tv U.S. House of Representatives CSPAN October 6, 2015 10:00am-12:01pm EDT
senator alexander: the health, education, labor and pensions committee will come to order. the hreatening of stealing american dream. and we'll discuss the legislation i've introduced to undo this decision and restore the law the way it was before the nlrb decision. senator murray and i will each have an opening statement. we'll introduce our panel of witnesses. we thank each of you of coming. and after the witness' testimony each senator will have five minutes of questions. last week i met a man named aslum an immigrant from pakistan who started out as a dishwasher at church's chicken and who today has become a very successful owner of church's chicken franchises. he talked about achieving the american dream. he said it was possible because of our nation's, quote, free
enterprise, entrepreneurial spirit, unquote. but on august 27, the nlrb released a decision that threatens to steal that american dream from owners of the nation's 780 franchise businesses and millions of $780,000 franchise businesses and millions of contractors. the labor board's new joint employer standard will make big businesses bigger and make the middle class smaller by discouraging larger companies from franchising and contracting work to small businesses. it's the biggest attack on the opportunity for small business men and women in this company to make their way up the economic ladder that we've seen in a long, long time. and i'm committed to fighting it with legislation that already has 45 co-sponsors in the senate and a total of 60 co-sponsors in the house, including three democrats. for three decades, federal labor policies said two separate employers if both have employment terms and working
conditions, that means two employers who are both responsible for tasks like hiring and firing, work hours, determining compensation and handling day-to-day record keeping. under the new joint employer standard, adopted in august, in browning ferris industries, a 3-2 nlrb majority said merely indirect control or even unexercised potential to control working conditions could make a franchisee and a franchisor joint employers. this means that for all these franchisees and contractors who work so hard to build their businesses in their communities, hire the right people, sometimes spend 12 hours or more meeting with customers, dealing with government regulations, paying taxes, trying to make a profit, they'll no longer be their worker's sole employer. rather, they're just one of the workers' employers. and for the businesses that have franchised their brand or used subcontractors to haul their waste or clean their offices and are now considered
one of the employers of these companies' workers, there will be a huge incentive to retake control of those franchises and retake control of those contracted tasks because if you have the liability of being the boss, you might be better off being the boss. that means costs go up, less ability to invest capital, joint employers, business owners will be forced to engage in collective bargaining and shared liability for violations. the change also harms employees. millions of employees will lose the ability to negotiate things like pay hours and leave time with their direct supervisor. those decisions will be made between the larger employee and the union. as one employee put it in an interview with a denver news channel, i'd be just another number to a corporation. i'm a person to my employer now. franchising will be particularly impacted by this decision. there are 780,000 franchise
establishments across the country. they create nearly nine million jobs. last week i met with a chattanooga, tennessee, couple who started their own franchisee location of two men and a truck moving company. they've been able to grow their first franchise into six locations. they'd like to continue to grow but this new nlrb decision is causing them to put their plans on hold. two men and a truck is a good example of how franchising allows entry into business ownership in the middle class. it was started in michigan by a mom with two sons who she was ready to put to work. her franchisee was her daughter. has now grown to 220,000 franchisees, 8,000 jobs, 38% of their franchisees began by working on a truck. successfully franchising a franchise business is one of the most important ways to climb the ladder of success. women owner co-own nearly half of all franchises. minorities own about 20%.
why would we want to disrupt this business model. the bill i introduced would roll back the nlrb ruling and reaffirm that an employer must exercise actual direct and immediate control over essential terms and conditions of employment. this is the commonsense standard that's been applied for decades. we have 45 co-sponsors of our bill. i hope we'll add more. i hope that includes some democratic members of the senate. this is an issue that's important. i believe it's time for congress to act as soon as possible to stop a destructive policy that damages middle-class growth, the middle-class growth that's made this nation what it is today. i hope my colleagues on both sides of the aisle will agree. senator measurey. senator murray: well, thank you very much, mr. chairman. our economy and our workplace and our country should work for all of our families, not just the wealthiest few. and i assume everyone agrees.
we can't make that happen without considering the massive changes in the labor market over the past 30 years. many big corporations increasingly rely on temp agencies, franchises and other third party sources to stay competitive and lower labor costs. and sometimes corporations still maintain significant control over the workers performing their day-to-day operations of franchises and subcontractors. now, some of these corporations work very hard to ensure workers are treated fairly and have access to the protections that they deserve. unfortunately, when some other parent companies maintain this control, it can often come at a huge cost to the workers and the small business owners alike. for example, some of the biggest corporations can dictate a franchise's pricing and store hours. they decide on how many people are on a franchisee's staff and they sometimes even have a say in how much employees can earn.
and yet these parent companies can escape all liability for poor working conditions and rock bottom wages. in some cases, workers have tried to exercise their basic rights to join together and improve wages and workplace conditions. when those workers sit down to negotiate, they find out that not all of the people who have control over the terms and conditions of their scombrobs have to show up -- jobs have to show up at the bargaining table. take, for example, a worker who worked for a temp agency that supplied workers for a warehouse in california. in a report from the national employment law project, he said he and his co-workers barely made more than minimum wage. they never knew when their shift would end and never had a day off work. that made them impossible to plan their lives. but when they joined together to form a union, instead of meeting them at the bargaining table, the company that owned
the warehouse threatened to close that temp agency and fire all the workers. now these employment arrangements can be bad for small business owners as well. take, for instance, a man named si -- syeed. he said he came to the u.s. from india. he had been an franchise owner for nearly a quarter of a century. over time the parent company had enacted tighter and tighter controls over syeed's business and that has really limited his ability to free up resources to treat his workers better. and he said, and i quote, when i lived in bombay, this was not what i thought that was meant by the american dream. and while there are many responsible corporations, other parent companies put all liability for low wages and poor working conditions squarely on the shoulders of the small business owner. i believe we need to help our workers and grow our economy from the middle out, not from the top down, and that means that we as a nation should not turn our backs on empowering
workers especially because that's the very thing that has helped so many of the workers climb into the middle class. now, there has been an overwhelming amount of disinformation out there about the nlrb's browning ferris decision, so before hearing testimony, i want to make a couple of things clear. when workers want to join together with their co-workers, they are not looking for special treatment. they are simply exercising their basic rights that are guaranteed by law. secondly, one of the board's responsibilities is adapting to the realities of today's workplaces to make sure workers can exercise their right to collectively pargr bargain. some of my republican colleagues have claimed this decision is somehow an overreach, but given the changes in the workplace, the board is simply carrying out its duties under law and this might be the most important point. i've heard some opponents of this decision use sweeping language about the scope of this decision. let's be clear.
