere you can get blown up and shot at in Iraq. Prior 

to heading overseas, I was full of cracks. Coming home, I was officially a broken man. 

The only job I could get upon my return was going door-to-door 

selling windows. My ‘‘colleagues’’ were all in high school. Imagine 

SBREP-219 with DISTILLER

30 

that, returning from Iraq where I led troops in combat to a job high 

school kids did to earn extra spending money. 

I wanted desperately to get out of the pit I was in, but I was 

scared to try anything for fear of failure, not realizing that every 

tie I refused to try, my failure was assured. The life I dreamed of 

seemed so far beyond my grasp. I had no title, no purpose. I wasn’t 

a manager; I wasn’t a graduate; I didn’t come from money; and I 

had no family. How on earth could someone like me dig myself out 

of this hole that had become my life? 

I ultimately hit rock bottom. I drank, self-medicated, and ultimately decided my life was not worth living. Somehow I got a second chance. I woke up the morning after I tried to end my life in 

the psyche ward, and for three days, I was surrounded by people 

who convinced me that the only way out was to repair my cracks 

and begin climbing out of the wreckage. With the help of mental 

health professionals and mentors, I began again. 

Today, I lead a company that has been the recipient of the small 

business of the year awards in Germantown, Frederick, and the 

State of Maryland. I have been awarded the ‘‘Top 40 under 40’’ of 

the very important professionals shaping the future of Maryland. 

I was a top 5 finalist for Men’s Health ‘‘Ultimate Guy’’ contest. I 

have gone from the kid who barely graduated from high school to 

giving the commencement address at one. I have gone from the 

young adult who was homeless to owning a business that is slated 

to make over $3.2 million this year. 

Through my non-profit, Platoon 22, I am helping brave service 

men and women who have charged into combat on behalf of our nation, only to return irreparably scarred—physically, mentally, or 

both. 

The SOLDIERFIT team also is active in the International Franchise Association’s VetFran program, which provides career opportunities to veterans and their families to ensure an easier transition back into the civilian economy. Together with a network of 

over 650 franchise brands, VetFran voluntarily offers financial discounts, mentorship, and training for aspiring veteran franchisees 

and veterans seeking employment. Under this program, over 

238,000 veterans and military spouses have found employment opportunities, including 6,500 veterans who have become franchise 

business owners since 2011. I am humbled to be part of this network and, more importantly, in a personal position to help the tens 

of thousands of service men and women returning from overseas 

deployments, some of whom are as lost as I once was. 

SMALL BUSINESS IMPACT 

Mr. Chairman, from the perspective of a small business, it appears regulators are attempting a corporate takeover of Main 

Street by changing the definition of a joint employer. If Washington 

regulators make large, primary companies liable for the employment and labor actions of third-party vendors, suppliers, 

franchisees or subcontractors over which they have no direct control, large companies may be compelled to exercise more control 

SBREP-219 with DISTILLER

31 

1 Crews, A. et al. FRANdata Key Findings and Survey Results: 2015 National Labor Relations 

Board Joint-Employer Ruling (2015). FRANdata. 

over these small businesses to limit their NLRA liability. Consequently, local business owners may effectively be demoted from 

entrepreneur to middle manager, as they are gradually forced to 

forfeit operational control of the stores, clubs, inns or restaurants 

they built. Not to mention, the enterprise value of thousands of 

franchises and small businesses may decrease because of the decreased operational control. Further, large companies may be 

forced to bring services in house rather than hiring a small business to do the work. Joint employer means big companies will get 

bigger, and small businesses may run out of business partners and 

ultimately fade away. 

A leading firm that conducts research on franchise businesses, 

FRANdata, released in November 2015 a survey report entitled 

‘‘FRANdata Key Findings and Survey Results: 2015 National Labor 

Relations Board Joint-Employer Ruling.’’ FRANdata surveyed industry leaders and stakeholders, conducted secondary research, 

and examined franchise company filings to assess the potential 

negative impact of the NLRB ruling on franchise businesses and 

indirectly on the economy. 

Among the most significant findings of the report are: 

• An estimated 40,000 franchise businesses, affecting more 

than 75,000 locations, are at risk of failure because of the jointemployer ruling, which will increase labor and operating costs 

beyond operating margins. 

