InsideSources

Republican Sen. Lamar Alexander discussed recent policy reforms with franchise owners Tuesday while also warning that one major issue is at a standstill.

The International Franchise Association (IFA) hosted the senator as part of its Legal Symposium Conference. Franchise business owners gathered to hear the latest on the legal and regulatory issues that impact them. President Donald Trump entering office last year has met changes aimed at creating a more business-friendly environment.

The White House and congressional leaders have worked to lower taxes and regulations in that effort. Sen. Alexander has played a critical role in that as the chairman of the Senate Health, Education, Labor and Pensions Committee. But one lingering issue, especially for franchises, is an updated version of what is known as the joint-employer standard.

“What I have discovered is that those who like a center-right administration, which I do, have a hard time accepting success,” Alexander said during the conference. “I can probably do the accomplishments and achievements over the last 15 months in a sixty-second version, which would be a better economy, lower taxes, fewer regulations, and more conservative judges.”

Alexander also points to reforms in the financial sector and new appointees filling critical federal roles as a good shift in direction. Labor Secretary Alexander Acosta was confirmed to the position April 2017. The National Labor Relations Board (NLRB) gained a new majority Jan. 12.

“That’s a pretty good list,” Alexander said. “In fact, if you only did the economy, taxes, regulations, and judges, at the end of four years, most administrations would be pretty happy with the different direction. So if you cut through all the tweets, the chaos, confusion, and cable television in Washington D.C. and look at the direction of the country, I think that it’s definitely different.”

President Trump was able to gain a majority vote on the National Labor Relations Board (NLRB) when his last nominee filled the fifth empty seat April 11. Former President Barack Obama still has two of his picks serving since they have staggered five-year terms. His board instituted the joint-employer update that the new majority is fighting.

The joint-employer standard is used to determine whether an employer is legally responsible for the employees of a company it contracts with. Alexander and other critics have argued the rule undermines the franchise business model which has been a pathway for people to launch small businesses and enter the middle-class for decades.

“The joint-employer decision during the last administration was a direct assault on that route to the middle-class,” Alexander said. “I’m glad to see this administration headed in a different direction on that, as well as in the micro-union decision and beginning to repeal the ambush election rule. These are all major decisions.”

The joint-employer standard was previously determined based on whether a company has direct control over the employment policies of another business. The updated standard is instead determined based on indirect control which critics have denounced as an overly vague overreach of federal powers that put employers at unnecessary legal risk.

The Obama-era NLRB was able to update the standard when ruling in a 2015 case involving Browning-Ferris Industries. The new board majority has struggled to reverse the change with the most recent setback being a possible conflict of interest involving board member William Emanuel.

Congressional Republicans have also attempted to roll back the updated standard as well. The Save Local Business Act was proposed to clarify the law so future administrations make such drastic changes in how it is interpreted. It is also written to fix an even greater underlying problem which has allowed for a patchwork of legal interpretations.

“So where are we likely to go on joint-employer,” Alexander said. “The House has done its job but in the Senate, to get legislative results you need a 60 percent vote. That’s going to be impossible to do without Democratic support. We don’t have any Democratic support in the Senate right now.”

Alexander adds that it likely comes down to labor board members to fix the problem in the meantime. Unless they are able to get enough support from their colleagues on the left, the bill is not going to pass. The House was able to pass its version of the bill with some Democratic support November 2017.

“I was only one of eight House Democrats to vote for the Save Local Business Act in November,” Democratic Rep. Stephanie Murphy said during the conference. “And I didn’t do it lightly. It wasn’t an easy vote. In fact, it was a very hard vote because many people whose views I respect were on the other side of the issue. But my door was open to everyone and we met with both sides.”

Murphy added that she was motivated to get into politics to find solutions and break through the partisan bickering. She decided to support the bill after hearing from franchise business owners – determining that the law needed to be codified so it can be clearly followed and that the definition detailed in the bill was reasonable.

Follow Connor on Twitter

Democrats are looking to gain a congressional majority during the upcoming midterm elections which could potentially have a big impact on franchise businesses.

President Donald Trump entered office with the promise of helping businesses and workers through economic growth. Congressional Republicans and the president have since worked to reform the tax system and roll back regulations. But the midterm elections could mean a major shift in direction if they lose a majority.

The International Franchise Association (IFA) is among the many business groups that have supported those efforts. While it’s difficult to predict what will happen, a Democratic majority could put those reforms at risk. Democratic House Minority Leader Nancy Pelosi unveiled what party leadership is focused on in her “A Better Deal” proposal.