this decision does not change the relationship between a local business owner and her employees. if she was deciding who to hire and who on her staff deserved a raise before this decision, she will continue doing that going forward. the browning ferris decision only clarifies that if another company also has substantial control in the critical terms of employment, like who ho hire and fire or how much to pay franchise owners' employees, the nlrb will take it as its word and treat it as an employer as well. workers can only exercise their basic rights, rights that are guaranteed under the constitution and the national labor relations act when all of the employers who have a say in the working conditions are at the table. again, the labor market looks a lot different today than it did 30 years ago. rather than using these trends to end basic worker protections
and undermine the fundamental process of due process, this committee should study those trends and discuss what we can do for workers and small business owners to keep the american dream in reach of all families. i hope this committee can find ways to look at those trends and work together on policies that expand economic security, grow the economy from the middle out and ensure our country and workplaces work for all of our families, not just the wealthiest few and the biggest corporations. thank you, mr. chairman. senator alexander: thank you, senator murray. i'm pleased to welcome our four witnesses today. ms. ciara stockeland is founder of mode stores, a discount store located in fargo, north dakota. founded in 2007, mode has nine franchisees, operating across six states. ed martin is the president of tilson home corporation in austin, texas. tilson home is a build on your lot custom home business that's
been in business for 80 years. mark kisicki is a shareholder of the ogle tree deakins law firm in phoenix, arizona. he's a member of the american bar association section of labor and employment law committee on practice and procedure under the nlrb -- nlra. mr. michael rubin is a partner at altshuler berzon, l.l.p. in san francisco, california. mr. rubin specializes in class action and aplate litigation. we thank the four of you for coming, some long distances today. we ask that you keep your testimony for five minutes. that will leave more time for the senators to ask questions. why don't we start with you, ms. stockeland. ms. stockeland: good morning chairman alexander, ranking member murray and members of the committee. my name is ciara stockeland, the owner and operator of mode,
a designer outlet concept which i founded in fargo, north dakota. i currently live in grand forks, north dakota, with my husband and our two children, harrison and isabella, which are actually watching today's events at their schools. fifth and sixth grade. thank you very much for the invitation to be up here before this committee today to share my story of small business ownership and discuss the concerns of local business owners everywhere regarding the nlrb decision to change the joint employer standard. it is an honor to be in washington before you today. likewise, it will be an honor to join employees, employers and many others as i attend the white house summit on worker voice tomorrow. today's joint employer issue is a critical threat to our livelihoods and it is very important that small business perspectives are heard by our nation's leaders. i am here to speak on behalf of the hundreds of small business owners like myself who are members of the coalition to save local business which i joined because i believe saving
local business is what's at stake in the so-called joint employer issue. today i will share why it's so critical for the future viability of millions of small businesses and the 780,000 franchise businesses in america that this committee in congress reinstate the very successful joint employer standard by passing s. 2015. this simple, one-sentence legislation will restore certainty to small business and i urge every committee member to support the bill. mr. chairman, i am small business owner and a third generation entrepreneur. i employ ton of people in my north dakota committee and they have about 40 employees across the 11 stores. i love creating jobs in america. nine years ago i opened my first store in fargo, north dakota. four years ago we began franchises and have successfully expanded to 12 locations across the midwest and south carolina. why did i franchise rather than
own a company-based operation? i knew it would be difficult to operate company-owned stores and support employees from a remote location in north dakota. by franchising my brand could grow through the operations of local entrepreneurs. i hoped to continue to grow and i plan to have 75 stores by 2024. i am a franchisor. my company mode is one of more than 3,000 franchisors in the u.s. while some people may hear the term franchise or franchisor and think of major corporations they should think of my store evened the story of hundreds and thousands of franchisors and franchisees who are small business owners. my company is precisely the kind of small business that members of congress can support. like many small business owners, i have known the stress of working to ensure i can cover payroll and rent while my employees have been paid first, i did not take a consistent paycheck until 2014. that's eight years of working
virtually for free. every day i work knowing if my business fails, my family will lose everything. we do not need another insecurity to add to the already extreme risk of business ownership. you may think we might have government that supports us but instead the nlrb has created extreme uncertainty by introducing the f. bmplet f.i. decision. i have two points to share. first, the joint employer ruling affects every small business. the majority of nlrb members made clear that b.f.i. decision was not an isolated one. the board wrote, we have decided to restate the board's legal standard for joint employee determinations and make clear how that standard is to be applied going forward. all businesses covered by the nlrb act and their business partners may face liability under the board's new joint employer doctrine. second, there can be no question that the joint employer standard makes small business unsafe.
no one here can assure me that my business will not run afoul of a nebulous indirect control standard. the expansion of joint employer liability from direct control, both direct and indirect, leaves small businesses facing serious uncertainty. mr. chairman, i plead for the use of common sense. the joint employer standard that has existed for decades works and protects small business. why change it? if s. 2015 is not enacted, why would i continue to grow knowing that i have the risk and that i'm liable for other employers' workers? senator alexander has put forth a proposal today to protect entrepreneurs and small business. i urge all members of this committee to support locally owned businesses in your states by working to enact and protect using the protecting local business opportunity act, s. 2015. thank you very much. senator alexander: thank you, ms. stockeland. mr. martin.
mr. martin: thank you, chairman. good morning. thank you for the opportunity to testify today. my name is eddie martin. i am a home builder from austin, texas, and president and chief executive officer of tilson home corporation. i have been active in the national association of home builders throughout my career. the nahb is also part of the coalition to save local businesses which was formed to protect the traditional joint employer standard. i am honored to participate in this hearing. i have over 30 years of experience in the home building industry. tilson homes has been a family-owned and operated company since 1932. we currently have 140 employees with a wide range of disciplines, including construction supervisors, design and drafting professionals, warrant tech and administrative staff. beyond our full-time staff, tilson contracts 287 companies to perform a range of
specialized services that are required to build a home. like roofers, framers and cleaners. on average each of our contractors has about 15 employees. because we contracted so many small companies, we are very concerned about the potential impact of the nlrb's browning ferris decision. the decision leaves employers guessing over how much indirect control constitutes a joint employer. a particular concern to me is whether basic business acts like choosing a project's completion date or scheduling an electrician to come to a jobsite at a certain time would trigger a defining of joint employment. if tilson contracted with a paint company for a home in austin, texas, we would be prevented from telling a subcontractor when to paint the walls or even when the walls would be constructed.
you might argue that indirect or potential control over just one essential term of employment, like scheduling, would not be sufficient to justify a finding of joint employment. but because the new indirect test is so vague and nonspecific, the nlrb has not excluded that possibility. browning ferris does not make sense in the real world. i was asked if i have indirect control if i ask a contractor to bring in extra staff to prevent delays? if an industry if mercy of weather, if rain sets my schedule act, shouldn't i be ask a contractor to increase the labor on a jobsite without becoming a joint employer? it creates such plurry lines that even a homeowner could be viewed as a joint employer. in the real world, a homeowner
is going to be involved in decisions regarding when workers begin and end the work day and will set deadlines for the completion date. those acts could meet the test of joint employer. or consider a homeowner who has a clogged drain. they may call a plumbing company and ask for specific plumber that they used in the past. does that homeowner have indirect control of staffing by requesting a specific employee and then scheduling a time for completion? this new standard is fundamentally flawed because it does not provide a clear and definite rule for determining if a company is a joint employer. home building is highly decentralized, supporting numerous local small businesses. having a large number of such small firms in the industry promotes competition, which ultimately benefits homebuyers by helping them keep
construction costs down. how can a business like mine work with hundreds of other businesses to navigate this maze of uncertainty. if the goal of the nlrb is to put small firms out of business, then congratulations are in order. this ruling may very well do that, and ultimately less competition among small firms leads to higher home prices for consumers. congress must act quickly to restore the traditional definition of joint employment so that companies like tilson can have a clear picture of our responsibilities. thank you, again, and i look forward to your questions. senator alexander: thank you, mr. martin. mr. kisicki. mr. kisicki thank you, chairman alexander. ranking member murray. appreciate the opportunity to be here and testify about this very important legislation. the protecting local business opportunities act would amend
the national labor relations act, that it would accomplish far more than its title or the simple language suggests. would require the nlrb to employ an ordinary meaning of the term employer when interpreting the act. just as congress intended, not the far-fetch definition that board defined in b.f.i., our browning-ferris. it is a group to collectively decide if they want union representation to act on their behalf collectively or if they want to deal directly with their employer on an individual basis. in order for them to exercise that right, and indeed for employers to know what their rights and obligations under this law are, it is of fundamental importance to be able to identify who is the
employer of any particular roup of employees. yet, the board has limited who can be defined as an employer. in fact, congress is limited who can be defined as an employer to just one employer of any particular unit. that employer can be to companies acting together as an employer but it can only be one employer. because it's so important for employees and employers to know their rights and the limits of this act, defining who is a joint employer is necessary. the board, however, failed to define what a joint employer was or provide any clear standards until 1984 when it finally did so and it adopted the ordinary meaning that we all understand constitutes an employer.
it's the entity that actually exercises direct and immediate control over significant terms and conditions of employment. the things that we all associate with an employer, the ability to hire, to direct the employee by supervision, to reward the employee through compensation, and when necessary to discipline and discharge. in browning-ferris, however, the board undid that clarity that had existed under this act uninterrupted for 30 years. it adopted a new standard that in reality is no standard at all. employers and indeed no union can be comfort thinking it can determine who is a joint employer under this standard. because the nlrb failed to give us any guidance as to how this very nebulous standard is going to be applied.
for example, the new joint employer standard is a two-part test, but the first part of the test is has another multipart test and the board failed to give us any standards as to how those factors would be weighed or evaluated. the common law test is in fact rooted in the common law, but it was a test that was developed, not to determine an employer-employee relationship, but to distinguish between employees and independent contractors. hen there's no question that individuals are somebody's employees, this test does very little to figure out whose employees they actually are. moreover, the board failed to give us any guidance as to how it would weigh the remaining factors of this test that are actually relevant once we conclude that we're dealing with an individual who's somebody's employee.
the board left that entirely to its own discretion in future cases and the discretion of its general counsel. and one thing the board did make clear, though, in browning-ferris, is that indirect control by one company over another's employees or the potential to control them is enough to create a joint employer standard and a relationship as a joint employer. but that standard is inherently nebulous because the ability to exercise indirect control or the ability to potentially control employees is inherent, at least to some extent, i would say in every business relationship where one employer is supplying goods and services to another. it will take years of lit combation and cost before we have -- litigation and cost before we have standards that can be understood by all of the constituents of this act. employers, unions and employees
alike. until then, this standard that the board has adopted in b.f.i. will do violence to the very purpose of the national labor relations act, which is to provide stability in labor relations. further undermining the purpose of the act is the damage this new standard will cause to the collective bargaining process. bargaining initial contracts is a very difficult and time-sensitive, time-consuming commitment. typically it takes more than a year. this new standard is going to put together employers that may have some interest in common but certainly have competing interests because they are in fact different employers. and it is going to require them to have to come to an agreement as to -- senator alexander: can you wind up your testimony, please? mr. kisicki: what the collective terms of a bargaining should be.