• As a result of business failures, downsizing, and a decline 

in the rate of new franchise business formation, more than 

600,000 jobs may be lost or not created. 

• The equity value of franchise businesses is expected to 

drop by a third to a half. Rising costs will have a negative multiplier effect on valuations. Potentially, hundreds of thousands 

of franchise business owners will see the equity they have built 

in their businesses over years decline as the advantages of the 

franchise model are stripped away, causing higher operating 

costs.1

As frightening as those statistics are, the NLRB is not the only 

agency trying to expand joint employer liability over more small 

businesses. On January 20, the Wage and Hour Division (WHD) released a 16-page administrative interpretation (AI) on joint employment, and it seems to provide an even broader interpretation of 

joint employment under the Fair Labor Standards Act than even 

the NLRB’s definition in its Browning-Ferris decision. 

In addition to the joint employer concerns, many local business 

owners are nervous about their future access to capital and the implications of joint employer on other agencies. The members of this 

Subcommittee well know that the Small Business Administration’s 

loan guarantee program is critical to the creation and growth of 

small businesses, as it was to SOLDIERFIT. Our business award 

came from the SBA, and our first franchisee secured his initial loan 

from SBA as well. So I want to emphasize how important it is that 

SBREP-219 with DISTILLER

32 

the SBA implement changes to the loan approval process that 

streamline and facilitate franchise businesses’ access to these 

loans. But, any changes to the standards cannot be viewed in a 

vacuum. It is important to consider these changes in light of other 

federal government agencies revisions to the definition of a joint 

employer and the increased scrutiny on franchise businesses to ensure there are no unintended consequences that would reduce access to capital. 

The worst case would be if the SBA streamlining proposal were 

to be hijacked by the anti-franchise-model forces in other agencies. 

If the SBA regulation meant to accelerate small businesses access 

to capital becomes instead a hammer wielded by zealots in other 

agencies determined to crush the franchise model, they would view 

the destruction as inconvenient but necessary collateral damage, 

but it would be a disaster for small business owners. 

Why are our local, small businesses being unfairly targeted by 

numerous federal agencies? Why don’t we have a government that 

supports small business, rather than making it immeasurably more 

difficult to create jobs and serve our communities? I don’t see or experience the so-called ‘‘cracks’’ in our model that some officials here 

in Washington claim to be trying to repair. From where I sit, small 

business like mine still employ 50-60 percent of the workforce and 

demonstrate immeasurable support for every community in America. We are proving that small business will continue to chart the 

course for success in this country. Mr. Chairman, one of the most 

important lessons I can share from my life experiences is this: 

When we refuse to fight, our failure is assured. I’ve seen what can 

happen when we refuse to stand up and fight for ourselves. That’s 

why I’m here today. To fight for my dream and the dreams of thousands of small business owners throughout the United States who 

are truly confused about why our government is implementing regulations that will assuredly chip away at our American Dream. 

Our Coalition is looking for members of Congress to stand up with 

us. 

CLOSING 

Mr. Chairman, I hope that through my story and the testimony 

of my fellow witnesses, you will gain a deeper understanding of the 

very long roads many of us have walked before realizing the 

dreams we are living today, and the reasons why our coalition of 

Main Street small businesses is asking Congress for help. 

The bottom line, Mr. Chairman, is this—no one can assure me 

that my business—or anyone else’s business—may not run afoul of 

the NLRB’s vague joint employer liability standard based on ‘‘indirect’’ and even unexercised, ‘‘reserved’’ control. That’s why I and so 

many small business owners around the country are asking for 

Congress to fight for locally owned businesses like mine, and exercise its Article I power to provide a check on an overreach by a federal agency like the NLRB’s joint employer activism. 

Mr. Chairman, thank you for your leadership on this issue, and 

thank you again for allowing me the honor of addressing you today. 

I would be happy to answer any questions you have. God bless. 

SBREP-219 with DISTILLER

33 

1 362 NLRB No. 186 (2015). 

