This week, the U.S. House of Representatives passed the Save Local Business Act, a bill that that would amend the National Labor Relations Act and Fair Labor Standards Act to restore earlier joint-employer standards for home building firms and other small businesses.

In 2015, the National Labor Relations Board (NLRB) ruled in the case of Browning-Ferris Industries of California Inc.  that a company could be considered a joint employer if it has indirect control or the potential to determine the key terms of an employee’s employment, including hiring and firing, supervision, scheduling, and the means and method of employment.

Under that standard, “joint employment” was defined as a worker who is employed by two or more employers, making both of them responsible for compliance with a statute. That would include contractors, subcontractors, staffing agencies and franchisees.

According to the National Association of Home Builders (NAHB), this week’s legislation “eliminates the uncertainty that has threatened to upend the residential construction sector and provides employers with a clear standard for joint employment,” said NAHB chair Granger MacDonald, a home builder and developer from Kerrville, Texas.

“Under current law, it is possible for a home builder to be considered a joint employer through such a basic business act as setting the work schedule of their subcontractor,” he said. “This bill would reinstate the sensible criteria that has worked for the American business community for more than 30 years and provide legal certainty for all business owners.”

According to NAHB, the older standard was especially problematic for the housing industry, because most home building companies employ fewer than 10 workers and rely on an average of 22 subcontractors to complete a house.

NAHB says the Save Local Business Act offers a common-sense solution to the uncertainty generated since the NLRB’s ruling by proclaiming that a company may be considered a joint employer of a worker only if it “directly, actually, and immediately” exercises significant control over the primary elements of employment.

“We urge the Senate to promptly introduce similar legislation,” said MacDonald.

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