we need to protect the national labor relations act fundamental purpose by adopting this legislation. thank you. senator alexander: thank you, mr. kisicki. mr. rubin. mr. rubin: thank you, senator alexander, senator murray and members of the committee, thank you for giving me this opportunity to testify about the practical impacts of the national labor relations board browning-ferris decision. i would like to focus on why the board's joint employer standard is entirely consistent with the purposes of the national labor relations act and why the board reached the proper result on the actual facts of that case. i had more than 30 years of experience representing low-wage workers in industries like warehousing, production and janitorial services. in those industries and in others where the use of perm and temp employees have become common, violation of wage, hour
and discrimination laws are rampant. often, those violations can be traced to the economic pressures that result when a company that in the past would have employed those workers directly instead decides to obtain its workers from a staffing industry and tries to contract away from the staffing agency all responsibility for legal compliance. particularly in low-wage industries, staffing agencies and labor services contractors are frequently undercapitalize and they operate on the tightest of profit margins. even when they are caught breaking the law, they often lack the resources to pay significant back pay awards, and they almost always lack the ability to provide reinstatement or meaningful injunctive relief. they also know that if the very first sign of workplace dissent, not to mention union organizing activity, their
staffing contract is likely to be terminated, leaving them and their workers without work. the statistics cited by the board dramatically illustrate the recent upsurge in labor outsourcing. between 1990 and 2008, the number of workers hired through staffing agencies doubled from 1.1 million to 2.3 million. last year the number was almost three million and it is expected to jump to almost four million by 2022. not surprisingly, studies have shown a strong correlation between labor outsourcing and high levels of employment law violations as well as lower wages, limited or no benefits and tremendous job insecurity. 50 years ago, there would have been no question that a worker performing convair belt or assembly line work like a plant like browning-ferris would be
considered an employee that owned and operated that plant. but 50 years ago it was an unusual like a company like browning-ferris to consider contracting out its core operational functions. in the browning-ferris case, the board recognized that although browning-ferris had contracted out its inplant recycling work, it continued to control crucial terms and conditions of the plant workers' employment. browning-ferris required lead point workers to meet its own pre-employment screening standards. it trained them how to do their jobs. it reserved the right to reject any worker offered by lead point for any reason or no reason at all. browning-ferris also set the pace of the conveyer belts that workers worked on. it decided when to allow the workers to take breaks. it set safety and productivity standards. it set when overtime would be required and how many workers would be required to work that overtime. and it gave job instructions to
those workers. both directly and through their supervisors. it also placed a cap on the hourly rate that any lead point worker could be paid and it prohibited lead point from increasing any worker's wages without its express approval. on these facts, it should have come as no surprise that the board found that browning-ferris and lead point were both statutory employers of the inplant workers for purposes of collective bargaining. it makes sense that a company with the power to determine or co-determine workplace conditions should have a corresponding duty to engage in collective bargaining over those conditions. the board's ruling was entirely consistent with a long-standing collective bargaining policies of the act and with decades of common law authority, including the right to control language in the restatement of the law of agency which is set forth the common law standards since before the national labor
relations act was enacted. to limit the definition of nnlra, as er the the proposed republican bill would do, would be to impose a harsh standard that would undercut the goal of encouraging meaningful collective bargaining and it would be far more restrictive than the common law standard or other workplace statutes like the fair labor standards act, the equal pay act and many state law statutes. certainly is the proposed bill's change in the definition of employer would have seriously negative impacts on workers. leaving those most in need of statutory protection without any meaningful remedy. temporary, at-will workers. but it would also hurt small business owners because it would make them solely responsible for collective bargaining even when they lack meaningful authority to fulfill nair statutory responsibilities. and there's no need for such a change. because any company that wants to avoid responsibility for bargaining can simply give its
supplier companies greater independence in controlling wages, hours and working conditions. we've seen the practical impacts of the modern workplace in industry after industry. warehouse workers, garment workers, performing piece rate work by fly by night -- senator alexander: could you wind you it up soon, mr. rubin? mr. rubin: who compete on low labor costs. the nlrb's central promise is to promote collective baringinning but until browning-ferris those workers had no realistic opportunity to bargain for improved conditions with the company that could actually co-determine their terms and conditions of employment. thank you. senator alexander: thank you, mr. rubin. thanks to awful you. we'll now have five-minute round of questions. i'll again. mr. kisicki, 40 years ago when ways a young lawyer i represented a company called ruby tuesday's. only had 10 stores.
i owned a little bit of it. wasn't worth much then. i think i could understand then the issue of what direct control might be over ruby tuesday franchisee. that company's now grown, and i'm not involved with it anymore and haven't been for sometime, but it's now grown to 800 restaurants. some are franchised. some are owned by the parent company. i'm trying to figure out how i could advise the headquarters of ruby tuesday or any other restaurant company how they could not have unexercised potential to control hiring, firing, wages, all these decisions or how they could not have indirect control of all these decisions which would cause me, i think, to suggest to them if they want to be sure they avoid liability that they simply own all their stores rather than allow them to be franchised. what would you advise them? mr. kisicki i'm afraid i'm --
mr. kisicki: i'm afraid i'm not going to advise ruby tuesday. i think you could do that, senator. you're absolutely right that the lack of clarity in this area makes it extremely difficult for us as counselors -- senator alexander: wouldn't a franchisor would have the exercise to do about anything with a franchisee? over a period of time they certainly would. mr. kisicki: they could terminate the franchise contract. senator alexander: they could say if you don't do this i could terminate the contract so that seems to me that seems de facto unexercised potential of control any franchisee. mr. kisicki: the test that the nlrb has adopted allows for just that. we just don't know. senator alexander: and based on your experience and knowledge of companies, would you not think that as a result of that liability or that uncertainty that the tendency for a lot of large companies would be to own
their own stores rather than to allow franchiseees to own stores? mr. kisicki: yes, senator. because of the other labor laws, in particular, in concerns about protecting their interests, many companies would be inclined to try and extend their power and control. senator alexander: ms. stockeland, you started your company nine years ago. you got 11 franchise establishments. would you have been able to grow so quickly without relying on the franchise model? ms. stockeland: no. it gave me the opportunity to take my brand and to expand it and create jobs and give their opportunities to other potential entrepreneurs around the country. i did not want to run a company-owned business from a remote location and manage those employees and so franchising really gave me the vehicle to expand my brand throughout the u.s. senator alexander: what would -- how would it change your
business if instead you owned all 11 sites and would what -- what would your employees think having you set tony blair schedules, pay and benefits -- set schedules, pay and benefits? ms. stockeland: i think it would be disheartening to those women who own my franchises around the country got into the mode business model because they want to own a business and control both their business and their employees. and so to take that away from them and make them virtually the middle man, middle manager would be very disheartening to them. senator alexander: mr. can i sicky the project director of the ucla stated in an article last not month, the nlrb has the power to cover other areas of worker law. it's very easy -- i'm quoting -- to see a possible scenario where you're using the same joint a little bit standard. you could argue, he says, that in court and go before a judge or you could try to get the
department of labor to change its definition. we've noticed through a leaked document from occupational health and safety that they're beginning to use this new joint employer definition. do you believe that the department of labor or the eeoc could merely adopt this much broader joint employer standard without going through a rulemaking process? why do you suppose that osha is adopting -- is going around trying to figure out whether some employer is a joint employer when its job is really worker safety? mr. kisicki: the only answer i have for that, senator, it appears to be part of a concerted effort by labor and incredible o hold leverage over employers by being able to use federal agencies to step outside of the bounds for which they were created by congress to protect
and try and go after other areas that then give labor leverage in various ways in our economy. i don't understand osha's reach and i certainly think it is possible that other federal agencies will try the same thing and try and extend the nlrb's b.f.i. decision are, our browning-ferris -- or browning-ferris, to try and expand the scope of liability. senator alexander: thank you. senator murray. senator murray: mr. rubin, let me start with you. we know we have workers that are struggling with stagnant wages, poor, working conditions on the jobs is not new. i worked with a lot of them. and oftentimes those workers have very little recourse to try and join together to improve their working conditions. even some of the major corporations are making massive profits. and we have some colleagues that want to continue to return
to a very narrow standard that has perpetuated some of those problems for the working families. could a return to that old andard, as fabricated in the protecting local businesses and opportunities act, could have a negative impact on the employers and their employees? mr. rubin: absolutely. the standard that they adopted in browning-ferris is are the common law standard. it's a standard that's been the effect part a few decades after the board was enacted, to go back to a standard that requires actual direct and immediate control in this era given the large number of contingent workers would certainly hurt the workers but even more it would hurt the contractors. the contractors are caught in vice-like pressure between the contractors that hire them and their obligation to comply with the law. they have no real power to meaningfully bargain.