HOUSE COMMITTEE ON SMALL BUSINESS 

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT, AND 

REGULATIONS 

Hearing: Risky Business: Effects of New Joint Employer Standards for 

Small Firms 

Testimony of Professor Harris Freeman 

Western New England University School of Law 

March 17, 2016 

I would like to thank the Chairman of the subcommittee, Congressman Cresent Hardy, ranking member, Congressman Alma 

Adams, and the other members of the subcommittee for this opportunity. My testimony will address two points regarding the National Labor Relations Board’s (NLRB) joint-employer rule announced in Browning-Ferris Industries of California 1 (BFI). First, 

the BFI decision is a proper exercise of the Board’s statutory authority and its consistent with Supreme Court precedent. Second, 

the Board’s return to a more inclusive joint-employer standard will 

do no harm to America’s small businesses even as it provides a 

path to meaningful collective bargaining for a significant sector of 

the low-wage work force that has been excluded from the protections of federal labor law. 

The viewpoint I offer today rests on my profound respect for the 

labor rights and procedures embodied in the National Labor Relations Act, which I acquired over the course of fifteen years teaching 

labor law and researching the workplace rights of contingent workers. My view of the Board’s modification of its own legal standard 

is also informed by my experience adjudicating labor law disputes 

during the six-plus years I served on the Commonwealth Employment Relations Board in Massachusetts. In this capacity, my decision making process was often guided by well-regarded NLRB 

precedent, policy, and the Board’s sound methods of adapting labor 

law standards to the evolving realities of the modern workplace. 

The NLRB’s Joint Employer Standard in Context 

The NLRB’s reexamination of the joint employer doctrine in BFI 

was an appropriate response to the rapid expansion of subcontracting and precarious low-wage work. Over the course of the 21st 

century, this trend has irreversibly fissured and restructured the 

American workplace. The extensive subcontracting of core business 

functions now has deep roots in low-wage sectors of our economy 

due to the widespread use of temporary staffing services and the 

expansion of franchising relationships. 

SBREP-219 with DISTILLER

34 

2See, e.g., Michael Grabell, Temp Land: Working in the New Economy, PRO PUBLICA, https:// 

www.propublica.org/series/temp-land (last visited March 15, 2016) 

I begin my remarks focusing on the ‘industrial realities’ of 

temping and franchising arrangements. It is widely recognized that 

these ubiquitous forms of business organization are impacted by 

the NLRB’s BFI ruling. Temping and franchising accounted for a 

disproportionate share of the economic growth following the Great 

Recession of 2008. By 2013, staffing services generated $109 billion 

in sales and 2.8 million temp positions—a full 2.0 percent of total 

jobs. Profits are also high; consider that in the first quarter of 

2014, True Blue (formerly Labor Ready), the largest U.S. staffing 

agency, reported profits of $120 million on gross revenues of $453 

million. Franchising is equally profitable. The ten largest fast-food 

franchises employed over 2.25 million workers and earned more 

than $7.4 billion in 2012. Shareholders earned another $7.7 billion 

in buybacks and dividends. This trend should be of particular concern to members of the Congressional Small Business Committee 

because soaring profits and substantial job growth in franchising 

and temporary staffing services have advanced hand in glove with 

poverty-level wages, extraordinarily high rates of wage theft and 

widespread health and safety violations in these sectors. 

Widely reported problems associated with low-wage temp work 

have eroded the wages, benefits and conditions of work in logistics, 

manufacturing, recycling and food processing.2 Compared to direct 

hires, temp workers experience a wage penalty. This is most severe 

among blue-collar temps who now comprise 42 percent of the temporary staffing workforce. For example, in metro Chicago, a class 

of permanent, long-term temp workers load and unload goods at 

the warehouses that service WalMart and other big box stores. 

These perma-temps comprise over two-thirds of the 150,000 strong 

warehouse workforce. Their pay averages $9 per hour—$3.48 less 

than direct hires. Almost two-thirds of these workers fall below the 

federal poverty line. A well-documented, national epidemic of wage 

theft by unscrupulous staffing agencies only makes matters worse. 

Further, OSHA complaints and protests by temp workers have unearthed major health and safety issues, causing OSHA to establish 

a Temporary Worker Initiative to determine, in part, when to hold 

staffing agencies and client employers jointly liable for violations 

that impact the temporary workforce. 