“It’s very hard to predict if they controlled both chambers,” Matt Haller, the senior vice president of government relations and public affairs at the IFA, told InsideSources. “Nancy Pelosi has put out her version of the Better Deal. That’s what they’ll be campaigning on, at least from the leadership standpoint, and what would be her priorities were she to become Speaker of the House.”

Former President Barack Obama oversaw several notable reforms of workforce laws during his time in office. Those reforms have faced legal and congressional scrutiny with critics arguing that the changes went well beyond what the law allows. Some critics even countered the changes helped unions while hurting workers.

The Trump administration has worked to roll back a number of those policies through the Department of Labor and National Labor Relations Board. Donald Trump will still be president no matter how the midterm elections turn out, so Democrats winning a congressional majority won’t necessarily mean a lot of changes unless they have a way to work with the president or gain enough support to override vetoes. They could also slow down the administration’s reforms by blocking nominees to open positions.

Democrats have attempted to regain working-class support they lost in 2016 by introducing bills and proposals aimed at helping employees and the unions that represent them. A Better Deal was unveiled July 24 as a new economic agenda focused on the working-class. The plan primarily covers wages, job creation, labor unions, and workforce training.

“I think if you’re a business owner in the franchise space you ought to be very concerned about what that worldview is,” Haller said. “I don’t think that’s the worldview of even the majority of the Democratic caucus. And it still remains to be seen whether that is a platform, if there is a Democratic majority in the House, that they would support.”

A Better Deal has several provisions that have concerned the business community. It limits how employers can utilize independent contractors, and includes mandatory mediation and arbitration, a ban on right-to-work type laws, and shorter union elections. Haller noted particular concern over provisions that promise to raise the minimum wage.

Democrats have long argued that the federal minimum wage needs to be increased. The current national minimum wage of $7.25 an hour hasn’t been updated since 2009. The Fight for $15 movement and other progressive groups have helped popularize the idea of raising it to $15 an hour. Those opposed warn that it could limit job opportunities and raise prices because of the added cost of labor.

A Better Deal promises to protect workers by strengthening union power so they can better fight for workers. Democrats have claimed policies like right-to-work actually harm workers by undermining unions. Republicans counter the proposal would actually benefit unions at the expense of workers by limiting their choice.

The Democratic agenda has still gained plenty of support despite the criticism. United Food and Commercial Workers President Marc Perrone praised the proposal for strengthening the collective voice and negotiating rights of workers. The AFL-CIO praised Democrats for implementing a true workers’ rights agenda.

The White House and congressional leadership have instead looked to decrease the tax and regulatory burdens on employers – so they’ll have more time and resources to invest into their business and employees. Haller warns that those pro-business reforms are at risk of being lost if they lose a majority during the midterms.

“I think that most people understand that our country is very divided and Washington is done doing things this year,” Haller said. “But I don’t think there is a full appreciation within the business community, particularly in our membership, what a reversal of the positive economic policies could mean.”

The IFA works to educate its members on the political proceedings and proposals that impact them. The business association discusses these issues at its conventions and other industry conferences to raise awareness and get people involved – like by telling their personal stories of what it’s like to be a franchisee.

Follow Connor on Twitter

Republican Rep. Bradley Byrne is fighting to permanently rollback a policy change from the previous administration that has become a major point of contention.

The Save Local Business Act was proposed to address concerns over what is known as the joint-employer standard. The policy determines whether an employer is legally and financially responsible for the employees of a company it contracts with. The standard became the center of a major policy fight when it was updated in recent years.

Byrne, who introduced the bill, notes it was one of the first issues he encountered after entering office in 2014. The legislation is intended to clarify the law so future administrations can’t make such dramatic changes again. It is also written to fix an even greater underlying problem which has allowed for a patchwork of legal interpretations.

“I think this is a huge issue,” Rep. Byrne told InsideSources. “Not just for the businesses themselves, but also for our communities, the nation, and the economy. So I do believe strongly that we do need a legislative fix here. I think what we did was pretty common sense, which was going back to the definition that has existed for decades. We get it locked into law so we don’t have to go through this again.”

Former President Barack Obama oversaw many changes to labor law during his time in office with the updated joint-employer standard being one of the most significant. The National Labor Relations Board (NLRB), at the time, defended its decision to change the standard as a needed update that better aligned with what the law intended.

