January 10, 2024
Dear Senators and Members of Congress,
Independent Women’s Voice is the leading national women’s organization dedicated to advancing policies that expand people’s freedom, opportunity, and well-being.
We support H.J. Res. 98, a Congressional Review Act resolution to rescind the rule submitted by the National Labor Relations Board relating to “Standard for Determining Joint Employer Status”. We believe that this rule will be devastating to small businesses and franchises in the U.S., in particular those owned by women.
Some 12 million small businesses are owned by women (43% of all small businesses) and they generate $2.1 trillion in total sales. According to the International Franchising Association, 30.6% of franchisee businesses are owned by women.
IWV is very concerned that the NLRB’s joint employer rule will undo the great success women entrepreneurs have enjoyed over the last two decades by effectively shrinking the market and increasing the liability and compliance costs for the firms they run.
The final NLRB rule expands the definition of joint employer beyond two or more businesses with “actual,” “direct,” and “immediate” control over the essential terms and conditions of employment (such as hiring, firing, discipline, supervision, and direction of employees) to include those which have only “indirect” or even “potential” control over employees’ essential terms and conditions of employment.
As we noted in our public comment, the NLRB’s new standard is vague and will lead to significant confusion for businesses of all sizes. Smaller firms, which do not have the legal and compliance resources of larger ones, will be disproportionately impacted by the new compliance costs and headaches.
For many women-owned businesses, this new standard will mean less revenue and ability to grow the business.
The NLRB rule also exposes women who use subcontractors to new liability. Outsourcing support and office services such as marketing and communications, technology, and accounting and payroll increases efficiencies for small businesses and allows business owners to focus on their firm’s work. However, women owners may be liable for the actions of the subcontracting firm’s employees. As a result, they are likely to limit or cancel contracts to reduce their exposure to liability, and thereby, reduce their own productivity. Many women-owned businesses, which have built niches as vendors for other (larger) firms, face the risk of losing clients, work, and revenue. Eventually, these subcontractors may lay off staff or shut down.
Finally, the millions of women who are franchise owners stand to lose the ability to independently manage their business. As franchisors increase control over essential employment terms and conditions of all employees (including those of their franchisees) to reduce their liability, franchisees will likely see their role relegated to one of “store manager,” which is not the dream women franchisees had when they opened their businesses.
We strongly urge all members of Congress to pass this resolution and overturn the NLRB’s final joint employer rule. Instead, the NLRB should return to the previous rule passed under the Trump administration that took a common-sense, traditional approach to the definition of joint employers. This will provide greater clarity, certainty, and security for small businesses and franchises nationwide.
Hadley Heath Manning
Vice President for Policy
Independent Women’s Voice