The workplace ills associated with franchising is exemplified by 

the challenges facing the 3.8 million workers who are employed in 

the fast-food sector. More than 75 percent of them work in franchised outlets and routinely face under-employment, poverty-inducing earnings and wage theft. Households that include a fast-food 

worker are four times as likely to live below the federal poverty 

level. The social costs of these conditions are borne by U.S. taxpayers, who shell out about $3.8 billion per year to subsidize public 

benefits received by fast-food workers employed at the top-ten fastfood franchises who must supplement poverty-level wages with assistance from government welfare programs. 

Workers are not the only ones impacted by the systemic production of inequality and poverty that is associated with many franSBREP-219 with DISTILLER

35 

3See Gillian K. Hadfield, Problematic Relations: Franchising and the Law of Incomplete Contracts, 42 STAN. L. REV. 927, 933-34 (1990); Catherine Rucklehaus, et al., Who’s the Boss: Restoring Accountability in Outsourced Work (NELP May 2014). 4 Boire v. Greyhound Corp., 376 U.S. 473 (1964). 5 Id. at 481. 

6 Boire, 376 U.S. 473. 7 691 F.2 1117 (3rd Cir. 1982). 

8 Browning-Ferris Industries, 362 NLRB No. 186, slip op. at *16-18. 9 Id., slip op. at *21. 

chising arrangements. Individual franchise owners also face high 

levels of economic uncertainty and like franchise workers, they are 

being squeezed by the big franchisors. The non-negotiable terms of 

franchise agreements dictate extensive franchisor control over dayto-day operations while placing most of business risk on the 

franchisee. These agreements routinely require franchisees to pay 

exorbitant fees for the right to operate, which not only places a 

downward pressure on wages, but leads to higher failure rates for 

franchised small business owners.3

The BFI Decision is a Return to the Traditional Joint Employer 

Test Endorsed by the Supreme Court 

The BFI decision did not radically reinterpret Board precedent 

and it did not resurrect a dormant, outmoded legal test. The Board 

merely returned to the traditional joint employment standard endorsed by the U.S. Supreme Court more than fifty years ago.4 BFI 

maintains the basic inquiry long used to determine whether a putative joint employer ‘‘possesses sufficient control over the work of 

the employees to qualify as a ‘joint employer’ with [the actual employer].’’5 Under the BFI decision the Board reaffirmed that a finding joint-employment is made only when a case-specific factual 

analysis shows that two employers ‘‘share or co-determine’’ the essential terms and conditions of employment. 

What the NLRB did do in BFI is close a longstanding loophole 

in the joint employer test. Relying on the joint employer test endorsed by the Supreme Court in Boire v. Greyhound Corporation 6

and the influential reasoning of the Third Circuit Court of Appeals’ 

decision, NLRB v. Browning-Ferris Industries of Pennsylvania,7 the 

Board found that joint employment rests on a broader approach to 

the concept of control than is found in later Board rulings beginning in 1984.8 Under this broader framework, the Board can once 

again examine the full range of common law agency factors that 

can reveal whether and how an employer actually exercises legal 

control over the essential terms and conditions of employment. The 

Board no longer limits its inquiry to examining whether employer 

controls are exercised ‘‘directly and immediately.’’ Instead, it will 

now use the traditional, multifactor common law inquiry to determine whether an employer ‘‘affects the means or manner of employees’ work and terms of employment, either directly or through 

an intermediary.’’ 9

This Board implemented this approach in the BFI case and found 

that the user employer maintained legal control over the 240 longterm temps at its recycling facility through a host of direct and 

intermediated factors, all of which decisively affected the means 

and manner of the employees’ work and terms of employment. The 

user employer was found to have issued ‘‘precise directives’’ 

SBREP-219 with DISTILLER

36 

10 Id. 11 Browning-Ferris Industries, 362 NLRB No. 186, slip op. at *24 12 Id., slip op. at *25 (Dissent of Members Miscimarra and Johnson). 13McDonald’s USA, LLC, a Joint Employer, et al., 02-CA-093893, et al.; 363 NLRB No. 92 

(New York, NY, January 8, 2016) (consolidating 13 complaints and 78 charges against McDonald’s USA, LLC). 14See Gillian K. Hadfield, Problematic Relations: Franchising and the Law of Incomplete Contracts, 42 STAN. L. REV. 927, 933-34 (1990). 

through staffing agency supervisors to communicate when a worker 

should be dismissed, where workers should be deployed, and the 

pace at which the work should be completed.10

The staffing agreement between BFI and the Leadpoint staffing 

agency was also found to establish BFI’s control over the workforce. 

