Tough Road Ahead for Small Business After NLRB Ruling

Date: September 01, 2015

The latest Labor Board decision makes small businesses liable for contractors and targeted for unionization efforts.


Small businesses and subcontractors face troubling challenges if last Thursday’s decision by the National Labor Relations Board stands.

In redefining subcontractors as direct employees and franchise businesses as corporate-owned, the board’s narrow 3-2 vote brings in sweeping changes that work against building and operating profitable local enterprises.

NFIB, a member of the Coalition to Save Local Businesses, will push for legislative action against the Browning-Ferris Industries decision, to codify the previous joint employer standard that’s been in place since 1984.

NFIB fights for small businesses on issues similar to this NLRB ruling, such as keeping minimum wage rates in check and minimizing tax burdens. Join NFIB to get your small business concerns heard

“Many thousands of Americans make a living as subcontractors, and this is a direct threat to them,” said Beth Milito, NFIB Senior Legal Counsel, in a press release. “They want the independence that comes with being their own boss and they want the potential for growth. All of that goes away if there’s no longer any regulatory or financial advantages in hiring subcontractors.”

Under the new ruling, companies that hire staffing firms for office-cleaning functions, for example, will be held directly responsible for the firm’s employees. Not only would the cleaning company be liable for any alleged violation of employment law, but the businesses it serves could be liable as well. Some say the ruling could also make small businesses and staffing firms bigger targets for unions. 

“This is very disturbing to many of our members. If the ruling stands, it makes it likely that the reason to hire a subcontractor goes away,” NFIB Media Director Jack Mozloom told The New York Times. “It takes away the financial advantages and removes any regulatory or legal protections that a customer gets from hiring them.” 

Here’s some of the reaction on Twitter following the ruling:


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