they're often undercapitalized. in the garment industry and the warehouse industry where i had extensive experience, they have no choice but to keep the contractor that hires them happy. they need to get the next job. they're more interested in getting those contracts than in legal compliance because they know the workers are powerless. they fear retaliation. they know nair entire contract will be terminated if the workers begin to organize or complain about working conditions. so a return to the old standard, the addition of actual direct and immediate, would harm small businesses. it would deprive them of the opportunity to become truly independent, to become true combrures because if the larger -- entrepreneurs because if the larger companies back off and bargain for themselves, then they're much better off. senator murray: ok. in its decision on b.f.i., the board noted its supreme court mandated responsibility to
adapt the national labor relations act to the changing patterns of industrialize and in had your testimony you touched on these, especially the current nature of the workplace that you're talking about. in your practice, what real-world issues have you seen with current work arrangements and what impact will they have on those arrangements? mr. rubin: it would help a great deal. it would help the workers, local economy and the contractors that employ them. the reality is that until the low-wage industries where my clients often work, the workers are absolutely powerless. they have to take whatever the temp agencys or staffing agencies give them. they know if they complain -- this happened in my warehouse workers case. we had a situation where wal-mart owned warehouses. it had another operate, schneider, operate them. grossly undercapitalized labor
services contractors. the workers, as soon as they complained, were terminated, by bringing a lawsuit or by making joint employer allegations, not under the browning-ferris standard, but under the far more protected state standard. it's important to bear in mind that what the board has done here is just bring the nlra in compliance with common law but there are plenty of statutes passed by this congress that are far more protective and established joint employer liability much more quickly and that circumstance, the worker had no opportunity in these warehouses to complain. but by bringing a joint employer claim under the flsa and state law, we were able to keep their jobs, compensated. otherwise you have a very vulnerable work force subject to exploitation because they know if they do anything to organize, their jobs are gone and their co-workers' jobs are
gone so there's group pressure to keep your mouth shut and just take whatever the employer dishes out. senator murray: so the supreme court has said the board has a responsibility to adapt the act to the changing patterns of industrialized. what you're talking about with major corporations who are actually controlling the franchises, controlling workers' pay, controlling their working conditions, is vastly different than what i heard ms. stockeland talk about her franchiseees. mr. rubin: absolutely. that's not the problem. the way she's doing her company is great the way she describes it. the problem is when the massive use of temp agencies contract workers that compete among each other in a race to the bottom based on labor costs alone, by contracting out this work, the companies are able to save a tremendous amount in labor costs. we've seen it in case -- in the warehouse case, there was a jump of $8 per hour or so between what the direct employees were making and what
the perma temp workers were making. throughout the country we've seen that disparity because all they have to compete on is labor costs and so they have a great incentive to cut it below the bone or below the legally required minimum. senator alexander: thank you, senator murray. senator isakson. senator isakson: if i got your numbers right, you've been in business 83 years and have 180 employees, right? and you have 287 contractors with whom you do business to contract houses? -- mr. martin: yes. senator isakson: that means you go from employer responsibility from 140 people to 4,305. is that about right? mr. martin: if all of them were considered employees. mr. ice ackson: you would be doing the same business. could you stay in business adding that many employees to
that responsibility? mr. martin: the biggest problem -- there are thrrs' all sorts of problems. one -- there's all sorts of problems. one of the problem is we schedule subcontractors to work on our jobs. if we had to schedule subcontractors and their workers, the logistics of that doing it over statewide would be unsurmountable. the other problem is i would have to gear up my human resources department to such a degree that would, you know, quadruple it, quadruple our costs in trying to manage our employees. so i would be very concerned about staying in business with doing the same amount of homes th 4,000 or even if you were very conservative, 200 to 300, which is still double my size, would be very difficult. senator isakson: which would mean you would have to sell your company?
mr. martin: yes. cyntex.ton, senator isakson: that could absorb that? mr. martin: right. senator isakson: when you have subcontractor to do hvac, you would require two things, one is a bond and second is insurance, correct? mr. martin: we require insurance, not a bond. senator isakson: the work schedule is determined by the weather, by other conditions and not determined by you. you determine what you need done but they have to do it within the confines of that right? is that not mr. martin: we have a critical path that we try to stick to given the weather and homeowner involvement. senator isakson: you don't pour contract below 32 degrees, right? mr. martin: it doesn't get below 32 degrees in texas. enator eyes sackon: i couldn't
-- senator isakson: thank you. i appreciate that very much. mr. rubin, i want to make sure i get this right. and i certainly don't want to say something that's not correct in what you said. but i was listening to your testimony. you talked about the economic pressures. you were talking about staffing companies, first of all. talking about the economic pressures on those staffing companies because they have the tightest of margins. that was your quote, if i'm not mistaken. mr. rubin: that quote is part of the productivity requirements, the auditing, the real time. yes, it's one of a number of factors. great economic pressure, that's correct. senator isakson: if they were providing independent contractors all of a sudden was a co-employer, they might have a deeper pocket is that not correct? mr. rubin: in many cases they do but as long as they hire a sufficiently capitalized contractor and ensure that the contractor doesn't commit any unfair labor practices they
don't have anything to fear from the browning-ferris decision. it only applies in the narrow circumstances where there could be a board proceeding and there are only two circumstances where that can happen. the first is whether unfair labor practice is committed. so if there are no unfair labor practices then there's no problem at all whatever the standard is it only rises if there is request for bargaining by a majority of the employees of the contractor and there the question is simply, is there going to be meaningful bargaining without the larger company? so it's not as much as a deep pocket problem as it is a collective bargaining unless you can meaningful affect the conditions. that's why you have to include the company that could share or co-determine the initial terms of employment. senator isakson -- don't take offense of this statement but as somebody that's been on the other side -- and i respect lawyers, especially my own. i have nothing against lawyers. is there is a reasonable fear
about a lot of franchisors they might be the deeper pockets that the trial lawyers would go after because they have a smaller pocket? mr. rubin: not because of the nlra. the concern that franchisors would have about the deep pocket would be under statutes like the flsa or others that would have the suffer or permit test would would make them liable for the joint employer. the back pay under the national labor relations act is not very large. discrimination claims, wage and hour claims, those are the claims that the deep pocket would be carney. this decision has nothing to do with that, and this standard is far less protective of workers' rights than the standard of those other acts. senator isakson: could i ask unanimous consent that the letter between the hotel industry would be entered in the record? senator alexander: it is. thank you. senator franken.
senator franken: thank you, mr. chairman. we've heard claims that the board's browning-ferris decision would be bad for small businesses and in fact the title of today's hearing, quote, stealing the american dream "of bone best ownership: the nlrb's joint employer decision. it's pretty -- it's a provocative title, i might say. mr. rubin, how does the joint employer standard under the nlrb's browning-ferris decision different from the traditional erms interpretation of the law which was used prior to 1984, a period where countless small businesses and businesses flourish and the middle class expanded? mr. rubin: it does not differ. the new standard goes back to the common law standard, to what the standard had been as set forth in numerous board cases and court of appeal cases.