The agreement gave BFI final say over who the staffing firm could 

hire to work at BFI’s facility, how much the staffing agency could 

pay the workforce, and the right of BFI to override Leadpoint supervisors’ directives to the workforce.11 The Board majority’s robust, fact-based inquiry into the employment relationship at BFI’s 

facility contrasts sharply with the limited factual assessment of the 

employment relationship urged by the two dissenting Board members.12

The BFI decision does not specifically address or apply the joint 

employer test to franchising arrangements. That factual determination is currently underway as part of an unfair labor practices complaint alleging that McDonalds Corporation, one of the nation’s 

largest franchisors, is a joint employer along with a number of its 

franchise outlets.13 I am not in a position to second-guess the outcome of this fact-intensive inquiry. 

However, this much is clear: Over the course of the last decade, 

tightly controlled business format franchisee arrangements have 

expanded significantly to ensure that major franchisors can maintain uniformity of brand, product and operations essential to their 

business models. These business format agreements permit 

franchisor control over franchisee workers’ terms and conditions of 

employment. Franchisor control can be exercised through training, 

operating manuals, and regular communications with 

franchisees.14 Franchisors in the fast-food industry have also implemented sophisticated computer-driven management systems to 

ensure brand maintenance and protection, creating yet another 

mechanism for franchisor control over worker’ terms and conditions 

of employment. 

These systems and the terms of franchise agreements, often enforced through unannounced, on-site visits by franchisor representatives, allow franchisors to control the number of workers required 

to do the job, the manner and speed of the performance of every 

work task, the equipment and supplies used on the job, the manner 

in which equipment is used, as well as employee grooming and uniform standards. Every one of these control mechanisms dictated by 

the franchisor may affect the essential terms and conditions of employment. 

The NLRB’s BFI Decision Presents a Workable Joint Employment Test That Does Not Create Uncertainty for Small Business 

SBREP-219 with DISTILLER

37 

15 Advice Memorandum from Barry J. Kearney, Assoc. Gen Counsel, Div. of Advice, Office of 

the Gen. Counsel NLRB to Peter Sung Ohr, Reg. Dir., Region 13 (April 28, 2015), https:// 

www.nlrb.gov/cases-decisions/advice-memos. 16 Id. 17 High turnover rates hurt low-wage companies in general, costing employers $4,700 each 

time a worker leaves and is replaced in the high-turnover sector. Robert Pollin & Jeannette 

Wicks-Lim, A Fifteen Dollar Minimum Wage: How Fast Food Industry Could Adjust Without 

Shedding Jobs, Political Economy Research Institute Working Paper, No. 373 (Jan. 2015), http:// 

www.peri.umass.edu/fileadmin/pdf/working—papers/working—papers—351-400/WP373.pdf. 

In the context of the economic realities of twenty-first century 

subcontracting that I have outlined, the BFI joint employer standard does not present an unworkable test and it should not be a 

source of legal uncertainty or anxiety for the small business community. The BFI ruling and other advice provided by the NLRB 

provide ample, clear guidance for small business owners, their 

human resource officers and legal counsel. In fact, as recently as 

April of last year, the NLRB’s Office of the General Counsel issued 

a detailed ten-page advice memorandum that applied the BFI joint 

employer test in case involving a major fast-food franchisor in Chicago.15

The General Counsel’s advice memorandum explained that the 

franchisor, Nutritionality, Inc., did exercise extensive control over 

its franchisee’s operations to ensure standardized products and customer experience. However, the General Counsel found that the 

controls Nutritionality exercised through its franchise agreement 

and directives it issued related to the image that the franchisor 

wished to convey and did not extend to any control over the terms 

and conditions of the employees at the franchisee’s restaurant.16

The memorandum concluded that the franchisor, Nutritionality, 

Inc. was not a joint-employer and therefore not liable for unfair 

labor practices allegedly committed by its affiliate. The NLRB’s advice memorandum makes it clear that the Board’s joint employment test does not predetermine the outcome of any fact-intensive, 

case-by-case inquiry into joint employment. 

