PRO Act Series: Joint Employer
The Good, the Bad, and the Ugly
- By [ Evan Armstrong ]
- 02/18/2021
The Good: Expands the Power of Labor Bosses
Unfortunately, the PRO Act is only good for organized labor and union bosses. The legislation would tilt the balance of power significantly from workers and employers to the detriment of the entire economy. The long-standing rule indicates an employer must exercise actual, direct, and substantial control over another employer’s workers to be considered a joint employer. The PRO Act would expand the application of a joint employer standard to require only a theoretical, indirect, and limited right of control over employees before joint employer liability would attach. In short, it would allow a union not only to organize a single organization, but other organizations that may be indirectly connected via modern business arrangements. Such a standard would allow organized labor the opportunity to organize against an entire retail supply chain and potentially the entire retail industry through sectoral bargaining.
The Bad: Uncertainty in Retail Operations
As RILA submitted in its public comments, retailers would face a wide array of potential uncertainty under the PRO Act joint employer standard.[1] Because the legislation would expand the number of business arrangements subject to joint employer liability, retailers could face these issues, for example, when they assess whether to contract with labor service providers for warehouse and distribution assistance; contract with firms that specialize in providing courier/delivery, security, janitorial, or landscaping services; or partner with third parties to provide marketing, repair, or other non-core services within a particular location or facility. This standard would affect 44 percent of private sector employees and lead to $17.2 billion to $33.3 billion in lost annual output for the economy by complicating many business-to-business contracts and arrangements.[2]
The Ugly: Harms Small Businesses and the Retail Supply Chain
Under the PRO Act standard larger companies could be more likely to subsume small local businesses and suppliers in order to mitigate the risk of the vague “indirect control” standard. Rather than building an efficient and effective network of small businesses and individually owned enterprises, the PRO Act joint employer standard would stifle entrepreneurship, business innovation, and flexibility.[3] In addition, the standard also hampers retailers’ efforts to encourage “corporate responsibility” among business partners, suppliers, contractors, and vendors to the detriment of workers, consumers, and communities.Retailers are focused on building a 21st century retail workforce that is diverse, innovative, and skilled. To realize this goal, we need modern thinking that reimagines outdated labor laws which impede innovation, disrupt communication between employers and employees, and stifle employee rights. We encourage lawmakers to reject the PRO Act and instead work on forward-thinking proposals.
For more information about RILA’s workforce policy initiatives, please contact Evan Armstrong.
[1] Public Comments
[3] https://www.uschamber.com/sites/default/files/documents/files/joint_employer_standard_final_0.pdf
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Investing in People
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Workforce
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Public Policy
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Human Resources
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Retail Works for All of Us
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PRO Act