The NLRB decision drew considerable attention with the change being so drastic. The business community and other critics denounced the updated standard as a dangerous overreach of federal powers that went beyond what the law intended. They also argued the updated standard created a lot of uncertainty for businesses because it was so vague.

“It was creating confusion that just wasn’t necessary,” Byrne said. “Anybody who goes to work needs to know who their boss is, who is responsible for what they do, and for them and their safety. And this just injected some confusion that was unnecessary. It was actually going to make things much worse for employees.”

The updated standard, in the minds of critics, also highlighted an even bigger problem with the law itself being unclear. The law has allowed for a patchwork of legal interpretations from courts and federal agencies. The bill wouldn’t just rollback agency interpretations – it’s also intended to rein in the many different interpretations already out there.

“We needed to have a legislative solution to it,” Byrne said. “So we put together a bill that made clear we were going back to what has been the definition of joint-employer for decades so that everyone was clear and understood it was the person who has direct and immediate control over the employee is the employer.”

Before the Obama-era change, the joint-employer standard was determined based on whether a company had direct control over the employment policies, such as wages and the hiring process, of another company. The updated standard was instead determined based on what is known as indirect control.

“Now there are limited times when there is more than one person exercising direct and immediate control,” Byrne said. “In that case, you’ll have a joint-employer situation. Those are rare and they should be for a lot of different reasons. So we put together legislation, we were able to get bipartisan support for it and pass it out of the House. It’s now pending in the Senate.”

President Donald Trump has upended many reforms from his predecessor with the joint-employer standard now all but dead. His administration has already reversed the update but the next administration could shift course again. Byrne notes legislation is needed to solve that problem by making it clear what the limits of the law are.

“The NLRB has issued its recent decision and that’s good, that’s helpful,” Byrne, who previously worked as an employment lawyer, said. “But we need clarity across the board here, not from these decisions but from legislation. So I’m hoping the Senate will pick up our bill and pass it.”

The NLRB, under new leadership, announced late last year that it has overruled the previous decision which set the precedent for the expanded standard. Labor Secretary Alexander Acosta has also withdrawn from an earlier informal guidance upholding the new standard.

The Coalition to Save Local Businesses was formed in recent years by business groups that were concerned about the updated standard. The International Franchise Association and other coalition members have spoken with lawmakers, launched media campaigns, testified during hearings, supported lawsuits, and backed opposition efforts.

“We had people in industry who were really up in arms about it because of the costs and confusion it was causing them,” Byrne said. “So they were reaching out to members across the political spectrum here in Washington, and getting their attention because the people and businesses that were being affected by this have a really important impact on local communities.”

Byrne adds that the updated standard brought the necessary attention needed to fix the larger problem. The joint-employer standard has been defined by many interpretations for years – but it wasn’t until the last administration updated it that enough people realized there was a problem at all.

Congress has a very busy agenda and the joint-employer issue isn’t a priority at the moment. House Republicans were able to pass their version of the bill Nov. 7. The Senate now has to take the legislation up too. Byrne is optimistic his Senate colleagues will pick up the bill once they start clearing bigger items from the agenda.

“We have to get the government funded first and foremost which is a real problem,” Byrne said. “But Sen. [Lamar] Alexander, who chairs the Senate labor committee, was very positive about this bill after it passed out of the House. So as soon as he can find some time for this bill to be considered by his committee, I think he’ll be looking for that.”

Those opposed to the bill warn the updated standard was necessary because employers were sidestepping their legal responsibilities to their employees by utilizing contracting work. The Economic Policy Institute warned that without the update larger employers could avoid having to deal with unions by saying the people working for them aren’t their actual employees.

“That argument presumes there could be a situation or set of circumstances where there could be no employer,” Byrne said. “I call it the immaculate employment. There is no way there will never be an employer. There is always going to be someone who is responsible, both financially and otherwise. So I never bought that argument.”

Byrne warns that the consequences of not passing the bill could be severe. The standard could be reversed back if left-leaning president takes office again – with all the uncertainty, costs, and burdens that come with it. The bill is intended to ensure that couldn’t happen by making the limits of the law clear.

“Think of the expenses that businesses would have to go through to gain the type of legal counsel needed to do the types of things to protect themselves,” Byrne said. “Just the legal costs would be substantial.”

The updated joint-employer standard was potentially far-reaching with so many businesses contracting together. The franchise model was of particular concern since it relies on large brand names contracting with many smaller and independently-owned businesses. The updated standard, critics warned, could have undermined the entire model.