It should also be noted that the BFI joint employer standard has 

not in any way altered the status of small business owners that operate a sizeable portion of franchises. These franchisee owners have 

the same employer status under the BFI joint employer standard 

as they did under the Board’s previous test. What has changed is 

that the burden of responsibility for the terms and conditions of 

franchise employees can be equally shouldered by franchisors when 

they are deemed joint employers. A finding joint employer status 

in a franchising arrangement might actually prove beneficial to 

franchisee owners. Joint employment would bring the franchisor to 

the bargaining table along with the franchisee. This would place 

the soaring profits being made at the top of the franchise chain on 

the table as a source of wage hikes for the underpaid franchise 

workforce. This could very well provide relief for beleaguered franchise owners whose small business is forced to operate with costly 

levels of workforce turnover 17 and under razor thin margins imposed by the franchisor business model. 

With regard to temping: the BFI decision does not present any 

uncertainty for large or small employers that use a temporary 

staffing agency workforce to perform the essential work of their 

SBREP-219 with DISTILLER

38 

18 Browning-Ferris Industries, 362 NLRB No. 186, slip op. at *22-24; See also Harris Freeman 

& George Gonos, Taming the Employment Sharks: the Case for Regulating Profit-Driven Labor 

Market Intermediaries in High Velocity Labor Markets, 13 EMPL. RTS. & EMPLOY. POL’Y J. 285 

(2009). 19See NLRB v. Weingarten, 420 U.S. 251, 266 (1975). 

business. In these situations, the NLRB has made it clear that that 

a user employer who contracts with a temporary staffing agency is 

potentially a joint employer of the temp workers that are deployed 

to the user firm’s place of work. The potential for a finding of joint 

employment is built into the structure of temporary staffing arrangements and contractual agreements. Unlike franchising, the 

temporary staffing industry business model is based on codetermination of the terms and conditions of employment. Typically, the 

user firm contracts with the staffing agency and retains extensive 

direct and indirect control over the means and manner by which 

the work is carried out in its own facility. The temporary staffing 

agency earns a substantial profit for handling all payroll issues, 

providing worker’s compensation insurance and coordinating the 

hiring of the workforce. BFI makes it clear that even when the 

temporary staffing agency deploys supervisors to the user employer’s worksite along with the temp workers, the staffing agency supervisors are obliged to follow the directives issued by the user 

firm’s managerial and supervisory staff.18

Over the last few years, we have witnessed large numbers of 

under-employed, low-wage temporary workers and franchised fastfood workers demand their fundamental labor rights. The NLRB’s 

joint employment test now allows for these workers to enter into 

meaningful collective bargaining relationships in workplaces where 

temporary staffing arrangements and franchising result in two employers sharing or codetermining the conditions of work. It would 

be virtually impossible for the temporary workforce at BFI to 

meaningfully bargain over a wage increase or to discuss a safety 

issue when BFI is not at the bargaining table to address these 

mandatory subjects of bargaining. Similarly, there can be no meaningful collective bargaining when a franchisor exercises palpable, 

albeit indirect control, over workplace conditions that are at the 

core of the obligation to engage in good faith bargaining if that employer is not legally obligated to sit at the bargaining table with 

workers that choose to unionize. 

Conclusion 

Given the NLRB’s obligation to apply labor law to changing economic realities,19 the Board acted well within the authority granted to it by Congress when it revised its joint employer standard in 

BFI. Nothing in the statutory text of the NLRA or in well-reasoned 

precedent prevents the Board from returning to the traditional 

joint employer test that predominated until 1980, when a rigid and 

narrower conception of joint-employment gained sway in Board proceedings. It is my view that the Board’s revival of the traditional, 

joint-employer standard is necessary to achieve both the flexibility 

employers seek and the fair treatment and decent wages that 

temps and franchise workers demand and deserve. Absent the 

NLRB’s revised joint employment test, our nation runs the risk of 

SBREP-219 with DISTILLER

39 

labor law becoming irrelevant in the much of the low-wage economy, where collective bargaining is sorely needed to address the extreme levels of inequality and exploitation currently experienced by 

millions of American workers. 

Thank you for considering my comments. 

