[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


                      REDEFINING EMPLOYER AND THE
                      IMPACT ON GEORGIA'S WORKERS
                       AND SMALL BUSINESS OWNERS

=======================================================================

                              FIELD HEARING

                               BEFORE THE

                        SUBCOMMITTEE ON HEALTH,
                    EMPLOYMENT, LABOR, AND PENSIONS

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

           HEARING HELD IN SAVANNAH, GEORGIA, AUGUST 27, 2015

                               __________

                           Serial No. 114-26

                               __________

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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Duncan Hunter, California              Ranking Member
David P. Roe, Tennessee              Ruben Hinojosa, Texas
Glenn Thompson, Pennsylvania         Susan A. Davis, California
Tim Walberg, Michigan                Raul M. Grijalva, Arizona
Matt Salmon, Arizona                 Joe Courtney, Connecticut
Brett Guthrie, Kentucky              Marcia L. Fudge, Ohio
Todd Rokita, Indiana                 Jared Polis, Colorado
Lou Barletta, Pennsylvania           Gregorio Kilili Camacho Sablan,
Joseph J. Heck, Nevada                 Northern Mariana Islands
Luke Messer, Indiana                 Frederica S. Wilson, Florida
Bradley Byrne, Alabama               Suzanne Bonamici, Oregon
David Brat, Virginia                 Mark Pocan, Wisconsin
Buddy Carter, Georgia                Mark Takano, California
Michael D. Bishop, Michigan          Hakeem S. Jeffries, New York
Glenn Grothman, Wisconsin            Katherine M. Clark, Massachusetts
Steve Russell, Oklahoma              Alma S. Adams, North Carolina
Carlos Curbelo, Florida              Mark DeSaulnier, California
Elise Stefanik, New York
Rick Allen, Georgia

                    Juliane Sullivan, Staff Director
                 Denise Forte, Minority Staff Director
                                 
                                 ------                                

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

                   DAVID P. ROE, Tennessee, Chairman

Joe Wilson, South Carolina           Jared Polis, Colorado,
Virginia Foxx, North Carolina          Ranking Member
Tim Walberg, Michigan                Joe Courtney, Connecticut
Matt Salmon, Arizona                 Mark Pocan, Wisconsin
Brett Guthrie, Kentucky              Ruben Hinojosa, Texas
Lou Barletta, Pennsylvania           Gregorio Kilili Camacho Sablan,
Joseph J. Heck, Nevada                 Northern Mariana Islands
Luke Messer, Indiana                 Frederica S. Wilson, Florida
Bradley Byrne, Alabama               Suzanne Bonamici, Oregon
Buddy Carter, Georgia                Mark Takano, California
Glenn Grothman, Wisconsin            Hakeem S. Jeffries, New York
Rick Allen, Georgia
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on August 27, 2015..................................     1

Statement of Members:
    Allen, Hon. Rick, a Representative in Congress from the state 
      of Georgia.................................................     5
    Carter, Hon. Buddy, a Representative in Congress from the 
      state of Georgia...........................................     4
        Prepared statement of....................................     5
    Roe, Hon. David P., Chairman, Subcommittee on Health, 
      Employment, Labor, and Pensions............................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Mintz, Mr. Jeffrey, Shareholder, Littler Mendelson P.C., 
      Atlanta, GA................................................     7
        Prepared statement of....................................    11
    Patel, Mr. Kalpesh ``Kal'', President and CEO, Image Hotels, 
      Inc., Savannah, GA.........................................    21
        Prepared statement of....................................    23
    Salgueiro, Mr. Alex, President and CEO, Savannah Restaurants 
      Corporation, Savannah, GA..................................    29
        Prepared statement of....................................    32
    Weir, Mr. Fred, President, Meadowbrook Restaurant Co., Inc., 
      Cumming, GA................................................    35
        Prepared statement of....................................    38

 
                     REDEFINING `EMPLOYER' AND THE
                      IMPACT ON GEORGIA'S WORKERS
                       AND SMALL BUSINESS OWNERS

                              ----------                              


                       Thursday, August 27, 2015

                        House of Representatives

                            Subcommittee on

                Health, Employment, Labor, and Pensions

                Committee on Education and the Workforce

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:03 a.m., in 
Live Oak Room and Cypress Room, Coastal Georgia Center, 305 
Fahm Street, Savannah, Georgia, Hon. David P. Roe [Chairman of 
the Subcommittee] presiding.
    Present: Representatives Roe, Carter, and Allen.
    Staff Present: Janelle Belland, Coalitions and Members 
Services Coordinator; Christie Herman, Professional Staff 
Member; Tyler Hernandez, Press Secretary; John Martin, 
Professional Staff Member; and Eunice Ikene, Minority Labor 
Policy Associate.
    Chairman Roe. A quorum being present, the Subcommittee on 
Health, Employment, Labor, and Pensions will come to order.
    I will first recognize myself for opening remarks.
    Good morning, everyone and welcome to today's hearing. I 
would like to thank our witnesses for joining us, and I would 
like to thank the staff here at the Coastal Georgia Center for 
their hospitality.
    It is nice to have an opportunity to get out of Washington 
for a hearing like this, which allows us to hear directly from 
you about the issues that will have a significant impact on 
workers and employees in your community and across the country. 
And I would also like to thank the people here in Savannah for 
the incredible hospitality you have shown us.
    Yesterday, I had a chance to visit the St. Mary's Health 
Center, a collaboration between Methodists and Catholics--I am 
a Methodist--it shows that if Methodists and Catholics can make 
something that nice work, imagine what Methodists and Baptists 
could do.
    [Laughter.]
    Chairman Roe. I also visited the Memorial Medical Center, 
very similar to our medical center at home. And I do not think 
I am going to have to eat for another week, I ate at the Wilkes 
Boarding House restaurant yesterday, and I am totally stuffed, 
and I had a great dinner last evening. The hospitality has been 
as expected: Southern and very warm. And thank you for that.
    The issue we are discussing today is an effort by a group 
of unelected bureaucrats in Washington that could fundamentally 
change the way franchise businesses operate. It is an important 
issue because there is a lot at stake. Hundreds of thousands of 
franchise businesses currently operate in the United States. 
More than 780,000 of them, actually. And they employ nearly 9 
million workers. These are small businesses that are 
independently owned and operated and that help create jobs and 
provide opportunities for many individuals to pursue the 
American Dream. Franchise businesses are vitally important to 
communities like Savannah and the families that live and work 
in them.
    A federal agency known as the National Labor Relations 
Board is trying to upend the franchise model that has worked 
well for decades. This is the same federal agency that tried to 
tell Boeing that they could not open a plant in Charleston, 
South Carolina, threatening thousands of good paying jobs for 
South Carolinians.
    Now the NLRB is again doing the bidding for big labor by 
making it easier to organize franchise workers, no matter the 
cost to working families and to job creators. To that end, the 
NLRB's General Counsel, Richard Griffin, is pushing the agency 
to rewrite the rules that determine who is responsible for the 
decisions affecting the day-to-day operations of a franchise 
business. Is it the franchisee, the individual that owns and 
operates the business locally, or is it the franchisor, the 
entity that enables the small business owner to use an 
established brand to sell certain goods or services in a 
particular area?
    If Griffin has his way, both will be joint employers and 
will have equal responsibility for those decisions, which will 
include hiring, training, wages, and work schedules. And if 
that happens, there will be serious consequences for workers 
and employers.
    First, let us talk about what it would mean to the 
franchisees, the small business owners. A change like the one 
Griffin is pushing will mean less freedom to actually run their 
businesses. If a franchisor is suddenly responsible for the 
day-to-day decisions at each franchise, they will assert more 
control over the business--obviously they will.
    That means the franchisees, the small business owners like 
Mr. Patel, Mr. Weir, and Mr. Salgueiro will have less say over 
these important decisions and will no longer decide how to run 
their own businesses. That is just the beginning.
    Expanding the joint employer standard will also lead to 
higher consumer costs for small businesses, lost jobs, more 
litigation, and fewer opportunities for individuals to pursue 
the American Dream.
    On top of that, the NLRB could extend this radical approach 
to other businesses like contractors and subcontractors. A 
change like that would threaten countless businesses in 
Savannah, throughout Georgia, and across the country.
    It is never easy running a successful small business, 
especially in an economy plagued by the persistent challenges 
we face today. We do not need an unelected, unaccountable board 
of bureaucrats, with an activist agenda, changing the rules to 
favor big labor. That is exactly what the NLRB is trying to do.
    As we have seen time and time again with this 
administration, the Board is bending to the will of the union 
bosses who want to grow the ranks of dues-paying members. And 
they are doing it at the expense of hard-working Americans.
    I want to thank our witnesses again for being with us today 
and sharing their personal experiences with the Committee. With 
your stories and personal experiences, you are helping us 
determine what will need to be done to address this misguided 
scheme and put in place policies that encourage--not stifle--
economic growth and job creation. I look forward to hearing 
from each one of you.
    And I will state for the record today that we did invite 
Democratic members of the House to participate and we also 
invited them to have a Democratic witness, which they did not 
do.
    I now will recognize our host today, Congressman Carter, 
for his opening remarks. Mr. Carter, you are recognized.