“Let’s take the franchise industry for example,” Byrne said. “If McDonald’s corporate becomes the joint-employer for every one of its franchisees then that’s going to destroy the franchise model. That means that McDonald’s is essentially going to take over, instead of these locally owned businesses.”

Follow Connor on Twitter

President Donald Trump was credited by a major franchise association Monday with the sector expecting to outperform the overall economy at an even greater pace.

The franchise model has been able to directly support millions of jobs – while indirectly boosting employment in industries like manufacturing and agriculture. It has also able to weather the sluggish economy over the last decade better than other sectors. Now franchise businesses expect even greater growth now that the economy is picking up pace.

The International Franchise Association (IFA) highlighted its economic forecast for the next year during a teleconference call Monday. Republican Sen. John Barrasso, industry experts, and a franchise owner discussed the findings during the call – crediting the president and congressional leaders for the expected increase in growth.

“Franchising has grown steadily, and given families and communities across the country much-needed stability,” IFA President Robert Cresanti said during the call. “Franchise business will continue to grow faster than the rest of the economy, only this year forecasts show this will be at an even more rapid pace.”

President Trump has looked towards regulatory and tax reform in his efforts to stimulate economic growth. Former President Barack Obama was seen by the business community as going too far with his efforts to implement new federal rules and regulations. The change in direction has come as welcome news to the business community.

“Most of our members are attributing this spike in confidence to Congress and the president’s pro-business policies,” Cresanti said. “High tax rates have been one of the biggest challenges to business growth for decades. Since the Tax Cuts and Jobs Act was signed into law, our members are incredibly optimistic about the economy, which is clearly reflected in this data.”

Sen. Barrasso believes franchise businesses will be helped by these efforts in two ways. They’ll immediately benefit from the lower business tax rates and decreased regulatory burden. The expected increase in jobs and wages generally might also be beneficial to franchise businesses – with customers feeling more confident and having more money to spend.

“There is this sense of confidence and optimism that you see all across the country,” Barrasso said during the call. “So from the standpoint of franchisees, this is going to be additional good news in the year ahead.”

The franchise model has been deployed by businesses in industries across the economy. It allows large companies to contract their brand name and products to smaller employers. Some franchises include thousands of companies contracting under the same corporation – like in the case of McDonald’s.

Cresanti notes that the franchise business model has created jobs twice as fast as non-franchise businesses since 2001. That growth, according to the forecast, is expected to be even bigger over the next year. The forecast predicts overall franchise economic output will increase 6.1 percent to $451 billion. Employment is expected to grow by 3.7 percent.

Trump and his administration have made notable cuts to regulations and other federal rules over the past year. The Competitive Enterprise Institute found in a report Oct. 1 that the administration had reduced the federal register by 32 percent. The American Action Forum found that those reductions have saved $560 million annually.

The IFA expressed particular concern when the previous administration updated what is known as the joint-employer standard – a rule that determines whether an employer is legally responsible for the employees of a company it contracts with. The business community denounced the new standard as being overly vague.

The franchise model was of particular concern since it relies on independently-owned businesses contracting with a larger company. The new administration has already started to upend the updated standard while lawmakers have been considering a bill intended to clarify that law was never meant to go that far.

Those opposed to the rollback of regulations warn it would leave employees without critical workplace protections. The Center for American Progress (CAP) has found in its research that the deregulatory and tax reform push has generally benefited the wealthy over middle and working class people.

Follow Connor on Twitter

House Republicans took a major step toward killing an Obama-era policy Tuesday, passing legislation aimed at better defining the law it was built upon.

The Save Local Business Act clarifies joint-employment. The business community expressed particular concern over changes made to the rule during the last administration. Critics argue the changes overstepped the intent of the rule and burdened franchises and other businesses that contract together with legal risk.

The National Labor Relations Board (NLRB), the agency tasked with overseeing labor dispute cases, started the current debate by changing how it ruled on joint-employment cases. The joint-employer standard determines whether an employer is legally responsible for the employees of a company it contracts with. Employers take on a lot of legal burdens and potential costs when they become joint-employers.

The joint-employer standard was previously determined based on whether a company had direct control over the employment policies, such as wages and the hiring process, of another company. The updated standard is instead determined based on what is known as indirect control, which the business community argued is overly vague.