and my statement in my prepared remarks, it's completely consistent with the restatement of agency and its comments which set forth that standard. the board at great length went through that law. senator franken: mr. martin, your business has been in existence for 84 year 51 years under the standard that we're talking about now. so i don't understand how this would be the death of small business or business ownership. mr. rubin, in your testimony you cite figures showing industries where industries outsourcing is common, they've shown higher levels of employment law violations, lower wages and job security. and these figures confirm what i've been hearing in minnesota from subcontracted janitors across the twin cities area who have been fighting the bargain
for better working conditions. can you tell us about what your 30 years of speernts representing struggling -- experience representing struggling low-wage workers and what has been the effect of lowering it during the reagan, bush era decisions and what affects have they had on wages and the opportunity for americans to work their way to middle class life? mr. rubin: it's had a significant decrease. wages are lower. there are fewer benefits. i've experienced this in case after case. workers fear, complaining, bringing lawsuits. they can't find attorneys who would pursue claims. they have no right to bargain. the percentage of bargaining in these industries are extremely low. and large companies are encouraged because of the weak laws, the formerly weak laws to exert more and more control. the reason it's hard for a
small business person is that a large company dictates price and so many other elements, but because of modern technological advances they can audit the workplace more. it's not just g.p.s. and barcodes anymore. they know exactly in many industries, warehousing in particular, deliveries, where any product is at anytime, what any worker is doing at anytime. workers have to press bump bars after they finish every particular task. so there's much more detailed control over what the workers do. the larger companies know about it and they're pressuring their subcontractors to cut labor costs to the bone, knowing that the workers can't complain. senator franken: so what we've seen in the last 31 years is really a flattening of the median wage, if not lowering, and we hear on the campaign trail for the presidential campaigns talk about the middle class and getting in the middle class. those aspiring to be in the
middle class. that they workers can't afford to be a good parent. you have, you know, we talk about the woman who worked as a ousekeeper in a hotel. people in warehouses. janitors. . their wainls make it impossible for them -- i hear from them saying i can't make enough money to be a good parent. a single parent who has to say, this isn't their only job. they do two jobs. they don't make enough money so that their kid can go to camp in the summer. and they can't be home with their kid because they are working two jobs. that's because they are getting
uch low wages from these subcontractors who are being controlled by the contractors. his isn't about your business. this is about -- it's about a different thing. and to say we are killing the american dream with this, the american dream worked pretty ood before 1984. we are not trying to kill the american dream. we are trying to stir the american dream. senator alexander: thank you, senator franken. senator roberts. senator roberts: thank you, mr. chairman. thank you for holding this hearing. thank you-all for being here today. i want to point out 96% of the businesses in kansas are small businesses. that's the answer in terms of economic development for our state. those folks being our job creators, we need to act as partners with businesses and not
against them to ensure high me, high nt -- pardon employment and economic growth across our state and nation. i think this new standard delivered by the national labor relations board seems to stand in the way of opportunity and growth. millions of franchisers, franchise east, contractors, subcontractors, temporary staffing firms will be harmed. in addition to those who wish to be employed by one of those industries. i have heard from folks all around kansas asking me what this means for their business. that means uncertainty. that means they can't really predict the future. that's a pretty good question. the uncertainty of this new standard is open-ended. just yesterday i had a chance to hear from a woman in wichita who recently opened her first business as a franchisee. she opened the doors 10 weeks ago. the endeavor of this concept began six months ago. and the experience she needed to start began a lifetime ago
working with our local businesses in the communities. she got a lot of help. as a franchisee and new business other, she looked for a strong brand name that would do well in her community. she enjoyed the franchise model, which included the foundation from which to launch her business. when asked if she would still have opened her dream store if this standard had been in place at that time, she answered, you know, i'm not sure. this would have been a huge red flag. i didn't open this store to have others run it. ms.franchisee happens to be stockeland. this is a designer outlet. it's an outstanding business. i think she makes a good point. this standard when applied disincentives young entrepreneurs from start-ups and would make franchisers libal for folks they didn't intend to be libal. -- libal for. ms. stockeland, you remarked in your testimony when you entered into an agreement with a franchisee you believe they are steining up to own and operate their own businesses, is that
correct? ms. stockeland: that is correct. senator roberts: are you explating anybody? ms. stockeland: i am not. senator roberts: your business model and the reputation of the franchise you have built. i see you hope to open 75 stores by 2024, is that correct? ms. stockeland: that is correct. senator roberts: i think that's a wonderful goal. i wish you the best of tubing luke in this tufpblete it's not a matter of luck, it's expertise. do you think the possibility of this standard applying to your new franchisees affect the number of entrepreneurs contact you and negatively impact the road you are trying to take? ms. stockeland: absolutely. it will also impact the interest to take those phone calls by me. senator roberts: i appreciate that. finally, a store owner in overland park, the fastest growing community we have in the state of kansas, full of small businesspeople and exactly the eople described by the distinguished senator when he
was in business himself. he said -- he said, look, i bought a business model not a business manager. and i fear when potential franchisees hear of this standard they will choose not to invest in the business in their community or what could turn out to be a family-run business. i don't know why we continue with all of the federal agencies involved with this regulatory overkill that makes it almost impossible to progress. i just had an old boy call me out in western kansas who said, i don't feel governed, i feel ruled. that's the problem. and i don't care if it's energy, education, small business, farming and ranching, or whatever. the regulatory overkill is unbelievable. i just don't know why we continue down this road. ms. stokeland, thank you for your example and i hope you're able to continue with the way you want to run your business. thank you all for your time.
thank you, mr. chairman. senator alexander: thank you, senator roberts. senator warren. senator warren: thank you, mr. chairman. historically if an employer violated the rights of its workers through, for example, an illegal firing, the employer would be on the hook for damages. today, though, some giant companies have figured out they can hide behind complex arrangements like subcontracts or franchises to dodge their legal responsibilities toward their workers. so i just want to pull this together about how this works. big parent company controls every tiny detail of what the workers do, including how much they get paid, how they are trained, when they have bathroom breaks. but , when for example, an employee doesn't get paid their guaranteed overtime, or when the employees want to exercise their legal right to collective bargaining, the big company steps back and dumps all the legal responsibilities and all the costs on the subcontractors. that way the big company gets
all the benefits of having a bunch of employees with none of the responsibilities that go with it. small companies can't do that. they are still on the hook to their employees, but not the big guys. so, mr. rubin, you spent a lot ever long time representing workers who get hurt when their legal rights are violated, and the big parent companies, they are making the money, throw up their hands and say, don't look at me. the problems are for the subcontractor. how do we get to a point where little companies have a whole bunch of legal obligations to their employees but big companies can duck out on these basic obligations for their workers? mr. rubin: the laws had softened and that's one of the things that this new board decision strengthens again, to give large companies the opportunity not only to contract out the work but to contract out their legal responsibility when things go wrong, when the law is violated.
that's precisely what has happened with contingent workers in the modern economy. senator warren: what's happened is the nlrb has changed the standard through a series of case by case decisions. what's been the consequence of narrowing the definition of an employer over the last 30 years? mr. rubin: it's meant that there is far less meaningful bargaining because companies that control terms and conditions aren't brought to the bargaining table. there is far less responsibility. what happens in practice is that the first sign of complaint on the workplace floor, the larger companies simply terminates all of these are at-will contracts. they term mate the subcontractor. they terminate the workers. that's why in a warehouse workers' case getting an injunction that preserved the workers' jobs resulted in better wages and benefits for the first time and made a huge difference for these workers getting up to the middle class. senator warren: for these giant corporations what i'm hearing
you say is basically this change in the rule, earlier change in the rule at the nlrb has triggered a race to the bottom that has squeezed workers. mr. rubin: absolutely. it squeezed workers. also the small companies that employ the workers. they own the companies that benefit from this new arrangement from the race to the bottom are the ones who can get the work done with large corporations without having legal responsibility for the consequences. senator warren: into this comes the nlrb last august. they finally acknowledge the problem it had created back in the 1980's, and it began closing this loophole by broadening the definition of who is an employer and -- so that workers' rights would be protected under those circumstances. so, my republican colleagues didn't seem to have a problem when the nlrb narrowed the definition, but now that the nlrb is going back to the original approach that it had used for many decades, they want to pass legislation to stop the
nlrb. how would that affect workers? mr. rubin: it would be devastating to the workers. it would result in a greater race to the bottom than we are already experiencing, and with a bill that passes, that makes us even more public, more companies, more large companies, would be inspired to do precisely what these other companies have done to the great disadvantage of the types of workers i represent. senator warren: thank you, mr. rubin. i think this is pretty simple. the law says an employer has certain legal obligations to its employees, like collective bargaining, or responsibility when an employee gets hurt. and small employers have to abide by those rules. but some big corporations dodge the law by pretending that they are not employers. they don't fool the nlrb or much of anyone else, and now the nlrb has called them out on this. it is no surprise that giant corporations that use this scheme and their republican
friends don't like what the nlrb is doing, but let's be clear. the nlrb is following the law and standing up for american workers. which is exactly what the nlrb by law is supposed to do. thank you, mr. chairman. senator alexander: thanks, senator warren. senator hatch. senator hatch: thank you, mr. chairman. mr. kisicki, actually the assertion that this is a return an old standard, it isn't, is it? mr. kisicki: no, senator. in fact, it's quite a bit of overseedment by the board majority in this decision. because there was, in fact, no standard that the nlrb applied consistently at any time. in fact, it did not start even adjudicating cases where there was a dispute about what was and was not a joint employer until the 1960's. so this idea somehow the
standard existed is incorrect. in fact, the nlrb was so confused itself at times that it at times referred to entities as single employers when it, in fact, was intending to refer to a joint employer relationship. a single employer is essentially where one company is not truly independent of another and they operate together. it's almost an alter ego they'rery. senator hatch: in 2014 the nlrb finally issued a decision in the case that had been pending at the board for over 10 years called cnn america. the board found cnn to be a joint employer of employees provided by a contractor, tbs, despite the fact that the board certified tbs as quote, the employer, unquote, some 20 years earlier, as the board now found that cnn was a quote, joint employer, unquote, cnn then owed
back pay to hundreds of highly compensated employees. if the nlrb's own certification of employee status can be overturned and significant liability imposed, how can any employer in america feel confident that this liability isn't limiting them as well? another question to it, how many employers have the resources to engage in 10 years of legal litigation before the nlrb? mr. kisicki: senator, let me take your second question first which is how many employers can afford this. i don't know, but i don't think it's many. certainly not small businesses that are the engine of growth in this economy and have been for decades now. those companies cannot afford the hundreds of thousands of dollars, it's not cheap to try and litigate a case with the nlrb because the nlrb is the federal government and they do
the work. the unions don't have to spend the money on this. it is done by federal taxpayer dollars. i also want to correct a comment that my colleague, mr. rubin, made about there is no issue. there is not an unfair labor practice violation. that's absolutely untrue. the fact is the nlrb files complaints routinely against employers, this is its practice, if there is a dispute of fact that if they accept the employee or union's version of the facts, would constitute a u.l.p. not that they in fact have concluded it's likely that the employer actually violated the law. so let's go then to the issue that you raised with cnn and that certainty that's provided by the nlrb in labor relations. that's why this act exists. and again with all due respect to my colleague, mr. rubin, we heard a lot about other situations. i haven't heard anything about how those other situations
actually involved employees exercising their rights under the nlra. it is a different law. it has a different standard for determining who is an employer. that's absolutely necessary if the nlrb is to give effect to the purpose that motivated this statute in the first place. that purpose is to protect stability of labor relations in america. stability's been tossed to the wind in this last term by the nlrb. this case is just one of them. the cnn case you just mentioned, senator, is another. if employers cannot rely upon the federal government agency's determination that the employer of a group of employees, that is their obligation, the nlrb has to define the employer, not an employer, the employer, if they cannot rely upon that and 10 years later the nlrb can come along and just decide we are going to change our mind and now
you're libal for millions of dollars of back pay. senator hatch: mr. martin, i appreciate your testimony today. i heard you make the point that the small guys go go out of business, small quote, under the nlrb under the definition of joint employer. exposure of this under the new stand stifles many small models. they are successful business models. i i know many small business owners who got their start and able to grow their business from contracts with local family-owned businesses. ow will this new rule impact local business creation? and how will this ruling stifle opportunities for our nation's plumbers, electricians, and tradesmen, one of which i was at one time? afl-cio, ber of the too.