  Prepared Statement of Hon. David P. Roe, Chairman, Subcommittee on 
                Health, Employment, Labor, and Pensions

    Good morning, everyone, and welcome to today's hearing. I'd like 
thank our witnesses for joining us, and I'd like to thank the staff 
here at the Coastal Georgia Center for their hospitality.
    It's nice to have the opportunity to get out of Washington for a 
hearing like this, which allows us to hear directly from you about 
issues that will have a significant impact on workers and employers in 
your community and across the country. The issue we're discussing today 
is an effort by a group of unelected bureaucrats in Washington that 
could fundamentally change the way franchise businesses operate. It's 
an important issue because there is a lot at stake.
    Hundreds of thousands of franchise businesses currently operate in 
the United States - more than 780,000 of them actually - and they 
employ nearly nine million workers. These are small businesses, they 
are independently owned and managed, and they have helped create jobs 
and provided opportunities for many individuals to pursue the American 
Dream. Franchise businesses are vitally important to communities like 
Savannah and the families that live and work in them.
    A federal agency, the National Labor Relations Board, is trying to 
upend a franchise model that has worked well for decades. This is the 
same federal agency that tried to tell Boeing they couldn't open a 
plant in Charleston, South Carolina, threatening thousands of good 
paying jobs. Now, the NLRB is again doing the bidding of Big Labor by 
making it easier to organize franchise workers - no matter the cost to 
working families and job creators.
    To that end, the NLRB's general counsel, Richard Griffin, is 
pushing the agency to rewrite the rules that determine who is 
responsible for decisions affecting the day-to-day operations of a 
franchise business. Is it the franchisee - the individual who owns and 
operates the business locally? Or is it the franchisor - the entity 
that enables the small business owner to use an established brand to 
sell certain goods or services in a particular area? If Griffin has his 
way, both will be ``joint employers'' and will have equal 
responsibility for those decisions, which include hiring, training, 
wages, and work schedules. And if that happens, there will be serious 
consequences for workers and employers.
    First, let's talk about what it would mean for the franchisees, the 
small business owners. A change like the one Griffin is pushing will 
mean less freedom to actually run their businesses. If a franchisor is 
suddenly responsible for the day-to-day decisions at each franchise, 
they will assert more control over the business. That means the 
franchisees - small businesses owners like Mr. Patel and Mr. Weir - 
will have less say over these important decisions and no longer decide 
how to run their business.
    But that's just the beginning. Expanding the joint employer 
standard will also lead to higher consumer costs, fewer small 
businesses, lost jobs, more litigation, and fewer opportunities for 
individuals to pursue the American Dream. And on top of that, the NLRB 
could extend this radical approach to other businesses, like 
contractors and subcontractors. A change like that would threaten 
countless businesses in Savannah, throughout Georgia, and across the 
country.
    It's never easy running a successful small business, especially in 
an economy plagued by the persistent challenges we face today. We don't 
need an unelected and unaccountable board of bureaucrats with an 
activist agenda changing the rules to favor Big Labor. But that's 
exactly what the National Labor Relations Board is trying to do. As 
we've seen time and again under this administration, the board is 
bending to the will of union bosses who want to grow the ranks of dues-
paying members, and they're doing it at the expense of hardworking 
Americans.
    I want to thank our witnesses again for being with us today and 
sharing their personal experiences with the committee. With your 
stories and personal experiences, you are helping us determine what 
needs to be done to address this misguided scheme and put in place 
policies that encourage - not stifle - economic growth and job 
creation. I look forward to hearing from each of you, so I'm going to 
yield to my distinguished colleague and our host today, Congressman 
Buddy Carter, for his opening remarks.
                                 ______
                                 
    Mr. Carter. Thank you, Mr. Chairman, and good morning. And 
thank all of you all for being here today. This is a very 
important hearing and the way I like to put this is instead of 
you coming to Congress, Congress is coming to you. And this is 
good; we need to do more of this. And I want to thank Chairman 
Roe, and especially thank my colleague, Congressman Rick Allen, 
from the Twelfth District here in Georgia for being here as 
well and making that effort to come down, not too far, but a 
little bit. But we appreciate it and appreciate you spending 
some time down here, both of you I think had an opportunity to 
see what we are so very proud of here in the First 
Congressional District. I believe that Congressman Allen was 
able to tour the ports yesterday, and that is certainly an 
economic engine, not only of Southeast Georgia but really of 
the Southeastern United States and we are very proud of that 
and want to do everything we can to help them.
    Chairman Roe, thank you for your leadership in this 
important issue and everything that you do, we appreciate your 
service very much.
    Earlier this year, the National Labor Relations Board 
announced they were proposing a change to the existing joint 
employer standard. The new joint employer standard by the NLRB 
has major implications for every small business community 
across the country.
    Let me interject right now, full disclosure, I am a small 
business owner. I have a small business that I own, three 
different stores, three locations. I should say my wife owns 
them now. One of the things that you have to do when you become 
a member of Congress is divest yourself of business interests. 
So let me say that I am married to someone who owns three 
pharmacies right now, 19 employees. So mine is the 
quintessential small business. So I just want to make sure that 
everyone knows, full disclosure, that I am a small business 
owner.
    But again, the new joint employer standard by the NLRB has 
major implications for every small business community across 
the country. Essentially the new rule would turn franchisees 
from small business owners into managers. Now there is a big 
difference between a small business owner and a manager. I am 
sure that what we are going to hear today, that these business 
owners are going to tell us how much they appreciate their 
managers. I can tell you that I would not be able to be here if 
it were not for having good managers and good people. However, 
there is a big, big difference between a manager and a small 
business owner--I will tell you that as well.
    So essentially, the new rule would turn franchisees from 
small business owners into managers and would result in 
franchisors limiting their expansion because of undue legal 
liabilities. From retail stores to financial service providers, 
almost every business in every community in the country would 
be affected.
    In Savannah, there are countless businesses that run under 
the franchisee-franchisor model, whether it is a Hilton or a 
McDonald's, we have got them here in Savannah. With this new 
rule, Savannah's small businesses would be subjected to legal 
liabilities that they have never been subject to before, 
causing many businesses to shut their doors. That is why we are 
here today. We cannot continue to allow the government to enact 
rules and regulations that squeeze small businesses until they 
close their doors.
    I look forward to a lively discussion on this issue here 
today and I yield back the remainder of my time.

 Prepared Statement of Hon. Buddy Carter, a Representative in Congress 
                       from the state of Georgia

    Good morning! I would first like to thank everyone for coming out 
this morning to learning more about this very important issue to the 
small business community. Second, I would like to thank Chairman Roe 
and the other Congressional members for holding this hearing in 
Savannah, Georgia, and for allowing me to show you around Savannah the 
last few days. It has been an honor and a privilege.
    Earlier this year, the National Labor Relations Board announced 
that they were proposing to change the existing joint-employer 
standard. The new joint-employer standard by the NLRB has major 
implications for every small business community across the country. 
Essentially, the new rule would turn franchisees from small business 
owners into managers and would result in franchisors limiting their 
expansion because of undue legal liabilities. From retail stores to 
financial service providers, almost every business in every community 
in the country would be affected.
    In Savannah, there are countless businesses that run under the 
franchisee-franchisor model. Whether it is the Hilton or McDonalds. 
With this new rule, Savannah small
    businesses would be subjected to legal liabilities that they have 
never been subjected to before, causing many businesses to shut their 
doors.
    That is why we are here today. We can't continue to allow the 
government to enact rules and regulations that squeeze small businesses 
until they close their doors.
                                 ______
                                 