SBREP-219 with DISTILLER

40 

SBREP-219 with DISTILLER


Insert offset folio 40 here 99483.001
41 

SBREP-219 with DISTILLER


Insert offset folio 41 here 99483.002
42 

SBREP-219 with DISTILLER


Insert offset folio 42 here 99483.003
43 

SBREP-219 with DISTILLER


Insert offset folio 43 here 99483.004
44 

SBREP-219 with DISTILLER


Insert offset folio 44 here 99483.005
45 

SBREP-219 with DISTILLER


Insert offset folio 45 here 99483.006
46 

SBREP-219 with DISTILLER


Insert offset folio 46 here 99483.007
47 

SBREP-219 with DISTILLER


Insert offset folio 47 here 99483.008
48 

SBREP-219 with DISTILLER


Insert offset folio 48 here 99483.009
49 

SBREP-219 with DISTILLER


Insert offset folio 49 here 99483.010
50 

SBREP-219 with DISTILLER


Insert offset folio 50 here 99483.011
51 

SBREP-219 with DISTILLER


Insert offset folio 51 here 99483.012
52 

SBREP-219 with DISTILLER


Insert offset folio 52 here 99483.013
53 

SBREP-219 with DISTILLER


Insert offset folio 53 here 99483.014
54 

SBREP-219 with DISTILLER


Insert offset folio 54 here 99483.015
55 

SBREP-219 with DISTILLER


Insert offset folio 55 here 99483.016
56 

SBREP-219 with DISTILLER


Insert offset folio 56 here 99483.017
57 

SBREP-219 with DISTILLER


Insert offset folio 57 here 99483.018
58 

SBREP-219 with DISTILLER


Insert offset folio 58 here 99483.019
59 

SBREP-219 with DISTILLER


Insert offset folio 59 here 99483.020
60 

SBREP-219 with DISTILLER


Insert offset folio 60 here 99483.021
61 

SBREP-219 with DISTILLER


Insert offset folio 61 here 99483.022
62 

SBREP-219 with DISTILLER


Insert offset folio 62 here 99483.023
63 

SBREP-219 with DISTILLER


Insert offset folio 63 here 99483.024
64 

SBREP-219 with DISTILLER


Insert offset folio 64 here 99483.025
65 

SBREP-219 with DISTILLER


Insert offset folio 65 here 99483.026
66 

SBREP-219 with DISTILLER


Insert offset folio 66 here 99483.027
67 

SBREP-219 with DISTILLER


Insert offset folio 67 here 99483.028
68 

SBREP-219 with DISTILLER


Insert offset folio 68 here 99483.029
69 

SBREP-219 with DISTILLER


Insert offset folio 69 here 99483.030
70 

SBREP-219 with DISTILLER


Insert offset folio 70 here 99483.031
71 

SBREP-219 with DISTILLER


Insert offset folio 71 here 99483.032
72 

SBREP-219 with DISTILLER


Insert offset folio 72 here 99483.033
73 

SBREP-219 with DISTILLER


Insert offset folio 73 here 99483.034
74 

SBREP-219 with DISTILLER


Insert offset folio 74 here 99483.035
75 

SBREP-219 with DISTILLER


Insert offset folio 75 here 99483.036
76 

SBREP-219 with DISTILLER


Insert offset folio 76 here 99483.037
77 

SBREP-219 with DISTILLER


Insert offset folio 77 here 99483.038
78 

SBREP-219 with DISTILLER


Insert offset folio 78 here 99483.039
79 

SBREP-219 with DISTILLER


Insert offset folio 79 here 99483.040
80 

SBREP-219 with DISTILLER


Insert offset folio 80 here 99483.041
81 

SBREP-219 with DISTILLER


Insert offset folio 81 here 99483.042
82 

SBREP-219 with DISTILLER


Insert offset folio 82 here 99483.043
83 

SBREP-219 with DISTILLER


Insert offset folio 83 here 99483.044
84 

SBREP-219 with DISTILLER


Insert offset folio 84 here 99483.045
85 

SBREP-219 with DISTILLER


Insert offset folio 85 here 99483.046
86 

SBREP-219 with DISTILLER


Insert offset folio 86 here 99483.047
87 

SBREP-219 with DISTILLER


Insert offset folio 87 here 99483.048
88 

SBREP-219 with DISTILLER


Insert offset folio 88 here 99483.049
89 

Æ 

SBREP-219 with DISTILLER


Insert offset folio 89 here 99483.050