mr. martin: it provides so much instability and hard to go forward. repeat, you cannot -- companies like ours does not have the legal resources to fight the nlrb if they come to me and say you're -- because you're in direct control, are you a joint employer. i can't fight that. i don't have the funds to do that, which means i go out of business. as do subcontractors. they have the same problem. senator hatch: thank you, mr. chairman. senator alexander: thank you, senator hatch. senator baldwin. senator baldwin: i want to thank the witnesses today. i think it's important to briefly mention the underlying statute that we are discussing today. in 1935, congress enacted the national labor relations act to protect the rights both of employees and businesses. to encourage collective
bargaining, and to curtail practices that harm workers, businesses, and the economy at large. and congress gave the authority f the national labor relations administrative decisions and to just for changing workplace realities. and the supreme court has reaffirmed that authority of the nlrb. in my view, that's exactly what the board has done in this recent decision. i have such great respect for small business owners in america. i think, gets g, to the heart of the very matter of what it means to be a small business owner. more specifically does that small business owner actually
have the ability to manage their work force, or is that autonomy an illusion? the small business owners that i speak to from the state of wisconsin are a very proud and independent lot and they are risk takers and innovators. and they provide livelihoods for millions across the nation. i recently met with a group of wisconsin small business owners, both franchisors and franchisees. and they have been following this decision and they are concerned about the impact of the joint employer decision and what it would -- what sort of impact it would have on their businesses. so i want to gets into some of these specifics today. we have heard a lot of discussion about stability, bright line clarity, sort of all or none. but it seems to me that one would want to have the ability
to look at each of -- say each franchise agreement as unique an look at these issues on a case buy case basis -- case-by-case basis. is the new standard a blanket ruling that says in all cases these will be considered joint employers of a franchisor and franchisee? or independent contractor? or none. or is this a case by case analysis depending upon the relationship between the two? mr. rubin: it's a case by case analysis which is how the board adjudicates, which is how the board accommodates the law to evolving conditions in the workplace. the reason stability is furthered by this ruling is simply, in responding to my colleague, because if you require every company that can meaningfully affect terms and conditions to be at the bargaining table, you can have a
meaningful collective bargaining agreement. that's what further the goal of achieving labor peace. case by case is the way it's always done, done in the past, and the way courts do it as well. senator baldwin: under the nlrb ruling the board states, i quote, moreover, as rule, the joint employer will be required to bargain only with respect to such terms and conditions which it possesses the authority to control. end quote. if i am a franchisor and i do not possess the authority to control wages, hours, hiring, firing, or discipline, can i be forced to bargain over those terms and conditions? mr. rubin: no. the case decided by the general counsel's division of advice just last april both under the old standard and the new standard concluded that a franchisor was not responsibility -- responsible
for an unfair labor practice precisely, senator baldwin, because the franchisor did not maintain those elements of control over terms and conditions. senator baldwin: in looking at the case you just referred to, as you said, it was a determination, the general counsel issued a memorandum of advice, can you tell the committee a little bit more about how the freshy situation was different than the situation in browning ferries? mr. rubin: sure. in freshy, the franchisor had nothing to do with personnel policies. all of its guidance was entirely optional. the franchisee used its own employee handbook. it didn't use the freshy hand book. freshy controlled only aspects or had input only aspects pertaining to the product itself. there was no auditing. the franchisee trained its own staff. there was no consultation before
the individuals were fired by the franchisee. by contrast in browning ferries, they retained the right itself to terminate any employee. it set a cap on wages. it determined when the workers could work. it told them where to work. it decided when to have breaks. it decided what the speed of the line was. there is a world of difference between those cases and as you point out, in case by case adjudication, every one of these differences matters and that's why you need an experienced administrative agency that is familiar with the modern workplace to evaluate the facts and decide on which side of the line a particular case false. senator baldwin: thank you. senator alexander: thank you, senator baldwin. senator casey. senator casey: thank you, mr. chairman. i wanted to first of all note that the title of the hearing is, i think misleading. i won't go into the analysis of that. stealing is a crime. it's even a violation of the 10
commandments. we are nowhere near that in this hearing. i wanted to go back to the fundamentals not just of the decision and implications of it, but also the reality of what we see in the real world. i think, mr. rubin, had maybe the best summation of what the reality is for workers looking at page 2 of your testimony, you say, and i'm quoting, in the low-wage economy in which many of my clients are employed, wage and hour violations, discrimination, and other unlawful conduct is rampant. yet, the workers whose rights are violated rarely complain or join together to enforce the rights, unquote. then you go on to say later in terms of the advantage that the rior case is allowed that, and
m quoting here, the employer both ways. have it they are able to have the advantage of dictating the terms and conditions while avoiding the bargaining about those same terms and conditions. that's just the way i see it. i also think it's not -- this traditional standard that we are going back to now made a lot of sense. it spoke directly to this question of the control you have of the work and how much control you have. and then the conditions that were -- the three conditions set forth. that had to be met. direct or indirect control, over significant terms and conditions, that's a reasonable
inquiry when you're doing a fact-based analysis. number two, the joint employer would have the ability to control. you have to make a determination about that. d then thirdly, that joint employer was necessary for meaningful collective bargaining. i think that it makes sense in terms of the reality of the workplace today. the reality of the economy today with it's doubled in terms of the number of temp workers. but also it's not such -- it's not a test that is so constraining that it doesn't reflect some flexibility that comes with making a fact-based determination. i think it makes a lot of sense. i wanted to ask you, mr. rubin, it it --cular question the question of control. it's always difficult to pose a
hypothetical but could you walkthrough the lengths to which a company like browning ferries or companies like it would go to control subcontractors. mr. rubin: sure. first of all under the old standard it's so easy for a company to circumvent the direct actual immediate standard. all you have to do is set up a company, hire a company, and instruct that company to tell the workers what to do. but browning ferries did far more than that. browning ferries was so involved. there were 240 workers inside this plant sorting, cleaning, the recycling line, they were working on a conveyier belt. what they did was control them by setting the speed, productivity levels, deciding when to stop the line so they could take breaks. the mandatory terms and subjects of bargaining were almost all controlled directly and
indirectly by browning ferries. and the reality of the situation was that if browning ferries was dissatisfied with a worker, even if that worker passed the screening criteria, browning ferries could get rid of them. if the workers began to organize, browning ferries could get rid of the contractor all together. so the old standard was susceptible to manipulation and abuse, and the one that is were hurt were the contractors seized in the middle and certainly the workers. senator alexander: senator isakson has questions. i would say this to senator baldwin, senator casey, consulted with senator murray, we'll go to a second round if any of you have further questions. senator isakson. senator isakson: thank you, mr. chairman. i have a question i want to ask mr. martin. before i do i want to snage senator warren with regard to her statements regarding big businesses. i listened to the testimony and
looked around to senator baldwin who has kohler in her state. and her she in pennsylvania, and coal coca-cola in georgia. not necessarily a bad thing in america. we have to be very careful about castigating people generically. we ought to call out people because they violated the law or intent of it. out of respect for the senator, i'll submit that statement for the record rather than take advantage of her absence. my question is this. mr. martin, you ever heard of a lady named abby holiday? mr. rubin: no, sir. it tor isakson: i do, sir mr. martin: i do business. senator isakson: she's 9 p years old. she started out as n independent contractor and built one of the most successful businesses in america based on the model of incentive, compensation through sales and commissions, and independent contractor model. if you take one -- one of the things i have concern about, if you construe the indirect