    Chairman Roe. Thank you, Mr. Carter.
    I will now recognize Mr. Allen for his opening remarks.
    Mr. Allen. Good. Thank you, Mr. Chairman. And again, I want 
to thank you for taking your time and our staff on the 
Education and the Workforce Committee for putting this hearing 
together. This is important business, and I want to thank my 
colleague, Congressman Carter.
    I will tell you, we also toured Gulfstream yesterday and I 
will tell you what, of course a lot of those folks live in the 
Twelfth District of Georgia. So, I just wanted you to know 
that. But, boy, everyone has been wonderful. And of course, we 
were there at the port and I will tell you, you know, I told 
those businesses and I tell my colleagues, you know, our 
colleagues in Congress are pretty envious of us down here in 
the Twelfth District and the First District of Georgia because 
I am going to tell you what, we are doing some business.
    And it is so refreshing to get out and get with these 
companies and talk about their challenges, as we are going to 
be talking about the challenges of our small business community 
here today. That is the way you learn and that is what we take 
back to Washington, unlike those who are heading those 
agencies. You know, apparently they are not listening to the 
American people, and that is the message we need to take back 
and, of course, that is the reason for this hearing today.
    To tell you real quickly, our districts--obviously we 
border, I am in Springfield, Georgia. About 20 minutes up the 
road is the edge of the district and then, of course, to the 
west is Claxton in Evans County and further south is Appling 
County.
    We also have a number of our staff members. If you would 
stand, our staff, Congressman Allen's staff, of course, thank 
you. We have got a great group traveling with us there. And 
boy, they are keeping me on a tight schedule.
    This is an important hearing and, you know, small business 
creates over 70 percent of the jobs in this country. It is 
small business that has been under attack, particularly the 
last six years. And, you know, I tell my friends in the small 
business community everywhere I go, I say hang in there, hang 
in there. We are doing the best we can do, and as we listen to 
this testimony today and we hear about the challenges of our 
small business community, let us remember their resiliency. 
Because it is not easy folks--and I have to disclose my wife 
owns a holding company now that owns a variety of businesses 
and, you know, I will tell you one group that took on the 
challenge, I really almost apologized to them about a year ago 
because I said, you know, I am not sure I did you folks a favor 
by allowing you to buy this business. It has been tough. You 
know, we are seeing a little light at the end of the tunnel 
now, but again, as we continue to see this regulatory assault 
on our small business community continue, it just gets more and 
more difficult to say is it worth it? It is worth it, folks. We 
must get people back to work in this country; it is the small 
business community that is going to do it.
    And again, I thank you, Mr. Chairman, and I yield back the 
remainder of my time.
    Chairman Roe. Thank the gentleman for yielding. And just 
for the record, this is an official hearing of the U.S. 
Congress.
    Pursuant to Committee Rule 7(c) all subcommittee members 
will be permitted to submit written statements to be included 
in the permanent hearing record. And without objection, the 
hearing record will remain open for 14 days to allow 
statements, questions for the record, and other extraneous 
material referenced during the hearing to be submitted in the 
official hearing record.
    It is now my pleasure to introduce our distinguished panel. 
First, Mr. Jeffrey Mintz is a shareholder of Littler Mendelson, 
P.C. in Atlanta, Georgia. Mr. Mintz is an experienced 
practitioner before the NLRB and has defended employer 
positions before the Equal Employment Opportunity Commission, 
the EEOC, and other state and federal administrative agencies 
and courts. He is considered a subject-matter expert with 
respect to representation elections and related NLRB 
proceedings, and preventative labor relations. He also has 
extensive experience advising employers facing non-traditional 
organizing including corporate campaign tactics designed to 
enhance union leverage so as to achieve labor's objective.
    I will now yield to my friend, Mr. Carter, for 
introductions.
    Mr. Carter. Thank you, Mr. Chairman.
    We are very fortunate to have two very influential business 
leaders in Savannah with us today. First, Kal Patel, who is 
President of Image Hotels in Savannah. Image Hotels owns and 
operates eight hotels as licensees of Starwood, Hilton, IHG, 
and Marriott brands. Mr. Patel has served on the boards of the 
Asian American Hotel Owners of America and on the Savannah 
Convention and Visitors Bureau. He was born in India in 1978, 
and moved to the United States in 1979, and he is a second 
generation hotel owner. Mr. Patel is a graduate of Savannah 
State University. Kal, thank you for being with us today.
    Also, we are very fortunate to have Alex Salgueiro, who is 
the President and CEO of the Savannah Restaurants Corporation. 
Mr. Salgueiro is the President of the Burger Kings, he actually 
owns and operates numerous Burger Kings throughout the Savannah 
area. Before starting Savannah Restaurants Corporation, Mr. 
Salgueiro was a project manager and the area manager with 
Burger King Corporation from 1971 to 1986. He was born in 
Havana, Cuba, a place that I had an opportunity to visit 
earlier this year. And he is a graduate of Florida 
International University. And by the way, I want to mention 
that we are glad you are here and that your health is better. 
We appreciate that, and glad you are doing better. And 
congratulations, I believe you are opening your store today, 
reopening on Derene Avenue.
    Mr. Salgueiro. Open now.
    Mr. Carter. Open now, open this morning. That is great. So 
thank both of you for being here. And I yield back.
    Chairman Roe. I thank the gentleman for yielding.
    Mr. Fred Weir is the President and CEO of Meadowbrook 
Restaurant Corporation in Cumming, Georgia. Currently owns and 
operates 10 franchise Zaxby restaurants in Georgia and 
Arkansas. You will be glad to know, full disclosure, had one of 
your salads before I came down here to Alabama the other day. 
He is a third generation restaurant operator. Mr. Weir 
currently serves on the Board of Trustees for Reinhardt 
University and the Board of Directors of Cherokee County 
Chamber of Commerce, and CASA, the Court Appointed Special 
Advocate. And thank you, Mr. Weir, very much for doing that. 
Many times that is the only advocate these young people have. 
So that is an incredible thing that you are doing, public 
service.
    I will ask our witnesses to stand and raise your right 
hand.
    [Witnesses sworn.]
    Chairman Roe. Let the record reflect the witnesses answered 
in the affirmative. You may take your seats. Thank you, 
gentlemen.
    Before I recognize you to provide your testimony, let me 
briefly explain our lighting system. You will have five minutes 
to give your testimony. When you begin, the light in front of 
you will turn green. With one minute left, it will turn amber. 
And then at five minutes, it will turn red. At that point, I 
will ask you to wrap up your comments. I am not going to cut 
you off in mid-sentence, but try to keep it around five 
minutes. And I will also ask the members to do the same thing.
    Mr. Mintz, you are recognized for five minutes.

  TESTIMONY OF JEFFREY MINTZ, SHAREHOLDER, LITTLER MENDELSON 
                     P.C., ATLANTA, GEORGIA

    Mr. Mintz. Thank you. Good morning, Chairman Roe, 
Representative Carter, Representative Allen. I appreciate the 
opportunity to provide testimony today. I am going to focus on 
providing a legal context for subsequent testimony from the 
franchisees in the room.
    Under the current doctrine used by the National Labor 
Relations Board to determine joint employer status, they use 
and have used for many years the common law of agency. And the 
question before the Board has been do two or more businesses 
share or co-determine the essential terms and conditions of 
employment of the employees that are the subject of the 
inquiry. The key is whether or not the second employer, the 
putative joint employer, meaningfully affects matters regarding 
the employment. And this is a broad range of things ranging 
from recruitment to hiring, disciplinary standards, 
supervision, the wages and benefits that are offered. 
Effectively, anything and everything that arises out of the 
employment relationship.
    The standard has required direct and immediate control, not 
just theoretical or hypothetical. And what the Board has done 
is review the totality of circumstances. No single factor is 
determinative.
    With respect to supervision, limited and routine 
responsibilities have not been enough. They require, have 
required, some degree of control over how work is done, not 
necessarily what or where or when, but how the work itself is 
to be performed.
    The Labor Board had, about a little over a year ago, 
invited interested parties to file amicus briefs; that is, 
summaries of rationale and argument, legal argument, as to why 
the standard should be changed, and if so, how it should be 
changed. And most commentators in the legal community view that 
as an invitation signaling a desire to change a well-
established standard.
    However, they also agree that the ``solution'' sought--and 
I use that term ``solution'' in quotes--the ``solution'' sought 
by the Labor Board seems to be coming where there is no 
apparent problem in the current administration of this 
component and interpretation of the National Labor Relations 
Act, and I question why they would be using administrative 
power to change a rule. If a change is warranted at some point 
in time, which I don't think anybody concedes is necessary, 
then it should be done via the legislative process as opposed 
to the administrative process of the Labor Board.
    Before the current standard, the Board's approach had been 
subject to some degree of controversy. And they used 
conflicting standards which made it difficult for businesses to 
develop the scope of their business relationships in a manner 
compliant with the legal precedent. With the current standard, 
however, businesses have been able to act and strategize and 
change in accord with this precedent that has been around for 
in excess of 30 years. And the result I think is clear, it has 
led to an expansion of franchised businesses and specialized 
subcontractor employers and jobs that they provide.
    So essentially, the business community's perspective is 
that there is no compelling reason to change the legal standard 
when the long-standing standard has offered predictability, 
stability, and a framework for their contractual relationships.
    Which takes us to the problem that is going to be answered 
I think very, very shortly. And that is the case that has 
prompted much of this debate currently before the Labor Board. 
It's called BFI and BFI is involving facts that are not unusual 
or controversial, it's an organizing drive in which a group, a 
Teamster Local, tried to organize the employees of a 
subcontractor of BFI's called Leadpoint. Leadpoint has the sole 
responsibility in this case for recruitment, hiring, 
discipline, evaluation, and termination. They have their own 
separate supervision on site. They have separate HR 
departments. So in effect, there's no role whatsoever that BFI 
plays in setting wages, administering benefits, scheduling 
employees, or maintaining their employment efforts.
    The ``support''--and I use that in quotes--for the joint 
employer contention is that BFI's contract with Leadpoint was 
cost-plus, and it had a cap. And I'm sure they capped it at 
whatever it would have cost BFI to pay for those employees and 
their wages and benefits had they employed them directly, and 
there was a financial incentive and benefit for them to 
subcontract the work to Leadpoint. But the cap doesn't 
determine what the employees are paid, and despite that, 
Counsel for the General Counsel has taken the position that BFI 
and Leadpoint are joint employers.
    Why would the Board do this now with this case? Well, his 
amicus--the General Counsel for the Labor Board's amicus brief 
says that the current standard has particularly inhibited 
meaningful bargaining regarding the contingent workforce and 
non-traditional employment relationships.
    General Counsel proposes that the Board move from day-to-
day control to operational control at the system-wide level and 
they want to broaden it to consider the totality of 
circumstances, which would include indirect or potential 
control, even if it's unexercised.
    With the caveat that the decision that we're talking about 
here is likely to be issued today or possibly early next week, 
but many expect it to be today in conjunction with the ending 
of the term of one of the Republican members of the Labor 
Board, we are concerned that it's going to lead to a lack of 
clarity, uncertainty regarding employment status, unwanted 
second-employer influence over the putative joint employer, and 
have direct impact upon the franchisor and franchisee 
relationships, which I will certainly let others in the room 
testify to.
    But in quick summary, the likely consequences of the 
anticipated change, none of them are welcomed by the employer 
community, and one commentator has said that it's an attempt to 
turn hundreds of individually-owned small businesses into one 
giant union hall. The employer, who does not directly control 
the terms or conditions, is going to face bargaining 
obligations under the National Labor Relations Act. They are 
going to be enmeshed in potential industrial disputes on a 
broader scale. They are going to lose the protections that the 
National Labor Relations Act provides as a secondary or neutral 
employer, meaning they are subject to picketing and other 
pressure points applied by the union in play. They are going to 
be exposed to financial and administrative liability for 
violations committed by the other employer, again who they do 
not control. They are going to be subject to corporate campaign 
tactics, which is where a union uses efforts to embarrass or 
squeeze an employer to develop a different, more receptive 
attitude towards their labor objectives. And there's going to 
be confusion and uncertainty during the expected requests for 
review while this is certainly undergoing some form of appeal 
process.
    So there's certainly going to be a negative impact on 
franchise development, and corporate small business ownership 
is going to be jeopardized if the new model is used, and the 
bottom line is there is great legitimate and growing concern 
among franchisors, franchisees, and small business owners at 
both the large and the small level. I've been contacted by many 
clients who you would consider larger employers and they want 
to know what they should do in anticipation of this dramatic 
change. I don't know what they're going to do, it's going to 
depend on a case-by-case assessment, but I do know that they 
are going to do something and something is not going to bode 
well for the impacted employers.
    Chairman Roe. Thank you, Mr. Mintz. And for the record, BFI 
is Browning-Ferris Industries, for the record.
    Mr. Patel, you're recognized for five minutes.
    [The statement of Mr. Mintz follows:]
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 TESTIMONY OF KALPESH PATEL, PRESIDENT AND CEO, IMAGE HOTELS, 
                    INC., SAVANNAH, GEORGIA