The new legislation would essentially rollback the updated standard by affirming that businesses can only be declared joint-employer if they exercise direct control over the same set of employees. It also aims to address the patchwork of legal interpretations that have emerged over the years from different federal agencies and courts applying their own interpretations.

Former President Barack Obama oversaw several significant changes to labor law; the updated joint-employer standard was among the most significant. The business community denounced the change as a dangerous federal overreach. The NLRB defended it as an update aligned with the law’s intent.

The NLRB revisited the joint-employment standard during a handful of labor dispute cases in recent years. A labor dispute case involving Browning-Ferris Industries set the precedent for the new standard in 2015, and the NLRB was able to change the joint-employer standard by altering how it ruled on related cases.

The NLRB’s decision to update the standard is potentially far-reaching, given the vast number of business that contract together. The franchise model, for instance, relies on large brand names contracting with many smaller and independently owned businesses: McDonald’s is not one company but rather many contracting under the same corporation.

The Coalition to Save Local Businesses (CSLB) has been at the forefront of the opposition since the update roughly three years ago. Coalition members have spoken with lawmakers, launched media campaigns, testified before Congress, supported lawsuits, and backed opposition efforts from the business community.

The International Franchise Association (IFA) led the coalition alongside other industry groups. The U.S. Chamber of Commerce and IFA, both coalition members, launched an ad campaign Nov. 3 urging lawmakers to pass the legislation in the most recent effort intended to underscore the dangers of the updated rule.

The Senate will also need to pass the bill before it can be signed by President Donald Trump. The NLRB is likely to reverse the updated standard anyways if given a relevant case in which to rule on. Trump changed the dynamic of the five-member board by appointing two new members and a new chairman. His pick to lead the Department of Labor, Secretary Alexander Acosta, has already withdrawn from an earlier informal guidance upholding the new standard.

The updated joint-employer standard still has its defenders. The Economic Policy Institute claimed, shortly after the bill was first introduced, that it would make small businesses responsible for business practices often mandated by large corporations. The Teamsters argued in an email to its members Nov. 2 that the bill would leave many workers with no protections when their employers violate wage laws or their rights to organize.

Follow Connor on Twitter

The business community is ramping up its efforts to underscore the dangers of a recently expanded contracting rule ahead of a congressional vote Tuesday intended to reverse it.

The joint-employer standard determines whether an employer is legally responsible for the employees of a company it contracts with. Former President Barack Obama was in office when the standard was expanded to the dismay of the business community. House Republicans could soon kill the update if they vote to approve the Save Local Business Act. The Senate will also need to pass the bill before it can be signed by President Donald Trump.

Industry coalitions and business leaders have fought back against the updated standard since it was proposed roughly three years ago. They have spoken with lawmakers, launched media campaigns, testified before Congress, and supported lawsuits against the update. Their fight has boiled over in the last week with many urging lawmakers to pass the proposed bill.

The National Labor Relations Board (NLRB) first altered how the standard is defined by changing how it ruled on joint-employment cases. An employer used to have direct control over the employment policies of another company. The NLRB expanded the standard to what is known as indirect control.

The business community denounced the updated standard as being overly vague and unreasonable. Business leaders have argued it creates uncertainty while putting employers at an increased risk of legal problems. Nearly 200 trade organizations expressed their concerns in a letter Nov. 6 urging congressional leaders to pass the proposed bill.

“Without a congressional solution, businesses of all sizes will continue to be exposed to unlimited and unpredictable joint employment liability,” the letter, which was obtained by InsideSources, said. “The decision has created immense uncertainty and undermined the relationships between a brand company and local franchise business owners, contractors and subcontractors, and businesses and their suppliers and vendors.”

The U.S. Chamber of Commerce and the International Franchise Association (IFA) were among the industry groups that signed onto the letter. They have been fighting back against the updated standard since the beginning. They also launched an ad campaign Nov. 3 urging lawmakers to pass the legislation.

“Over the past three years, lawmakers have heard from countless franchise owners who need clarity on the joint employer issue so they can open more locations, create more jobs and provide the support necessary for their franchisees to succeed,” Matt Haller, the senior vice president for government affairs at IFA, said in a statement provided to InsideSources. “This ad highlights how legal ambiguity makes it harder for small businesses to expand.”

The National Restaurant Association (NRA) was also among the industry groups that signed onto the letter. The NRA has issued reports to lawmakers and joined coalition efforts against the new standard. Additionally, the association released its own letter Nov. 6 urging lawmakers to quickly pass the proposed bill in order to protect small businesses.