responsibility, indirect control too liberally to business you'll do awith small business, would you agree? mr. martin: yes. senator isakson: stealing the american dream of business ownership is exactly an appropriate title because abby holiday could not have done in dallas what she did if that law was in place in its application today. there are thousands of others in sales business, construction businesses, agricultural businesses, that operate under an interpent contractor. there is an application about stealing the opportunity for ownership that pays exactly to what we talked about today. i appreciate the time, mr. chairman. i yield back. senator exearn: i'll go to smart murray then smart baldwin then senator casey. senator murray: i'll just make a remark that i think all of us understand that big businesses, there are good big businesses and no one is denigrating them. there are great small businesses. we all want them to survive. what i think is the important
point about this ruling is that we do have some corporations who are completely disconnected from the workers that they control. they don't have to hold any liability before this hearing on any kind of poor working conditions or poor standard or anything. because they had a franchise owner that was carrying all the liability. this is not fair to franchise owners themselves who can't control their labor market because somebody else is telling them how to do it. and they are taking all the liability for it. i just want to make that point because i think it's really important to this ruling and how we go forward. i do want to thank all of our witnesses today for your i appreciate you being here. senator alexander: senator baldwin? senator baldwin: one more. i indicated i had met with a oup of franchisors and
franchisees recently, specifically about this case and one of the concerns i heard from them was in regard to the ability of the franchisor to provide training to help their franchisees be successful, but also to protect their brand. there was a concern that the new standard might limit this ability. now, we had a back and forth about the freshy case and the . morandum of advice we see in that case that the franchisor provided an operations manual, with mandatory and some suggested specifications standards, operating procedures, and rules that were perfect script -- prescriptive. in addition, all franchisee owners and managers were required to undergo a four-week training period before a new
franchise could open. the franchise agreement also stated that freshy could terminate the franchise agreement for 20 different iterated reasons, including franchisee's failure to comply with the operations manual. based on this information do you believe that the franchisors that i met with in the state of wisconsin should be concerned that their training programs could lead to being how those joint employers in and of themselves? mr. rubin: i don't think that should be a concern. no. i don't think that would be a problem. the training by itself. in my experience, in dealing with employees of franchisees, the only time we get into a joint employer issue is when the franchisor exercises far more control than in the freshy example or the example that we heard from my fellow witness this morning. many franchisors control the --
every detail of what goes on in the workplace, including not only how the product is friend to the customer, but what the employees do, how they do it, when they do it, and a range of activity that is they closely monitor in real time. senator baldwin: thank you. ms. stockeland: senator baldwin, may i speak? it new to this. i just want to say that there's been some discussion about how i feel senator franken brought up, myself, senator murray also, and a small business owner are excited and don't feel this applies to me. i would say that what mr. rubin just said is case in point. he said that he doesn't think hat an operations manual would -- excuse me, i'm'nies. he said he doesn't think that they should have concern over that and that's just the point. there is no definition here.
so who decides if a franchisor is big or small? where does that line come? who decides that and when is that decided? and that uncertainty is what gives me cause to pause and look at further expanding my business because i don't want that liability of having to run and operate employees and those labor standards across the franchise systems that i have. thank you very much. mr. rubin: i believe the senator asked my opinion. so i ref fasted it with i think. the way we analyze issues as they arise on case by case basis. we look to precedent. we look to things like advice memos. where we have an analysis in a case like freshy, that guides us. i can say confidence that would not be a problem for you and your franchisees. senator alexander: senator casey. senator casey: one point on this question of franchises.
i don't think this decision is directed that way. directed at franchises in any way. if you look at the nlrb majority decision, even explicitly speaks to this question when it says the decision is not on franchises. i'm reading now, this is page 20, footnote 120 of the decision, quote, none of those situations, meaning franchise situations, are before us today. we decline the descent implied invitation to address the facts in every hypothetical situation in which the board might be called on to make a joint employer determination. unquote. i think even the decision itself is explicit on the question of ranchises. senator alexander: thanks to all of you. i'm just -- don't have a quefment i'm make a closing
comment. i think all four of you for coming. we appreciate your comments. if you have anything you'd like further to say, we would be glad to receive it if you'll give it to us in the next few days. my thought about this is i think stealing the american dream is pretty accurate. his is why i think so. there are 780,000 franchise operations in the contry. the new joint employer standard it, which according to observers like mr. navarro of the ucla labor certainty who i quoted earlier, he stated under new joint employer definition, you no longer have to show direct control over operations. if you have a franchise agreement or contractual relationship depending on the industry, that's enough to show you have influence over working conditions. the language in this new decision is if you have
unexercise potential to control or if you have indirect control, it's hard for me to see how there could be any franchise in the country. over which the franchisor would not have some unexercise potential to control or some indirect control. if that is the case, it seems to me the inevitable consequence of decision like this is to greatly reduce the number of franchise opportunities in america. people like miss stockeland will thing twice before opening a new franchise. that will reduce the growth of new jobs in america. that will reduce, in my opinion, the growth of opportunities to move up the economic ladder. we obviously have some strong differences of opinions on this committee about it, but we have 45 senators who would like to restore the law to the way it was before the browning ferries decision and i hope other senators will join. i thank the witnesses once more. the hearing record will remain open for 10 days.
members may submit additional information and questions for the record within that time if they would like. the committee will stand adjourned. [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]
>> if you missed any of this discussion, check c-span.org to see our programming schedule for the day. it may reair later this afternoon. u.s. house is set to gavel in at noon eastern, about 20 minutes from now. 10 bills considered under suspend the rules. legislative business starts at 2:00 p.m., although members are expected to gavel out and then come back in at 4:00 p.m. to consider those 10 bills. including ones on religious freedom and the transportation security administration employee screening. again, the house coming in at 4:00 p.m. eastern for legislative business. also let you know that members will vote at about 6:30 eastern with special order speeches following. the house coming in at noon eastern. live coverage here on c-span. to get us there, conversation with congresswoman loretta sanchez from this morning. she's a member of the armed services committee and she discussed u.s. military and
training strategy against isis. s representative loretta sanchez, democrat from california, a member of the armed services community -- committee. good morning. guest: good morning. host: thank you for joining us. the paper this morning all have stories about the bombing in afghanistan that happened in kunduz. can you inform those of us who are not following closely. what went on and what do you think of the role of u.s. military and that operation? guest: i think there was a u.s. gunship going into one of the main areas where the taliban has overrun. u.s. department of defense had said that it was to protect our american troops who were in the fight there. the reality, it is turning out that, or they have confirmed that the gunship was actually in
there because it was called in by the afghan army forces. consistently a hospital run by doctors without borders. deathswere several and many casualties. everyone is trying to figure out what happened. host: what do you think about the change in story from what we initially heard to what we are now hearing, what does i suggest to you? guest: not good. this is always the difficult part. especially for a policy maker like myself, someone who is trying to decide do we stay in afghanistan, do we put our military there, who do we back there, how do we do that, what types of moneys are the american taxpayer putting towards that? we don't have a good sense, sometimes, of what is going on.