    Mr. Patel. Chairman Roe, Congressman Carter, and 
Congressman Allen, I would like to thank you and the members of 
the Subcommittee for the opportunity to testify at this hearing 
today. I look forward to sharing my story of entrepreneurship 
and the American Dream.
    My name is Kal Patel and I am a small business owner from 
Pooler, Georgia, and the president and CEO of Image Hotels. I 
am also a past Board of Director at the Asian American Hotel 
Owners Association and second generation hotelier, and I am 
proud to continue the family business.
    My family emigrated from India to the United States in 1979 
in order to pursue opportunities for entrepreneurship and to 
improve our station in life.
    In 1985, my parents bought the Red Carpet Inn, a 50-room 
hotel and our first experience with franchising. Franchising 
provided the consistency of customers, security of a national 
brand, a larger market share, and tools and resources to help 
us succeed in growing our business.
    While I was growing up, the hotel was not only our family 
business; it was our way of life. I learned important life 
lessons about the value of hard work and community service 
while I was making beds, cleaning rooms, taking out trash, and 
maintaining the upkeep of the property. Soon, as a teenager, I 
was learning the financial and managerial aspects of the 
business, and I became a more active participant in running the 
operations of our hotel and seeking opportunities for the 
development of additional properties.
    At 17 years old, I started Image Hotels to consolidate our 
operations and secured an SBA loan to develop my first 
property, a 50-room Ramada Limited in Port Wentworth, Georgia. 
I am proud to be a lifelong entrepreneur and job creator and I 
am grateful for the opportunities my family and I have had to 
be small business owners.
    Today, we own eight properties throughout the Southeast, 
including Marriott, Hilton, and Choice branded properties, 
where we employ 275 hardworking Georgians.
    Franchising is the preferred model in the lodging industry 
because it allows hoteliers to control our own businesses. It 
is for that reason I am here today to discuss the 
overwhelmingly negative impact a change in the joint employer 
legal standard for franchise business relationships will have 
on small businesses and our employees.
    The franchise business model has been essential in creating 
entrepreneurship opportunities for hoteliers, thousands of whom 
are first and second generation Americans. I fear the prospects 
for business ownership would be significantly limited if 
franchising were no longer available to us.
    Hotelier franchisees are responsible for undertaking all of 
the financial risk and directly operating the business. 
Further, it is the hotel owner and operator who controls 
staffing decisions.
    For their part, my franchisors provide a support system for 
my business and ensure I maintain a minimum brand standard. 
However, aside from some general conversations with my 
management teams, brand representatives do not interact with my 
staff and both the franchisee and franchisor prefer it that 
way.
    Franchisees also pay the franchisor a one-time license fee 
for the use of the flag or brand name and pay royalties based 
on gross revenue. These specific responsibilities are clearly 
defined in the franchise agreements I signed with each brand 
for each hotel but in no way does the agreement create an 
agency expectation or diminish my independence as a business 
owner.
    As a hotelier, I have come to depend on the franchise-model 
as the most advantageous means to small business ownership. An 
expanded joint employer legal standard indicated by the NLRB 
would compel franchisors to take an active role in staffing 
decisions due to the newly manufactured potential for 
liability. Franchisees would lose independence in decision-
making and would effectively become employees of the franchisor 
because they would be forced to follow someone else's 
directives.
    Similarly, as franchisors spend more time and additional 
resources at my properties, they will likely insist on charging 
higher royalties and license fees to account for their 
increased cost and, thus, add financial burdens on my 
businesses. As brands are coerced into micromanaging my 
businesses, our contractual agreements outlining our 
responsibilities will undoubtedly be upset and potentially 
invalidated.
    What I struggle with most is trying to understand the 
rationale of the NLRB and its General Counsel in seeking to 
upend a business model that has been exponentially successful 
for decades. The NLRB's General Counsel has referred to 
franchising as an outsourcing arrangement where the franchisor 
inserts an intermediary and merely designates the title of 
employer onto the franchisee in an effort to evade bargaining 
with organized labor. This is an absurd and offensive 
characterization of the life and business my family and I have 
built over the past 36 years.
    Chairman Roe and members of the Committee, I urge you to 
investigate this issue thoroughly and keep my employees and my 
story in mind as you review administrative decisions affecting 
small business owners.
    I encourage you and your colleagues to tour hotels in your 
districts and get to know the proprietors and employees who are 
eager to serve the guests who come to stay with them. I 
sincerely appreciate Congressman Carter taking time to visit 
our Double Tree, last week, at the airport recently and 
experiencing firsthand the impact of the lodging industry and 
the franchise model on the lives of our team, our families, and 
our community here in Southeast Georgia.
    I am grateful for the opportunity to speak with you today 
and I urge you to stand up for us and protect us from 
oppressive government overreach from bureaucrats in Washington, 
D.C., who do not understand our businesses, our communities, or 
our ways of life.
    Thank you.
    [The statement of Mr. Patel follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Chairman Roe. Thank you, Mr. Patel.
    Mr. Salgueiro, you are recognized for five minutes.


   TESTIMONY OF ALEX SALGUEIRO, PRESIDENT AND CEO, SAVANNAH 
           RESTAURANTS CORPORATION, SAVANNAH, GEORGIA

    Mr. Salgueiro. Thank you, Chairman Roe, Representative 
Allen, and Representative Carter for the opportunity to submit 
my testimony today. My name is Alex Salgueiro and I am Chief 
Executive Officer of Savannah Restaurants Corporation, owning 
10 Burger King restaurants in and around the Savannah, Georgia 
area. I would like to note that I am a small business owner; my 
views are my own and may not reflect those of Burger King 
Corporation or other franchisees within the Burger King brand.
    I was born in Havana, Cuba, in 1954. I am the son of a 
former Cuban governor who fled to the United States after the 
Cuban revolution. After two years in hiding, my family and I 
were able to join my father and seek refuge in the United 
States. As a boy growing up in Miami, Florida, I first became a 
crew member at a local Burger King, which is the world 
headquarters city, when I was 14 years old. After years of hard 
work and dedication, I became a district manager for Burger 
King Corporation and was tasked with opening the first Burger 
King restaurants in countries including England, Denmark, 
Sweden, Panama, Ecuador, Venezuela, and Colombia. After that 
stint, I then settled in Atlanta, Georgia, where I became the 
area manager for Burger King Corporation in that area for five 
years.
    My experiences with the Burger King brand helped me to 
recognize the opportunities available for lower- and middle-
class Americans. Through franchising, people can live the 
American Dream of owning a business, creating jobs and giving 
back to their community. After 16 years working for the Burger 
King brand, I decided to leave the corporation and purchase my 
own Burger King franchise in Savannah, Georgia.
    I now own ten Burger King restaurants, employing over 350 
individuals in and around the Savannah, Georgia, area. Several 
years ago, I owned as many as 15 restaurants and employed over 
480 individuals, but due to government mandates contained in 
laws such as the Patient Protection and Affordable Care Act, I 
have been forced to sell or close some of my restaurants, a 
third of my business, and put some of my employees out of work.
    I am here today to talk to you about the impact of yet 
another likely mandate on my business--the joint employer 
standard as proposed by the National Labor Relations Board 
(NLRB). As I understand it, the NLRB would like to expand the 
standard from requiring direct control to looking at the 
totality of the circumstances in determining whether 
franchisors or franchisees should be considered joint employers 
for labor claims. For the reasons below, and on behalf of a 
business that is solely owned and run by me, application of the 
proposed new standard would be devastating to my business, my 
employees and the franchise model in the United States in 
general.
    The Franchise Model: appreciating the franchise model is 
essential to understanding that a new joint employer standard 
would be devastating to all parties involved. As a franchisee, 
I am required to carry certain trademarks and other identifiers 
consistent with the Burger King brand. This model provides my 
business with brand recognition, quality control measures 
designed to ensure that customers receive a high quality 
experience no matter what franchise they visit.
    That being said, I've signed agreements specifically 
identifying myself as an independent owner and operator of my 
Burger King restaurants. I became a franchisee because of the 
opportunity to be my own boss and hire people from my 
community. I own my business and I'm in complete control of the 
hiring, firing, scheduling, and duty assignments of all my 
employees among many, many, many other responsibilities that I 
have. In fact, in my 45 years working for both the Corporation 
and on the franchisee side of the business, I have never been 
part of any discussion with Burger King Corporation and a 
franchisee over personnel matters. Franchisor-franchisee 
discussions have always been limited to non-labor business 
issues such as advertising, marketing, restaurant operations, 
and vendor sourcing, just to name a few. The franchise 
agreement specifically establishes franchisee independence, the 
cornerstone of the entrepreneurial spirit. By changing the 
definition of control from indirect to direct, the proposed 
joint employer language destroys an essential element of the 
franchise model.
    As a franchisee, I also agree to a provision in my 
franchise agreement that indemnifies Burger King Corporation 
against claims, demands, losses, obligations, costs, expenses, 
liabilities, debts, and damages. There's a whole lot of stuff 
that they're indemnified against, I could go on.
    As a result, if Burger King Corporation is treated as a 
joint employer, labor claims will skyrocket and all legal and 
financial obligations related to those claims will fall on my 
shoulders. As a small business owner, the time and cost 
required to defend those claims against both the corporation 
and myself will take time away from running my business, drain 
my resources, and will very likely cause me to go out of 
business.
    To put it plainly, a more broad joint employer standard 
would destroy the franchise model as we know it. Threatened 
with increased liability, franchisors will be forced to 
implement extreme oversight policies in local franchises across 
the country. And I have worked on that side of the business, so 
I know what I'm talking about. As a result, franchisors will 
increase not only corporate oversight efforts, but implement 
extreme, detailed franchisee and employee policies which will 
shift franchisees' focus from running their business and 
providing superior customer service.
    As a franchisee, I will be no more than a glorified manager 
in my own business and in my own restaurant. As the best 
resource to determine the needs of my local community and 
workforce, I will have no flexibility in determining the daily 
operations of my business. Further, increased franchisor 
oversight will undermine my relationship with my employees and 
leave me in a constant fear of labor claims. The years of labor 
and hundreds of thousands of dollars I have invested in my 
business will result in nothing more than an income and an 
employer manual. I will be a glorified manager.
    In addition to the oversight described above, a broader 
joint employer standard will likely cause franchisors to 
reconsider their corporate structures. A threat of increased 
liability may lead to increased corporate buyouts in an effort 
to consolidate franchisor oversight and management. As a 
result, the new joint employer proposal will likely lead to 
store closures, job losses, reduced economic activity, and 
reduced community support. In a brand that is almost 100 
percent franchised, thousands of Burger King owners and 
operators will be forced to sell their business and leave their 
employees in uncertain futures.
    In closing, the new joint employer standard--as proposed by 
the NLRB--will quickly destroy a successful business model, 
which has been in place for decades. The current standard, 
which correctly defines the terms in which an entity should be 
considered an employer, has been effective for all parties 
involved and will continue to work for many, many years to 
come. For those reasons stated above, implementation of a new 
broader standard will place unprecedented burdens on 
franchisees. For me, I will likely be forced to either close my 
restaurants or sell them to the Corporation. Either way, this 
proposal will likely cause small business owners like me to 
close their doors and put hundreds of thousands of employees 
out of work.
    My BK franchise has allowed me, and many other minorities 
like me, to attain the American Dream. Unfortunately, if the 
new joint employer standard, as proposed, is enacted, it will 
destroy the ability for many middle class Americans like myself 
to be able to use franchising to attain the American Dream.
    Thank you.
    [The statement of Mr. Salgueiro follows:]
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    Chairman Roe. Thank you, Mr. Salgueiro.
    Mr. Weir, you're recognized.


