Despite widespread national dissatisfaction with Congress, it is still the country’s best check against government overreach and unaccountable bureaucrats trampling on American job creators.
Nowhere is this more evident than in its attempt to save small businesses and job creators from the overreach of an out of control National Labor Relations Board.
A labor union dominated agency whose new “joint employer” standard could cut off a well-worn path to the middle class. The House of Representatives is introducing the Protecting Local Business Opportunity Act (PLBOA), which would reestablish the traditional definition of employer and keep the path to the middle class unobstructed for millions of Americans who want to own their own business.
A little background for those who may not closely follow the many recent changes to the country’s labor law: In August the NLRB members voted to overturn longstanding precedent regarding who constitutes an employer. It broadened the definition from those who exercise direct control over wages, benefits, and working conditions to entities that have the mere “right” to exercise “indirect” control over employment terms.
On paper, this might not seem like a titanic shift. In reality, it upends the construction and home building industry as well as the franchise model (in addition to numerous other business relationships) because employers now become liable for their subcontractors’ standards. In turn, subcontractors and franchisees become glorified employees of the contractor or franchisor, sapping their independence, initiative, and incentive.
Increased liability will increase the costs and headaches of subcontracting. It will cut off one of the most well-worn paths to good careers, especially among minorities, who are disproportionately represented in the construction and building industries and who make up a disproportionate number of the country’s franchisees. Fearing lawsuits, employers will become far more selective as to who they select to offer a franchise prioritizing established players over upstarts.
This is especially notable for home building firms, which rely on an average of 22 subcontractors to construct a typical home. It is unclear whether basic actions like setting a home’s completion date, the job site hours, or other basic standard for subcontractors would trigger “indirect” control under the new joint employer status. This will also drive up the cost of housing. It will force many small builders out of business as it becomes too costly for them to use the subcontractors necessarily to keep their business operational.
The Founding Fathers recognized the dangers of one branch of the government going on a power-trip. They created checks and balances. “If men were angels, no government would be necessary,” said James Madison. “If angels were to govern men, neither external nor internal controls on government would be necessary.”
While Congress considers the PLBOA to reign in the unelected bureaucrats at the NLRB, it should also look to check the power of these unaccountable administrative agencies in general that were never intended to have so much power in the first place.
Alfredo Ortiz is CEO and President of Job Creators Network