The Save Local Business Act is intended to affirm the earlier definition by clarifying what exactly joint-employment is. The proposed bill also aims to address the many other interpretations that have been applied by federal agencies and courts. The National Retail Federation (NRF) argues that without action retailers will face unlimited and unpredictable threats.

“The Save Local Business Act would establish a commonsense definition of employer under the National Labor Relations Act and the Fair Labor Standards Act,” NRF said in a letter Nov. 6. “Without congressional action, retailers and chain restaurants will continue to face unlimited and unpredictable joint employer threats that slow job creation and entrepreneurship.”

The NLRB has argued the standard needed to be updated so that it better aligned with what the law intended. The Economic Policy Institute argued July 27 that upending the updated standard would make small businesses responsible for business practices often mandated by the large corporations they contract with.

The Competitive Enterprise Institute (CEI), a free-market think tank, has worked alongside the industry coalitions since the start. CEI has released several reports in recent years intended to highlight the potential risks the new standard poses. It also issued a coalition letter of free-market advocates Oct. 3 who believe the bill will help address the problem.

Follow Connor on Twitter

International Franchise Association (IFA) president Robert Cresanti has spent recent weeks traveling the country to talk with employers about the current tax reform push and how it could impact their businesses.

Cresanti says he made it a point to travel so that he could truly understand what employers thought. They discussed a range of issues with tax reform becoming a prominent part of those conversations.

Republican leaders have turned their full attention toward passing tax reform in recent months. They are hoping to do something comprehensive that will help employers and workers by boosting economic growth. They have looked at rate reductions and simplification as pathways to accomplishing those goals. Cresanti believes that lawmakers are on the right track.

“I’ve been out with my members in the field at various locations, meeting with small businessmen and women,” Cresanti told InsideSources. “We’re talking to them about what are the issues that are at the top of their agenda. It’s abundantly clear that we have to have a comprehensive tax reform bill.”

Republicans have long been advocates for tax reform as a means of spurring economic growth. Their tax reform framework provided a glimpse into how the eventual bill might look when it was released Sept. 27. Republicans hope to significantly reform the tax code in a way that hasn’t been done since 1986.

“Franchises, the small business community, in particular, need it now more than ever,” Cresanti said. “We have massive costs that have been lifted onto these small businesses over the last many decades, be it from local governments or regional issues, in some cases counties. We have had increased minimum wages and other expenses.”

The IFA is the oldest and largest organization representing franchise establishments worldwide. It has 733,000 members. Small businesses encompass a sizable portion of their membership. Franchising is a popular business model in which large companies license their brands out to smaller, independently-owned businesses. McDonald’s, for instance, is comprised of many different companies operating under the same brand name.

“Hardworking Americans who have risked their homes and their mortgages, borrowed against their 401(k) to open a business are the people who are struggling and looking towards some kind of relief,” Cresanti said. “The burden for them is not just the raw number of taxes they pay, but the complexity of that tax code.”

Cresanti adds that pass-through businesses constitute about 80 percent of IFA’s small business members. The owners of pass-through entities are directly taxed on their income instead of having the corporate rate applied to their business. The framework promises to limit the maximum tax rate for these businesses to 25 percent.

Businesses that are structured as pass-through entities are often small and family-owned. Some have warned that pass-through businesses are not always small, and wealthy individuals might abuse the new system. The Institute on Taxation and Economic Policy (ITEP) found that wealthy individuals could use the pass-through structure to avoid paying higher taxes.

“While we’re seeing a good amount of economic growth, I can definitely sense talking with these entrepreneurs that there is a lot of headroom for a lot more growth,” Cresanti said. “This is one of the steps, and maybe the key step, that Congress can accomplish in the short term.”

Republicans have also made simplification a primary focus throughout their push for tax reform. They have argued that many businesses and individuals face an unnecessary burden in just complying with the tax code. The National Taxpayers Union found in a 2015 study that the economy loses $233.8 billion in productivity annually because of the complex tax code.

“When we’re talking about tax-related things, certainty is always preferable to uncertainty,” Cresanti said. “We’ve been going back and forth on this for quite some time, and I think it hinders people from making investments because the following year the government tries to use the tax code to incentivize another industry or create another wrinkle in it somewhere.”