TESTIMONY OF FRED WEIR, PRESIDENT, MEADOWBROOK RESTAURANT CO., 
                     INC., CUMMING, GEORGIA

    Mr. Weir. Good morning, Chairman Roe, Congressman Allen, 
and Congressman Carter. My name is Fred Weir, I own four 
Zaxby's restaurants here in Georgia. Thank you for inviting me 
to testify on the new joint employer standard that frightens 
small business owners like me. This is a proposal that has 
almost unlimited destructive capability, and it threatens to 
undermine how I run my business, as well as the jobs of many in 
our employee family.
    I appear before you on behalf of the Coalition to Save 
Local Businesses and the International Franchise Association. 
The CSLB is a diverse group of locally owned small businesses 
like me, as well as associations and organizations that 
represent small business. The group is dedicated to protecting 
and strengthening sectors of small business, which are now 
under attack by the National Labor Relations Board, a 
regulatory body of five unelected Washington bureaucrats. The 
Coalition's goal is to maintain the current joint employer 
legal standard across federal and state statutes.
    The IFA is a leading association member of the CSLB, and 
works to protect, enhance, and promote franchising. In 
franchising today, there are more than 780,000 establishments 
across the U.S. that support nearly 8.9 million direct jobs, 
$890 billion of economic output for the economy and 3 percent 
of the Gross Domestic Product. IFA members include franchise 
companies in over 300 different business format categories, 
individual franchisees, and companies that support the industry 
in marketing, law, and other areas.
    The new joint employer standard is aimed directly at the 
destruction of small business in my local community outside 
Atlanta, of the small business in this state, and in every 
state across the country. This statement may sound like a 
pretty good example of hyperbole, except that it is not 
hyperbole. It is true. It's happening now and only the United 
States Congress can stop this economic juggernaut.
    Mr. Chairman, the title of this hearing is ``Redefining 
Employer.'' Please forgive me, but saying the joint employer 
redefines employer like a Category 5 hurricane redefines the 
shoreline. No, Mr. Chairman, a Category 5 hurricane eradicates 
the shoreline and everything on it. And this new standard for 
joint employer proposed by the NLRB is specifically designed to 
do the same thing: eradicate franchising and irreparably damage 
every small business built on the franchise model.
    Franchising is a method of doing business that has allowed 
hundreds of thousands of individuals who want to run their own 
businesses to realize that dream using their own sweat equity 
combined with someone else's concept. Franchising is a method 
of doing business that's so successful because it's so 
repeatable. Franchising provides a pathway to prosperity for 
entrepreneurs, employees, and communities in every corner of 
our country. I have seen franchising allow businessmen and 
women in my community to create and build businesses that 
otherwise they would have never had the opportunity to do.
    I have been in the restaurant business all my life. I 
decided to become a Zaxby's franchisee because I recognized the 
great concept built around unique stores and a very exciting 
menu of chicken, salads, and desserts that I knew would be 
successful. As I mentioned, I have four Zaxby's restaurants 
with 160 employees here in Georgia,and I operate restaurants in 
other states as well.
    I signed a franchise agreement with Zaxby's precisely 
because I knew I would be the boss of this new business, 
implementing the Zaxby's concept. I know the restaurant 
business, I know my community, and I knew that this Zaxby's 
concept would be successful there. In Cherokee County, where I 
have my restaurants, I do not distinguish between the success 
of my restaurants and the success of my employees. My goal in 
opening up my first franchise was to build something unique and 
special not only for my own family but for the many teams 
members that work for us.
    It is no exaggeration that I treat all my employees as if 
they were members of my own family, because in my eyes, they 
are. Many on our staff have loyally worked for years with the 
special relationship and culture that we have worked hard to 
create. This culture is the reason many on our staff have 
stayed for so long. However, if franchisors and franchisees are 
defined as joint employers by the NLRB, I might lose control of 
the business and the many decisions that are made on the local-
level by myself and our managers, who know and care for team 
members. And that would be lost. Please allow me to give you a 
few examples.
    Our staff bring their best to work every day. They know I 
care about them, and I want them to succeed. When a high school 
student starts his or her first job at one of our Zaxby's 
restaurants, I make sure her parents are there at the 
orientation session. I want the young lady to see the pride in 
her parents' eyes as she begins her first job and learns what 
it means to be a part of the community with a higher purpose. I 
want her to know that her job is not just a place to earn a 
paycheck, but it's also a community where she will collect a 
larger dividend of meaning in her life.
    Sometimes my employees find themselves in very difficult 
personal circumstances at home, with a sick parent or child, or 
with other life challenges. One relatively young employee 
suddenly had a heart attack, and had used up all of his 
personal leave time. We made sure he continued to be paid until 
he could resume a normal schedule.
    Another employee, a single mom, suddenly faced her own 
mother's illness and needed to take time off to care for her. 
She took the time, and we made sure she continued to take home 
a paycheck.
    We offer scholarships to our employees, young and old, so 
they can enrich their education. We do these things because we 
would do them for our own family. We have employees have been 
with us for years. They stay, not for the money. We all need to 
be paid, but our employees stay because that's where they want 
to be. This is where they want to live.
    Mr. Chairman, the new joint employer standard from the NLRB 
would drain the life out of hundreds of thousands of small 
businesses that operate under the franchise model. The new 
standard would force operational changes on the franchisor and 
the franchisees. Since the NLRB appears determined to change 
this measure of who controls the business, the balance of 
control between the franchisor and franchisee will have to 
change. The franchisor's magnified liability will lead to 
substantially diminished control by the franchisee.
    Decisions that are mine today will be the corporate 
franchisor's tomorrow. Today's culture of family practices and 
for caring for community will be replaced tomorrow by the 
corporate personnel manual. Maybe there's no room for parents 
at their daughter's orientation. Maybe there's no room in a 
manual for continuing a paycheck after leave is exhausted. 
There might not be room in the manual for helping a single mom 
whose mother is ill. Without any doubt, there will be fewer 
opportunities for new entrepreneurs who want to start their own 
businesses, and who would have used the franchise model to do 
so, but find the joint employer standard has shut down the 
franchising pathway to prosperity.
    The brave new world of a wide-open, nebulous joint employer 
standard is a bleak and desolate place. It is bleak because it 
rests entirely on wrong assumptions about how businesses--
especially franchise small businesses--operate in towns and 
communities across this country. It is desolate because it 
deprives people, the entrepreneurs and risk takers who start 
businesses and the individuals who find meaningful employment 
there, of a future and the opportunity for a better life.
    This plea is not based on politics either to the right or 
the left. I know beyond a shadow of a doubt our business has 
solely been successful because of the amazing people who work 
for us and the decisions I have been able to make about our 
business culture. A new joint employer standard would 
fundamentally alter the way I operate and inhibit our ability 
to expand and prevent much of this from happening. That does 
not benefit the hard-working people we have now on our team, 
and prevents many others from joining our family and growing 
with us, creating even more jobs. The NLRB needs to leave the 
joint employer standard as it is.
    Mr. Chairman, I ask that this Subcommittee and your 
colleagues in Congress do everything to stop the NLRB. In 
fighting back, you will help save local businesses like mine.
    Thank you very much for your time.
    [The statement of Mr. Weir follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Chairman Roe. I thank the panel for their testimony and I 
will now begin the questioning. I recognize myself now for five 
minutes.
    I think, Mr. Patel, I will start with you. You mentioned, 
when reading your testimony last evening, ``What I struggle 
with most is trying to understand the rationale of the NLRB and 
its General Counsel in seeking to upend a business model that's 
been exceptionally successful for decades.'' Why do you think 
that is? Because you are correct in that.
    Mr. Patel. Why isn't it? I don't see any other pressure 
group going to Congress trying to correct it, that it's not 
successful. The one thing that this does--and to what Mr. Weir 
said--is building culture in a company. When corporate America 
or some other agency up North or out West is trying to tell you 
how to mandate employees, it changes the culture of a company.
    I can give you lots of stories within our organization 
where we have taken a housekeeper or a night auditor to a 
general manager, the opportunity to go up in a company. The 
brand or the franchisor applauds that. They do not prohibit 
that. Now take the reverse, it is going to come back and say I 
am not motivated to take that night auditor or that housekeeper 
to graduate them, if I've got standards coming on to me that 
say you need to do X, Y, and Z.
    So this has been successful for decades, I don't see any 
other group trying to correct that formula, the franchisor and 
the franchisee.
    Chairman Roe. Mr. Weir stated--and as I read your 
testimony--you compared the joint employer--the new definition 
to a Category 5 hurricane, that the NLRB wants to destroy the 
franchise model. I disagree with you, I think basically what it 
is, is the NLRB is tilting the table in favor of unions.
    I grew up in a union household. My dad was a member of the 
