Congress must preserve business stability from the damaging effects of new joint employer rule

Black-owned businesses are an important part of our state’s economy and the Black Chamber of Arizona is focused on removing barriers to entry for minority communities to achieve the dream of small business ownership. Of the over 641,000 small businesses in Arizona, Black owned-businesses represent just 26,000 of them. Unfortunately, a new National Labor Relations Board rule will make it harder for Black business owners to thrive. Known as the joint employer rule, it would redefine the standard for determining joint employer status under the National Labor Relations Act (NLRA). Originally set to go into effect February 26, a federal judge is weighing whether a lawsuit can move forward and has delayed its implementation until March 11.

Franchisees, many of whom are minorities, will be most impacted by the joint employer rule. The rule shifts the standard from a well-established framework to one that is based on unexercised control. This would deem a franchisor as a joint-employer to franchisees. Although the intention of this rule may be to address certain labor relations issues, its implications for Arizona’s Black-owned businesses are wide-reaching and potentially detrimental. When business models are transformed – whether in a positive or negative fashion – the Black community, often under-capitalized, bears the weight of the negative impacts brought by the change.

The franchise business model is important for Arizona’s Black business community allowing entrepreneurs to partner with well-known brands and bolster local ownership of MainStreet Mesa, Tempe and Chandler businesses. On average, Black-owned franchises earn over twice as much compared to Black-owned independent businesses, and 26% of franchises are owned by people of color compared to 17% of independent businesses. We cannot allow this new rule to undercut such a successful business model for future generations of minority entrepreneurs.

But our concerns go beyond franchise businesses. This rule could harm minority businesses success in contractor-subcontractor relationships as well. Take the construction industry, for example. General contractors play a vital role in the coordination of efforts between multiple subcontractors. This ensures the safe and efficient completion of projects. The NLRB’s rule will threaten to disrupt this delicate balance by imposing joint employer status on general contractors. Such a shift could lead to increased costs, decreased equity and efficiency, and add increased uncertainty for all involved parties.

It is crucial that Congress understands the consequences that may arise from this regulatory shift. Through Congress’ authority under the Congressional Review Act (CRA), they have begun to push back against the NLRB’s harmful bureaucratic rule. The U.S. House recently passed H.J.Res. 98, a resolution of disapproval under the CRA that would overturn the joint employer rule, on a bipartisan basis.

In an attempt to mitigate these concerns, the business community in Arizona — especially Black-owned businesses — is urging Senators Mark Kelly and Kyrsten Sinema to vote in favor of H.J.Res. 98 and overturn the NLRB’s job-killing joint employer rule.. Doing so will preserve the current, clear joint employer standard, which is integral to maintaining the integrity of hard-working Arizonans, protecting the interests of minority small business owners, and promoting economic stability.

As discussions surrounding this critical issue quickly unfold, it is essential for our policymakers to carefully weigh the potential consequences of this rule. Our Senators must consider alternative approaches that address labor relations concerns, without jeopardizing the stability of local businesses. By doing so, they can strike a balance that fosters a thriving economy, while also safeguarding the interests of both employers and employees in the great state of Arizona.

Robin S. Reed is president & CEO of the Black Chamber of Arizona