worse, for a policy maker, it is not like i can fly in and take a look at what happened and say -- we are always subjected to the fact that it is a combat zone. in some ways, we are relying on the military to tell us what happened. it was, in particular, our own military that made this mistake. it is difficult. host: what is the best way forward? given what we know and what we have to find out? guest: it is preliminary. is our military making the investigation. we are trying to get the real facts on the ground. call.the president's he is the commander of those forces. to decide what to do. wants to, congress interject itself in this, but this is a very tactical mistake. prices and overall policy mistake. what it reflects to a lawmaker is what the heck is going on in
afghanistan? host: do you expect hearings? well we hear testimony from those involved? of thethe commander forces in afghanistan will be here in washington dc -- washington, d.c.. i would anticipate this would be whatr one on the list of both democrats and republicans on the armed services committee will be asking about. what specifically are you going to be asking and searching for? guest: what is going on in afghanistan? what are we really doing at this point? how could this happen? it seems, because again, i don't have all of the details, and everything is hearsay at this point. i am not on the ground eating able to ask questions, it seems that from the hospital came the call saying you are bombing a
hospital, this is doctors without borders, please stop this. in the fog of being shot at, or bombed. yet, he continued. -- it's continued. it is a major problem. host: there is a story in the a verse today about the possibility of the obama administration leading 5000 troops into afghanistan from the 1900 or so that remain. first of all, what do you think about that prospect and is it necessary? guest: i haven't spoken to either the department of defense or to our administration to see what it is they are contemplating. that the minute obama came into office, i send a message to him saying listen, afghanistan is a major problem. you either have to get out or get in. this lingering of what has been going on with respect to the corruption of those governments in their, the election that went for thethe inability
, the types of moneys we put in their, making deals with the taliban. it is a bad situation in afghanistan. host: the post story says there is no final decision. according to the story, 3000-5000 troops envisioned under general dembski's proposal certainly, we put the pressure on afghanistan. remember why we are there. the training camps, the building up. laden'sama bin financial tutelage to do the terror attacks that happened to us on 9/11. there is a direct correlation to the. to be in the country 13 years later or however long it has been, 14, i guess, that begs the
question what is our role there and what is happening? host: representative loretta sanchez, our guest joining us to talk about military operations in not only iraq and afghanistan but other areas of the world as well. you can call to ask questions, 202-748-8001 four republicans, 202-748-8000 four democrats, and for independents, 202-748-8002. if you want to tweet or ask questions for our guests, you @ wj. to c-span i want to ask what is going on not only as far as u.s. operations, but the russian involvement. how has that complicated it in your mind? guest: it has completely collocated the situation. powers inproblems -- a very limited airspace and area in a possibility of combat
modes. they could run into each other at any point. it could escalate completely out of control. it is a bad situation. remember what is happening here. russia has gone in and said listen, we are trying to get to isis. what the united states is trying to do is go after isis. the united states has said that assad has got to go. russia has propped up assad with the dynamic with him. you have syrian rebels, we don't whomany, who, how many more have been fighting for their "democracy" against a side, looking to take down a sid -- assad. you have a series of players and their in confined space were serious things could happen if they run into each other. host: richard: in the washington
post says this is that a fair characterization? guest: i would not say that at all. people think it is easy for us to go into any country any time anything is going on in that country and interject ourselves. her member, the president has to follow laws. the governing law around the world is the united nations charter which says we have to have specific reasons of why we go to war. there are four reasons. if someone attacks us, we have the possibility to go to war. if we think they are about to inack us, if we are invited by the government to help them,
i.e., allied. the fourth is if we have a u.n. resolution from the security council that says go in. we have none of those four. the present has none -- the president has none of those four in order to go to syria. that makes the question, all of these people run in and say we have to go to syria, we have to get rid of assad. you can't march into a country to get rid of somebody. that is not the international law we live under. host: the training of syrian rebels under the united states spending a lot of money to do so. figure?you do with that guest: you are looking at somebody who has always questioned that strategy. i will cut you wide. iraq, and we in
are not even talking about rebels. we are talking about the government. i saw, let's go in and train and equip in iraq, a complete failure from my standpoint. we have seen in afghanistan. we have these afghan armys calling in an airstrike on a hospital that has nothing to do with the combat going on. now we are doing it with syrians. some are very well intentioned, but it isdemocracy, difficult to figure out who these people are, how to vet then when the whole country is falling apart. whether we are vetting them to go after assad or whether we are training them to go after assad or to do what we want which is eliminate the threat of isis. i have not seen this strategy worked very well. host: our first caller from you is from new york, david. go ahead. caller: good morning, conyers
moment -- congresswoman. you please share with us why it is that congress is not decisively going after the main cause, the root and source of terrorism, saudi arabia? sponsoring isis, al qaeda, taliban, and told them point blank that they should stop once and for all their ideological and financial, military support of these groups which incidentally, our government in the 1970's, gave them the blessing to go ahead with because we were fighting russia and afghanistan. if we do that, we don't have to get involved in these countries. they can sort it out themselves. certainly, you reap what you sell. -- sow. definitely in this weather was war, the russians, the united states, and what happened
in the middle east after the fall of the cold war. the continuation or uprising of iran. i voted not to go into iraq because i believed it would destabilize the area and we didn't have a good game plan for what happened after. we got rid of saddam. the rise of iran as an inferential player sitting there. i believe there are some in the policymaking world that see saudi arabia and others in this, if you will, counterbalance to a iran and its terrorism going there. there are competitions with that. who knows? i don't know. believe me, i have asked a lot of questions about the communities -- committees i have sat on and with respect to the administration of who is what and who is it that we are working with, saudi arabia and others, that would make us not put our foot down and say, this
has to stop. you are also destabilizing what is happening there. host: here is anthony from new york for our guest, democrat line, hi. caller: thank you very much for the opportunity. representative sanchez, do you foresee any hearings in the way of accountability for the invasion of iraq, or whether be any policy changes or anything implemented to safeguard the united states military from being infiltrated by people who came to office be it george bush, rumsfeld, condoleezza rice. it seems as though there was an old terrier agenda that drag us agendaaq -- ulterior that drag us into iraq. there was no justification. it was a war crime. children not the account ability of those people who have created a disaster in the middle east?
should there not be accountability? there is no end in sight and the amount of misery we have caused these people. it makes no sense to the american seditions, iraqis, afghani's, i don't see any of them in my neighborhood. they do not drop bombs on my head. i don't understand why we have destroyed a civilization. the world is tough enough on all of us. not to mention, we can't afford what we have done. this incursion is beyond the pale of anything -- we can't even take care of detroit, our own cities in this country. host: what our guest respond. guest: first of all, thank you for asking the question. i think that question has been asked over and over. to your first point, do i see congress opening an investigation into that, etc. the way congress is working today, i don't see the ability in a by patterson -- bipartisan
matter to look for a category from the previous ministrations or the consideration of some of this. i take that to heart. i take this seriously. that in order for america to work, our system of government, you have to have a counterbalance. you have to have legislative, .dministration, judicial system it is the responsibly of the congress, the representatives of the people to take to task and investigate the administrative, the executive powers. some of which it completely, in my opinion, went the wrong way. again, i will reiterate. i voted against the iraq war. i was one of the strongest people on the committee to question rumsfeld, his actions, our strategy, what was going on, the type of money we spent.
that is why we have to be careful with this syria issue. we have libyans, we don't know where egypt is going. it seems to be stable right now, but we don't know. rock, of course, we know is falling apart. it has isis in there, etc. -- iraq is falling apart. everyone in the congress rushes to use the military as the only tool we have whenever a problem arises somewhere. fly zone, no-fly zone, bond these people, put troops on the ground, send in special forces, do the seals. that is one tool that we have to use. it has been used and overused. it is an expensive way to do business. it is not necessarily the right way to do business. i sit on the armed services committee, i am a married to a former colonel out of the u.s.
army infantry. i have a son who is going into the u.s. army. we consider ourselves a military family. i am what to tell you we cannot continue as the solution to everything to send our troops in to do business. there are other means in which we have to do that. o-matic means -- diplomatic , the, actual intelligence economics of the situation. particular the bush administration used the military far too is >> we'll leave our cofrpbl of this discussion from this morning's "washington journal" at this point for live coverage of the u.s. house. the chamber about to gavel in at noon eastern for morning hour speeches. they are expected to adjourn until 2:00 p.m. for brief speeches. and then after gaveling out again, members will return after
4:00 for legislative business. there are 10 bills to be considered under suspend the rules today. including bills dealing with international religious freedom. another considering screening of employees of the transportation security administration. votes after 6:30 eastern. now live coverage of the house here on c-span. the speaker pro tempore: the house will be in order. the chair lays before the house a communication from the speaker. the clerk: the speaker's room, washington, d.c., october 6, 2015. i hereby appoint the honorable adrian smith to act as speaker pro tempore on this day. signed, john a. boehner, speaker of the house of representatives. the speaker pro tempore: pursuant to the order of the house of january 6, 2015, the chair will now recognize members from lists submitted by the majority and minority leaders for morning hour ebate. the chair will alternate recognitionwe