union, and the NLRB is supposed to--I am an old basketball 
player and the NLRB is supposed to be a fair referee. It is 
supposed to come in and represent the employer and the employee 
so they all get a fair shake.
    What this particular NLRB is doing is tilting it 
dramatically in the favor of the unions. And let me just give 
you an example. This is not the first assault on small 
businesses that I have seen by the NLRB. One was the ambush 
elections. The average time it takes to have an election, so 
that everybody gets all the information on the table, has been 
38 days, that is how long it is. Now it can be as little as 11 
days.
    In my business--I am a small business person. We started a 
medical practice with four doctors, 12 employees. We now have 
100 providers and 450 employees. I could not find Mr. Mintz in 
10 days to get representation for my business. I could not find 
a good labor lawyer where I live in that length of time.
    And I think the secret ballot protection, I mean the most 
sacred thing--I put a uniform on and left this country and 
served in the Second United States Infantry Division to protect 
your right to a secret ballot. And that is trying to be taken 
away from us. And I say this as a joke, my wife swears she 
voted for me, but I do not know whether she did or did not, 
because she had a secret ballot. She claims she did, but I do 
not know for a fact that she did.
    [Laughter.]
    Chairman Roe. So some days I probably wonder whether she 
did or did not.
    But I could go on and on with this, and I think that is 
what this is. And you all have very eloquently said and stated 
that you run your business day to day, you decide what the 
wages are, what the hours are, all of those things. And the 
other thing, I know the person who always employed me was the 
person who signed my paycheck. And I think you sign all the 
paychecks of your employees, I believe that you do.
    Mr. Mintz, I want to get a statement on the record from 
you. According to recent media reports--yesterday--officials at 
OSHA have asked regional officials to take into account whether 
the franchisor controls the workplace safety practices of the 
franchisee when considering potential violations at the 
franchise business. Could you make a statement about that, 
please?
    Mr. Mintz. Chairman Roe, I think that is a move that is 
consistent with what we are seeing, not just at the National 
Labor Relations Board, but throughout the administrative 
agencies that are staffed by appointees, political appointees. 
And I happen to agree with you with respect to the labor law, 
the labor law component. I think it is designed--this is 
designed since labor law was not effectively changed itself, 
the Employee Free Choice Act failed and they are moving to seek 
to ambush elections and now the expansion to try to enhance 
unions' ability to organize on a larger scale.
    I think the expansion of the joint employer definition by 
OSHA as well as by the Department of Labor and the EEOC--the 
common thread running through them is that there are going to 
be more employers that are subject to potential administrative 
and financial liability and more employees that will have 
access to and recourse through the administrative agencies for 
violations of what they view in the workplace.
    Chairman Roe. Let me just state for the record before I 
yield my time, is that look, you have a right to unionize. In 
America, that is a right we have that is clearly established in 
law. But you also have a right to make an informed decision. If 
you want to have it, fine, vote for it. That is legal in 
America. And if you do not, you ought to be able to not vote 
for it. It is also legal to do that. And as I said, it looks to 
me like the NLRB, and especially with this, is trying to close 
a billion dollar plant in Charleston, South Carolina. That was 
astonishing to me, that they tried to do that. And no jobs were 
lost in Everett, Washington. As a matter of fact, jobs were 
added at Boeing in Everett.
    My time is expired. I yield to Mr. Carter.
    Mr. Carter. Thank you, Mr. Chairman.
    I am going to start with Mr. Patel. Mr. Patel, as you 
mentioned, I had the opportunity and was delighted to visit one 
of your hotels last week, and I appreciate your hospitality 
very much. I could not help but notice the relationship between 
you and your employees. I mean you seemed to take a personal 
concern and personal interest in your employees.
    And I am just wondering, if this rule were to go through, 
do you see that--I am sure you are not going to change, but 
because of circumstances--if this rule went through, I am not 
sure that the franchisees would still have that same 
relationship.
    Mr. Patel. That bond and that connection. I think, would we 
give it a valiant effort and try to keep the culture and the 
etiquette the same? Absolutely. Will law or brand regulations 
in terms of governing HR allow it to continue? I highly doubt 
it will. And again, when you're mandated to do things a certain 
way, it's going to create a separation in that. Above and 
beyond that, you know, I'll say it for the third time, I'm 
going to be a manager for those franchisors and that's not the 
American Dream and it's not allowing us to continue, what I'm 
going to say, as a true free enterprise system. You're 
constricting that.
    Mr. Carter. Let me ask you about--you utilize 
subcontractors?
    Mr. Patel. Yes.
    Mr. Carter. How do you think this is going to impact that 
portion of it?
    Mr. Patel. Well, trickle-down economics, trickle-down labor 
market, you know, this is going to create a domino effect in 
the labor market. So when I get ready to develop or acquire a 
hotel, we look at the market from a performance standpoint, 
then you look at the labor market. So if the subcontractor is a 
franchisee, say U.S. Lawns, a franchise company that does 
landscape work, if they're doing landscape work for me at one 
of my hotels, he's going to have the same bureaucratic things 
that we have to deal with. Right? So, it's going to trickle 
down in that way.
    You know, the other issue is if I'm forced to lay off or 
let go, then it's going to create a shift in employment. So I 
think subcontractors will also feel the same pain and, you 
know, just as I'm their customer, will I get the same service? 
I doubt it.
    Mr. Carter. Right. You mentioned that you're a second 
generation hotel owner and you obviously have been successful 
and you know what it takes to build a business and to keep it 
successful.
    What about future expansion? Do you think this is going to 
have a negative impact or a positive impact on future 
expansion?
    Mr. Patel. This would have a definite negative impact. I 
would probably change my business model completely to where I 
would probably get out of this business particularly and get 
out of franchising as a whole. You guys have got to keep one 
thing in mind: small businesses in general today have a hard 
time maintaining HR. Just hiring one person, the amount of 
checks, balances, and assurances we have to go through to stay 
within the law is very hefty and now we've just added the ACA, 
which pardon me, I haven't figured it out yet, but I don't 
think Congress has figured it out. It's horrendous.
    And then we add this to that? We are just growing that 
stack and I'll ask you guys, why would I want to employ more 
people? Why would I want to employ more people, I do not want 
to create more jobs, unfortunately, because you're not--
Congress or the law is not motivating me to go out and do that.
    Mr. Carter. Thank you, Mr. Patel.
    Mr. Salgueiro, you mentioned in your testimony the 
interaction between the franchisee and the franchisor on non-
labor issues, and that obviously exists. But now it is going to 
be expanded if this rule goes through, and you are essentially, 
as you said, and as all of you have said, going to end up being 
just a manager for Burger King.
    Mr. Salgueiro. Well, if the numbers are correct that there 
are some 90 million-plus people out of the workforce right now, 
get ready for that number to explode and go up, because 
franchisees will want to have much fewer employees than they 
have now. Over the last 20 years, the average Burger King 
restaurant used to employ 50 employees and now we employ 25, so 
it's cut in half. This type of move would actually cut that 
further. And I can tell you, robotics and American ingenuity is 
hard at work right now trying to replace every one of those 
jobs in these kitchens. You know, McDonald's is doing a lot of 
research, Burger King, they're all putting a lot of money into 
research.
    But it would be--like Mr. Patel said, we have a culture 
that if you work hard and you do well, there's no limit to how 
far you can advance, how much you can get paid. You know, our 
GMs have the power to raise people's salaries, to raise their 
wages, all they have to do is fill out one form, one page form 
and their supervisor signs off and it is done. And I can tell 
you, you take that type of control away where supervisors 
cannot even pay people what they're worth and the whole thing 
just self-destructs.
    Mr. Carter. Right, right.
    Mr. Salgueiro. This is just a move by our government to 
facilitate unions to get into industries that they don't belong 
in, that they've tried to be in and they've never been able to 
crack because there's just no need for unions in our 
industries. But they're bound and determined that they're going 
to get there and what they're going to do, they're going to 
destroy the industries.
    Mr. Carter. Right.
    Mr. Weir, every one of you has talked about the 
relationships with your employees. I know that Zaxby's is a 
Georgia company and is a community supporter. Zaxby's, as all 
of you, has been very supportive of the community. Do you see 
that changing as a result of the franchise--not necessarily 
Zaxby's franchisor, but just the fact that the small business 
ownership of it goes away?
    Mr. Weir. I do----
    Chairman Roe. Please be brief because he has exceeded his 
five minutes.
    Mr. Weir. Yes, sir.
    I do, in several ways. One, just the sheer economic cost of 
having to change the model. Obviously we're in business and we 
commit part of what we have left over after operational 
expenses to participate in the community and be charitable. I 
see that being tremendously impacted just by the additional 
onus of all the regulations and potential liability as well as 
having a hierarchy of stricter control. Things that we may do 
and understand on a local level may not be understood at the 
corporate office in Athens, Georgia, and it quickly washes 
away. That affects a whole community, it affects organizations 
like you mentioned with CASA, affects a lot of people in a lot 