The Government Accountability Office found in a 2014 study that the tax code is so complex that very few professional tax preparers are able to calculate the correct tax refund. Republicans hope to make the tax code less complicated primarily through reducing the income brackets and eliminating certain deductions.

“Our country really needs a simpler, and a fairer, and more transparent tax system than the one that we have,” Cresanti said. “We’ll leave millions of dollars in the pockets of working families if we accomplish this particular feat. So we’re pushing very hard. I think this is eminently doable.”

The tax framework merely showed where lawmakers are in the process of eventually drafting a bill. But there are still some critical details that must be worked out. Cresanti is hoping for an overarching tax plan that leaves out complexities like special classes of taxpayers.

“We don’t know exactly where the merry-go-round is going to stop,” Cresanti said. “We have our preferences. But we’re going to have to do a bit of studying on behalf of the industry and get more information out. One of the key questions I keep getting is deductibility of businesses in high taxed states like New York and California.”

The framework includes a provision which eliminates what are known as state and local (SALT) tax deductions. SALT deductions allow taxpayers who itemize to deduct some of their local taxes on their federal taxes. Cresanti notes that some small business owners are concerned with how the change will impact their bottom line.

Those opposed to the plan have also expressed concern that low-income individuals will see their taxes increase. The framework reduces the seven current income brackets down to three. The top and middle-income brackets are written to include overall rate reductions. But the lowest bracket increases from 10 percent to 12 percent.

Cresanti countered the concerns by pointing to the zero percent rate included in the framework. Republican leaders hope to essentially provide a fourth bracket for low-income Americans. They plan to accomplish this by consolidating standard deductions and personal exemptions at an increased amount.

“How this could be hurtful to low-income earners is beyond me because even more people move into the category where they pay a rate of almost zero percent under this bill,” Cresanti said. “I don’t think the class warfare argument holds a lot of water with the people who are out there pulling on this economy.”

Republicans still need to work out the details on how they will consolidate those deductions and exemptions. But the end goal is to create a zero tax bracket by eliminating taxes on the first $24,000 of income earned by a married couple, and $12,000 earned by individuals.

Small businesses aren’t the only focus of the plan which promises to lower rates and simplify the tax code. The framework is also looking to lower rates for upper and middle-income earners. It reduces the top individual tax rate from 39.6 percent down to 35 percent. It also lowers the corporate rate to 20 percent.

Follow Connor on Twitter

The business community called on congressional Republicans Wednesday to roll back a rule which was greatly expanded during the last administration.

Former President Barack Obama made major changes to labor law during his time in office. Business leaders expressed particular concern over what is known as the joint-employer standard. The standard determines whether an employer is legally responsible for the employees of a company it contracts with.

Employers take on a lot of legal burdens and costs when they become joint-employers. Republicans are looking to address those concerns with legislation that better clarifies how the standard is determined. The Coalition to Save Local Businesses (CSLB) urged lawmakers to pass the bill following a congressional hearing Wednesday.

“Each hearing this Committee holds teaches us more about the consequences of the expanded joint employer standard,” CSLB Executive Director Michael Layman said in a statement provided to InsideSources. “The Save Local Business Act strikes the right balance between protecting local businesses and employees and providing them with as much clarity and certainty as possible.”

The CSLB has been at the forefront of opposing the expanded standard. The coalition has launched media campaigns and worked with lawmakers hoping to reverse the update. The International Franchise Association (IFA) has led the coalition alongside other industry groups.

“Local franchise business owners nationwide are feeling the effects of this ambiguous new rule, and they deserve the clarity and certainty the federal government could provide,” IFA public affairs vice president Matt Haller said in a statement provided to InsideSources. “We look forward to continued action in the days ahead.”

The IFA also had a chance to discuss the proposed bill with members Tuesday during a conference in Washington D.C. The Franchise Action Network Annual Meeting included educational events and speeches from industry leaders. IFA members were able to discuss the joint-employer bill will lawmakers.

The CSLB has played a major role in opposing the expanded joint-employer standard. Coalition members have spoken with federal lawmakers, launched media campaigns, testified before congressional hearings, supported lawsuits, and backed opposition efforts from the business community.

“The impact of the NLRB’s dramatic expansion of joint employment liability on restaurants and other small businesses is extensive,” Cicely Simpson, executive vice president of the National Restaurant Association, said in a statement provided to InsideSources. “It results in higher operational and legal costs and fewer opportunities to create jobs.”

The National Labor Relations Board (NLRB) changed the joint-employer standard by altering how it ruled on related cases. The joint-employment standard is determined based on how much control one employer exerts over the employees of another company.

