ONCE AGAIN, Washington politicians are pushing for major policy changes that would undermine businesses and disrupt business relationships throughout Virginia and across the country. If these efforts are successful, they could compromise the viability of a number of often interwoven business models, setting off a chain reaction that will cost local jobs, threaten Virginia businesses, and put our economic recovery on shaky ground.
The legislation in question is the Protecting the Right to Work Act (PRO Act), and it currently is being cosponsored by just about every Democrat in the Senate, except for the two senators from Arizona and Virginia Sen. Mark Warner.
The independent business community appreciates Senator Warner withholding his support of this economically devastating legislation and is counting on him to continue to do so.
The PRO Act would make major changes to what it means to be a “joint employer.” As background, when two or more business entities share certain employer responsibilities for a worker, then they are determined to be a joint employer under the National Labor Relations Act.
In recent years, the specific factors that have been used to define what it means to be a joint employer have changed as each new administration has sought to put its own personal stamp on federal labor law.
In 2015, the Obama-era National Labor Relations Board made a hugely consequential choice, known as the Browning–Ferris Industries decision, that completely redefined the joint-employment standard, making it much more complicated and confusing to determine who is and isn’t a joint employer.
This, of course, created new burdens and compliance costs for businesses, while at the same time undermining contractual relationships between different types of businesses as well as the contractors, subcontractors, and vendors or suppliers they use and rely on every day.
After hearing an outcry from small business owners in Virginia and nationwide, the Department of Labor actually set a final rule overriding that disastrous 2015 NLRB decision in January 2020.
The DOL’s new rule greatly simplified and streamlined the criteria used to determine joint-employer status. That rule change provided some much-needed clarity that put many small business owners’ minds at ease, as it greatly decreased confusion as well as compliance costs.
But some politicians just can’t leave well enough alone. One of the biggest problems with the PRO Act is that it would overturn DOL’s rule and codify into law the 2015 NLRB decision that created so much uncertainty across so many Virginia businesses and industries.
This would have enormous, negative repercussions for many interlocking businesses and industries across the spectrum of Virginia’s economy.
Particularly for Virginia’s wholesalers, distributors, franchisees, and small businesses, the impact of reverting the joint-employer standard to what it was under the Browning–Ferris Industries decision cannot be overstated.
It would create serious confusion and uncertainty, given how many of the business models in our respective industries often overlap or connect at some point. With so many moving parts and different players operating as self-employed individuals or independent businesses of their own, changing what it means to be a joint employer could threaten business relationships across the board.
That includes wholesalers and distributors as well as franchisors and franchisees, another successful business model that has helped so many Virginians achieve the American dream of owning and operating their own business. Under the PRO Act, these small, independent business owners across the state would find it harder to grow their operations, hire the workforce they need, and reinvest in their communities.
The last thing Virginia’s economy needs right now is major changes to labor policy that will undermine the strength of local businesses.
Let’s focus on helping Virginia recover from the recent economic downturn by empowering our businesses to re-invest in themselves, create new jobs for hard-working Virginians, and support strong local communities. Senator Warner should continue to make that his goal and stay far away from the business-killing PRO Act.
Jeff Smith, III is president of the Virginia Wholesalers and Distributors Association. Nicole Riley is the executive director of the National Federation of Independent Business–Virginia.