of ways that you'd never see in a larger-level, but at the 
local-level have a tremendous impact on individual lives.
    Mr. Carter. Right. Thank you, Mr. Weir.
    Mr. Chairman, I apologize, I yield back my exceeded time. 
Thank you.
    Chairman Roe. Thank the gentleman for yielding.
    Mr. Allen, you are recognized for five minutes.
    Mr. Allen. Thank you, Mr. Chairman.
    Mr. Patel, when you build a hotel, do you own that ground 
and that building?
    Mr. Patel. Absolutely.
    Mr. Allen. So you go and you get a loan for that. So you 
are at risk.
    Mr. Patel. Absolutely.
    Mr. Allen. Okay. So maybe your hotel brand is maybe 
domiciled in a state that is a not--Georgia by the way is a 
right-to-work state. Does everybody understand how that works? 
But, so maybe your franchise is located in a state that is not 
a right-to-work state. And so under this rule, if I understand 
it, and, Mr. Mintz, you come in if I am going down the wrong 
trail here.
    But under this rule, as I understand it, if it is a co-
employment agreement, that if that group in New York or 
wherever, in a state that is not a right-to-work state goes on 
strike, that in fact, your employees could walk off the job?
    Mr. Patel. I'm assuming they could also have picket signs 
in front of my hotel. I don't know.
    Mr. Allen. Okay, so they could shut your business down.
    Mr. Patel. Absolutely.
    Mr. Allen. Okay. Mr. Mintz, that is against the law in 
Georgia.
    Mr. Mintz. Well, the federal law, the National Labor 
Relations Act, protects secondary or neutral employers. The 
problem here, the web that is going to be created is you're 
going to have links between the two employers that are separate 
but considered joint employer for purposes of the labor law. 
And that would enable someone to--some union--to engage in 
pressure tactics, picketing, and handbilling at Mr. Patel's 
hotel in Georgia, but it might also allow them to engage in 
similar conduct at the Marriott headquarters or any other 
Marriott that's located in Georgia or elsewhere.
    Mr. Allen. Exactly.
    Mr. Mintz. That's the true problem that's created by this.
    Mr. Allen. So basically that could put you out of business 
and put you at risk of losing your business.
    Mr. Patel. Absolutely.
    Mr. Allen. Okay. Well, that is the seriousness of what we 
are dealing with here.
    The other thing is that, you know, my family's business is 
the construction industry and of course we use a lot of 
subcontractors, who are small independent businesses. Mr. 
Mintz, how would--for example, the way I understand this is, if 
this applies, that as a general contractor, that basically that 
labor would answer to me as a joint employer agreement and I 
could go tell that workforce to go do this or this against the 
will of the very subcontractor who is contracted to do the job.
    Mr. Mintz. If the general and the sub are considered joint 
employers, you're going to have influence and attempted control 
by the general over the sub's employees. And you're also going 
to have potential liability of the general for anything that 
the sub did or did not do, consistent or inconsistent with the 
labor and employment laws. And I think the impact of that is 
going to be that more and more general contractors or other 
employers, who use subcontractors--for instance, they are a 
manufacturing facility and they use a sub to do their cleaning 
work--they are going to re-examine the value of that type of 
relationship. And even though that cleaning is not their core 
competency, they're going to re-assess whether they'd rather 
have control and do the work in-house and thereby cut the 
relationship with the subcontractor out there.
    Mr. Allen. Mr. Weir, you have restaurants in other states?
    Mr. Weir. Yes, sir.
    Mr. Allen. Do you have any restaurants in states that are 
not right-to-work states?
    Mr. Weir. No, sir. We're in all right-to-work states.
    Mr. Allen. Okay. So of course, Zaxby's is headquartered in 
Georgia I believe, is it not?
    Mr. Weir. Yes, sir, in Athens.
    Mr. Allen. Okay. So you would not be faced with say the 
issue that Mr. Patel would be faced with because of the 
situation here in Georgia and the ability for you to run your 
business as you see fit.
    Mr. Weir. Potentially we could, sir. There are Zaxby's 
restaurants that are now going into states that aren't right-
to-work and so if this was an expanded thing and we are all 
considered as one, the impact could be felt by all of us, is my 
understanding at least initially here.
    Mr. Allen. I did not think about that, but that is another 
issue. Because if you went into a state, for example, that 
organized a restaurant, then the same rules would then apply to 
every restaurant.
    Mr. Weir. It seems that is what they're wanting to do.
    Mr. Allen. Is that correct, Mr. Mintz?
    Mr. Mintz. Well, it would depend on how the Labor Board 
defines the bargaining unit, which might be different than the 
scope of the employer's practices. That depends on how much 
interchange there is between one group of employees and another 
group of employees.
    Mr. Allen. I yield back the time I do not have, Mr. 
Chairman.
    Chairman Roe. I think we will go ahead with a second round, 
if it is okay with everyone, to ask a couple more questions.
    One, on subcontractor, I am not in a franchised medical 
practice, but if I were, I subcontract out environmental 
services. We have a huge office building and we subcontract 
that out. With this ruling, I would then be in charge of the 
people coming in to clean my office up. I have never done that, 
I have had the subcontractors--I have a contract with them what 
I expect in the contract to do. So this absolutely changes the 
relationship between, as you pointed out, Mr. Allen, clearly.
    The other thing that was brought up and I think by Mr. 
Patel, was the cost of regulations. I am going to mention right 
now, as we know, it costs a lot to send your kids to school and 
it pains me to say that I have a friend at Vanderbilt, being a 
UT graduate, but I do. And the chancellor there is a friend of 
mine. He came to my office the other day and this was not just 
Vanderbilt, but he had a study with the University of Maryland, 
two-year colleges, small Christian colleges, for-profit 
colleges, about 20 of them. He found that Vanderbilt 
University, just complying with government regulations, added 
$11,000 per student per year to their tuition. Unbelievable. 
And that is going on with--I heard Mr. Salgueiro talk about 
complying with the ACA regulations, which we still do not--and 
I have read that bill in detail--and we still are trying to 
figure out what it really means, as you just said. We are not 
sure, as Mr. Patel said, what it means.
    I think I want to get something on the record here. Mr. 
Mintz, you said this as clearly as anybody, in your first two 
paragraphs of your summary, ``Under current and well-
established legal precedent, two employers are deemed `joint 
employers'''--and this is decades old now--``when two entitles 
share the ability to control or co-determine employees' 
essential terms and conditions of employment.'' Which would be 
hours of work, hiring, firing, what you do.
    I just heard three owners say that absolutely is not what 
happens. So under current law, the NLRB, along with the General 
Counsel, is totally changing a business model that affects 
780,000 franchisees and almost 9 million employees. That is 
what is about to happen. It is a very big deal.
    Mr. Mintz, did I understate that or overstate that, or did 
I state it correctly?
    Mr. Mintz. You stated it correctly. We're moving, the Labor 
Board, or the General Counsel for the Labor Board, would have 
the standard moved from direct control, which is the current 
requirement, to potential or indirect control. And then they 
also consider the industrial realities test, whether it's 
necessary to have the larger secondary employer at the table 
because of the economic relationship with the other.
    Chairman Roe. Well, I think it has become clear to me. We 
held this hearing in Mobile, Alabama, two days ago and I have 
heard from similar business owners very similar commentary. And 
I think we know the end result of this, it is not good for 
employees and it is not going to be good for employers and 
business development. And you have already heard, because of 
what has happened with the ACA, Mr. Salgueiro has had to reduce 
the number shops and stores that he has open right now.
    I will now yield to Mr. Carter.
    Mr. Carter. Thank you, Mr. Chairman.
    Mr. Mintz, we understand what impact this is going to have 
on these types of businesses, the franchisees, and franchisors. 
What about, are there any others that we are not seeing, are 
there any other industries that we typically would not think 
that this would impact that perhaps it would impact?
    Mr. Mintz. I think it's about as broad as you can paint 
that picture of potential impact. I just used one example of 
the manufacturing facility that has a contractor that does 
cleaning work. A facility might have drivers that they use for 
your local deliveries or over-the-road deliveries. Depending 
upon the contractual relationship and how that is structured, 
the General Counsel would use that even unexercised authority 
or control to find the two entities joint employers. And I 
think what is going to happen is that the one employer is going 
to look at the value of maintaining that and the risks of 
maintaining that and then reconsider whether or not he needs to 
have that relationship and that exposure or whether he wants to 
take that work back in.
    So I think anybody that functions as a subcontractor to 
another employer is at risk. Could be cafeteria service, any 
type of secondary but required function at the main employer's 
job site or within his business.
    Mr. Carter. Right.
    Mr. Weir, you made a comment that I thought was 
interesting. You said that the franchisor's liability is going 
to increase. Therefore, as you would expect and as anyone would 
expect, the franchisor's control over the business itself would 
have to increase. That is only natural, correct?
    Mr. Weir. Yes, very much so.
    Mr. Carter. And this is where the ultimate problem comes 
in: if the franchisor, if their responsibility is increased, 
they are naturally going to have to have more control over 
that.
    Mr. Weir. Very much so.
    Mr. Carter. Which in this situation means that the small 
business owners have less control over it.
    Mr. Weir. It does. And my fear with that as well is when 
that model changes like that, what is the incentive for the 
franchisor to franchise. You suddenly just have a bunch of 
