Eight years after the Great Recession, many in the country still
struggle economically. While we continue to look forward positively with
respect to the future, we need economic policy initiatives that promote growth
and fuel our entrepreneurial spirit. Technology has allowed many more people to
work for themselves and build economic security. This is even truer for the
African American community, which has traditionally been locked out of opportunities
in corporate America, but for whom, as the chart below shows, is starting to
see some modest improvement. Economic independence is one key to our future.
There are many
pathways to achieving the American dream. Some of these pathways lead to
entrepreneurship and to the use of empowering and flexible business models,
such as franchising and the shared economy.
Recent economic policy initiatives may serve to block the door
to opportunity. Specifically, federal and state efforts to expand the
definition of a “joint employer” beyond the traditional legal definition of
“direct and immediate” control may reduce opportunities for the Black franchisor
and for Black creatives in the sharing economy.
Let me explain.
Under the newly expanded definitions, employers who possess
“indirect” or “unexercised reserved” control might be considered a “joint
employer”. The uncertainty that business
owners feel over this matter might limit the ability of an employer to provide critical
support for employees, like worker training and development, apprenticeship
programs, corporate social responsibility programs, and guidance on compliance.
For instance, if I own a franchise and the corporate entity offers tuition
assistance, it could be determined that the corporate office has indirect control
over my employees. Additionally, If I have a contract with Google, which
requires I offer paid vacation to my employees, those employees might be
considered indirect employees of Google. This designation could have any number
of confusing and negative consequences, including tax and liability. In the
absence of clarity, employers are considering whether to refrain from offering
these critical programs altogether.
In what has become a rarity in American politics, a
bipartisan effort is underway to clarify this problem. HR 3441, the Save Local Business Act, is
designed to clarify the new standard and allow business owners to have more certainty
going forward.
Our economic analysis suggests this law is needed to
maintain the progress as evidenced by the chart and to continue to propel the employment
gains we have seen in the Black community.