H.R. 4366: Save Local Business Act

This bill, known as the Save Local Business Act, aims to clarify how joint employment is defined under two key labor laws in the United States: the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA). The changes proposed by this bill focus on the criteria used to determine when two or more employers can be recognized as joint employers of the same workers.

Changes to National Labor Relations Act

The bill amends the definition of "employer" in the NLRA. It specifies that an employer can only be considered a joint employer of another employer's employees if they:

• Directly and actually exercise significant control over essential aspects of employment.
• Control hiring and firing of the employees.
• Determine the pay and benefits for these employees.
• Supervise the employees on a daily basis.
• Assign work schedules or tasks.
• Discipline the employees.

In essence, both employers must have direct involvement in these key areas for joint employer status to apply.

Changes to Fair Labor Standards Act of 1938

Similar modifications are made to the FLSA, where the definition of "employer" is also adjusted. The bill states that to be considered a joint employer under the FLSA, the same criteria from the NLRA must be met. This means that a joint employer relationship would only be recognized if both employers have significant control over the employees’ terms and conditions of employment, as outlined above.

Implications of the Bill

The proposed amendments intend to provide greater clarity on what constitutes joint employment, which could impact numerous businesses that rely on franchise models, subcontracting, and other forms of indirect employment relationships. By limiting the conditions under which two companies can be classified as joint employers, the bill seeks to reduce the legal uncertainty that currently exists regarding employer responsibilities and liabilities.

Relevant Companies

None found