corporate stores. You take away a lot of the entrepreneurial 
spirit of people who are able to grow things much faster than a 
corporate chain would. And so you have a huge economic 
stagnation created from that.
    Mr. Carter. Mr. Mintz, that being the case, what gives 
here? What is the NLRB thinking? I mean what ultimately is 
their goal?
    Mr. Mintz. I think they're ultimately trying to expand the 
scope of people that are covered by it, and I frankly think 
that the General Counsel and his political allies are 
interested in expanding the collective bargaining relationships 
because of the deep trouble that organized labor finds itself 
in. It represents such a small percentage of the American 
workforce and it's dwindling and they're looking for some 
administrative vehicle to try to pump those numbers up.
    Mr. Carter. Right.
    Again, I want to thank all of you for being here. This is 
invaluable, thank you.
    Mr. Chairman, I yield back.
    Chairman Roe. Mr. Allen, you are recognized.
    Mr. Allen. Mr. Patel, you touched little bit on what I am 
hearing from all in the small business community: compliance 
requirements. Does it, and has it, affected your ability to 
reinvest in your business and grow your business?
    Mr. Patel. Yes. So to give you an example, on my drive over 
here, I mentioned to two of the people I was with, you know, we 
are very selective on where we invest. Before, it was more 
freelance to where let's just do it. So we've already 
constricted ourselves to be more conservative on where we 
invest. So today, you know, I have eight properties, it could 
have easily been 10, which would have yielded maybe 50 more 
jobs. And we want--I want to go to sleep good at night, I don't 
want to have to worry. So yeah, we're more conservative today.
    You know, Silicon Valley has a new adjective out, it's 
called ``disrupt,'' I'm sure guys know what it means and the 
story behind it. So Air B&B is a disrupter to the hotel 
universe today. If this passes, this will be a disrupt or a 
disrupter to the franchisee-franchisor model. And even though I 
haven't talked to franchisors about it in detail, I promise you 
they equally probably do not want to get involved in telling 
Mr. Salgueiro or Mr. Weir or Mr. Patel, this is your schedule 
for your upcoming week. They don't want to be involved, they 
don't know my labor market the way I know it.
    Mr. Allen. Mr. Salgueiro, from the standpoint of compliance 
and this continued threat by the federal government on the 
small business community, is it, in your opinion, keeping you 
from expanding your enterprise?
    Mr. Salgueiro. Already the numerous compliances that are on 
top of all of us are just earth-shattering. We spend countless 
hours and thousands of dollars. Just take the ACA, there are 
these new forms that have to be filed here by December that, 
you know, you have to get a lawyer to fill them out because if 
you don't fill them out, you're going to be fined and you're 
going to be fined per employee. And in my case, that could be, 
you know, half a million dollars, it could be three quarters of 
a million dollars, and I'm out of business.
    So we're already spending just an inordinate amount of time 
trying to react to all the compliance issues, you know, with E-
Verify, with ADA, and just countless others that I will not 
mention right now.
    I just opened a restaurant today, I can tell you I would 
have been opened probably 10 days ago, but there's a lot of 
inspections you've got, there's a lot of hoops you have to go 
through, federal, state, and local. And you know, we don't mind 
doing it, but it's incredible when they tell you to rip out the 
whole wiring because it's low voltage and it should be burial 
cable and those types of mundane regulations that no one ever 
told you about.
    But there's no doubt, this will negatively affect all 
franchise businesses in America and franchising has been in 
America now for over 50 to 60 years, it has been the most 
successful way for people to open their own business and to get 
in business and to leave the middle class and to be able to 
give back to their communities and their states and their 
country.
    Mr. Allen. Mr. Weir, how about you? Is the federal 
government keeping you from growing your business and hiring 
more folks?
    Mr. Weir. Very much so, and just a lot of the stuff that we 
still don't know certainly scares us and causes us to really 
rethink just how big we want to get. And it does, it hampers 
us. You know, and the crazy thing with it, when you look at the 
franchising model in America, there's no other model that's 
created more millionaires and created the American Dream for 
more people, regular people. These aren't people that already 
had something and expanded on it. They were often regular 
people. And I could give you countless stories of people in our 
organization or within the Zaxby's brand who started out as 
very regular folks, team members, assistant managers, who have 
gone on to be able to own their own business and live out the 
American Dream.
    And to use a politically correct term, it's the ultimate 
redistributor of wealth. You take a model where everyone shares 
in the profits and even someone who is an employee has the 
opportunity, much like Mr. Salgueiro, to see opportunity and to 
start out to build something, and that's replicable so that 
people that are working for him now, in 10 or 20 years, can do 
the same thing. For the life of me, I don't see why you would 
want to prevent that.
    Mr. Allen. Well, I want to thank all of you for your 
courageous testimony this morning. I mean, we love this country 
and we want to make this country better. And one of the 
problems, Mr. Chairman, we have in this country today is jobs. 
We have got to put people back to work. And I want to thank you 
for helping us do just that, because this goes on the record, 
we will carry it back to Washington, and I promise you we will 
do everything we can to help you create jobs.
    Thank you.
    Chairman Roe. I thank the gentleman for yielding.
    I will now ask Mr. Carter if he has any closing remarks.
    Mr. Carter. Thank you, Mr. Chairman.
    Again, I want to thank you, Mr. Chairman, for your 
leadership in Congress and particularly on this issue, and for 
coming down here. Again, as I said in the opening, instead of 
you going to Congress, Congress is coming to you. We need more 
of this, and we want more of this. We want to hear from you. 
You know, the best thing the government can do is get out of 
the way. And quite often, we are the problem; we are getting in 
the way.
    So, I thank all of you for your testimony, thank all of you 
for attending, and thank you, Congressman Allen, I appreciate 
you being here as well.
    Again, we are here to help--I know, we are from the 
government, and we are here to help. I know the irony in that.
    [Laughter.]
    Mr. Allen. You did not have to say that.
    Mr. Carter. I know. But truthfully, we do want to help you. 
You are the backbone of our economy.
    Thank you, and I yield, Mr. Chairman.
    Chairman Roe. I thank the gentleman for yielding.
    Mr. Allen, do you have any closing remarks?
    Mr. Allen. I just again would like to say thank you to our 
panel for their courageous testimony here today.
    You know, all I want to encourage you folks to do is hang 
in there. You know, we are fighting a good fight.
    Mr. Chairman, thank you. Thank you for coming down here in 
God's country. Like I said, our colleagues in the United States 
Congress are very envious of us down here in Georgia and that 
is because of what you are doing. You are sticking in there, 
you are taking risks to create jobs and we deeply appreciate 
that. Please keep it up, and we are going to do everything we 
can to try to keep the federal government off your back.
    Chairman Roe. I thank you.
    And I want to thank again our panel. You all did a 
tremendous job here today. I too am a small business owner, 
went out 30-something years ago, hung a shingle up, started my 
medical practice, and we grew it. The biggest asset you have in 
your business are your employees, no doubt about it. The worst 
day of my life is when my nurse decided to stop and go 
somewhere else. As a matter of fact, it got so bad I married 
one, my nurse, I did not want to lose her.
    Anyway, you know, I see the over-reach of government and 
the cost of regulations and so forth. I mentioned at 
Vanderbilt. We did a field hearing--I have done these around 
the country and it is great to do it in a part of the country 
where I understand everybody, that is also good. When I go up 
north, it is little harder for me to understand them and them 
me.
    But there was an agency that went into a surface mine and 
gave--a surface mine now--and gave an MSHA violation for a two-
pronged toaster in the office. That is past ridiculous when 
that happens. And that is just somebody checking a box to 
maintain a job. That does not add anything to benefitsafety, it 
does not add anything. Look, we do need some rules and 
regulations and safety in places. I toured a number of 
factories last week, unbelievable the difference in the 
factories in this country today than there were when my dad 
worked in a factory from World War II on until he passed. So it 
is much safer, a much better work environment because for that 
factory, for my office, for your businesses, the single most 
important asset you have are the people working for you, no 
doubt about it. And we have had employees in our office that 
have been with us almost 40 years so we try to create a work 
environment because I understand how important those folks are.
    I think this is just another assault by the federal 
government on small business. And look, our problem--we have a 
deficit in Washington, D.C. Let me tell you who can fix the 
deficit, I am looking at it right here. Business can fix the 
deficit. We raise the GDP from two to three, three and a half 
percent, the deficit goes away, jobs get created, people get to 
work, and we have more money coming into the federal 
government. We will solve the problem in doing that.
    And Mr. Salgueiro, you mentioned about filling out that 
form--welcome to Medicare. I have been dealing with that for 
almost 40 years. If you think you have a problem filling forms 
out, you should try to be on the Medicare side.
    I want to thank the people here at the Coastal Georgia 
Center and certainly the incredible hospitality you all have 
shown us in South Georgia. It would be a privilege for me to 
come back here again.
    With no further comments, the meeting is adjourned.
    [Whereupon, at 11:25 a.m., the Subcommittee was adjourned.]

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