Those opposed to the new standard have argued it is simply too vague. It could potentially impact any group of businesses that contract together. Franchises were of particular concern since their business model relies on large corporations contracting with many small businesses.

“The NLRB’s 2015 ‘joint employer’ decision would disrupt hundreds of thousands of business operations throughout the country and threaten the ability of hardworking Americans to achieve the American dream of owning their own business,” Associated Builders and Contractors President Mike Bellaman said in a statement provided to InsideSources. “We support the Save Local Business Act and urge a swift vote in the committee to pass it.”

The NLRB decision drew considerable attention because the change was significant. But it also highlighted what critics saw as a bigger problem with the law itself being unclear. Over the years, the law has caused a patchwork of legal interpretations from courts and federal agencies.

Business leaders and industry groups have opposed the updated standard in other ways as well. The National Restaurant Association has filed several legal briefs during key joint-employment cases. The U.S. Chamber of Commerce has issued reports highlighting why the updated standard is dangerous for businesses.

The NLRB revisited the joint-employment standard during a handful of labor dispute cases in recent years. The Browning-Ferris Industries case set the precedent for the new standard when it was decided in 2015. The Department of Labor further solidified the change by issuing its own informal guidance.

President Donald Trump has already begun the process of rolling back changes brought about by the last administration. Labor Secretary Alexander Acosta announced that the department would be withdrawing from its earlier informal guidance on the updated standard.

Follow Connor on Twitter

House lawmakers are looking to add clarity to a patchwork of legal interpretations Thursday by introducing a bill that more precisely defines what joint-employment is.

The joint-employer standard determines whether an employer is responsible for the employees of a company it contracts with. The law has allowed for multiple interpretations from courts and federal agencies. Republican Rep. Bradley Byrne is leading a group of lawmakers hoping to end the uncertainty through legislation.

Byrne introduced the bill during a press conference alongside other lawmakers and business owners. Republican Rep. Virginia Foxx, chairwoman for the House Education and the Workforce Committee, was among the lawmakers who joined in support. The bill is receiving some bipartisan backing as well.

The National Labor Relations Board (NLRB) found itself at the forefront of the debate in recent years. The board was able to implement an updated standard by changing how it ruled on labor dispute cases. Those opposed argue the updated standard exposed employers to unnecessary risks by being too vague.

Employers take on a lot of legal burdens and costs when they become joint-employers. The updated labor board standard could potentially impact any group of businesses that contract together. Franchises were of particular concern since their business model relies on large corporations contracting with many small businesses.

“Without the passage of this legislation, a patchwork of rules governing employer liability will continue to hinder thousands of beneficial business relationships including franchise businesses, contractors, and temporary staffing agencies,” Trey Kovacs, labor policy expert at the Competitive Enterprise Institute, said in a statement provided to InsideSources. “Congress is reclaiming its responsibility from bureaucrats for a policy that has a huge economic impact. It is imperative that Congress quickly pass this legislation.”

The joint-employment standard is determined based on how much control one employer exerts over the employees of another company. Critics contest the patchwork of various interpretations makes it difficult to reasonably determine whether an employer is exerting too much control.

The NLRB revisited the joint-employment standard during a handful of labor dispute cases in recent years. The Browning-Ferris Industries case set the precedent for the new standard when it was decided in 2015. The Department of Labor further solidified the change by issuing its own informal guidance.

President Donald Trump has already begun the process of rolling back changes brought about by the last administration. Labor Secretary Alexander Acosta announced that the department would be withdrawing from its earlier informal guidance on the updated standard.

Business leaders and industry groups have testified against the updated standard many times before. The National Restaurant Association has filed several legal briefs during key joint-employment cases. The U.S. Chamber of Commerce has issued reports highlighting why the updated standard is dangerous for businesses.

“The current standard is vague and negatively impacting small businesses and employees across the country including the restaurant industry,” Cicely Simpson, executive vice president of the National Restaurant Association, said in a statement provided to InsideSources. “We urge the House to bring the bipartisan Save Local Business Act to the floor for a vote as quickly as possible.”

The International Franchise Association played a major role in readdressing the joint-employer standard. It has spoken with federal lawmakers, launched media campaigns, testified before congressional hearings, supported lawsuits, and backed opposition efforts from the business community.

Follow Connor on Twitter

Subscribe for the Latest From InsideSources Every Morning