Decelerator of Small Business and Startup Growth: “Faster Labor Contracts Act” (FCLA)

By SBE Council at 8 June, 2026, 10:56 am

Oppose the FCLA (H.R. 5408) via Discharge Petition H.Res. 1140

Dear U.S. House Member:

On behalf of the Small Business & Entrepreneurship Council (SBE Council), I write in strong opposition to H.R. 5408, the "Faster Labor Contracts Act" (FLCA). America's small businesses and entrepreneurs support fair workplaces and good-faith negotiations to address employment issues directly with their employees. The FLCA would allow government-appointed arbitrators to dictate the terms of private labor agreements. Rather than encouraging voluntary agreement between employers and workers, the bill substitutes government intervention for negotiation and risks imposing workplace arrangements that fail to reflect the realities of individual businesses and their employees.

Under the bill, employers must begin bargaining within 10 days of a new union's request, with unresolved negotiations moving to federal mediation after 90 days and then to binding arbitration if no agreement is reached within 30 additional days. A three-person arbitration panel may impose a contract that remains in effect for two years, without guaranteeing workers a vote on the agreement or providing employers a meaningful opportunity to reject unsustainable terms. For small businesses, startups, and entrepreneurial firms, the consequences could be severe. The vast majority of small businesses do not employ dedicated labor counsel and cannot absorb months of legal and administrative costs associated with prolonged negotiations and arbitration proceedings.

Moreover, labor costs often represent the largest operating expense for a small business, and these firms are already navigating persistent labor gaps, rising benefit costs, inflationary pressures, and higher borrowing costs. If arbitrators impose wage, benefit, staffing, scheduling, or work-rule requirements that exceed what a business can sustainably support, the result may be reduced hiring, fewer advancement opportunities, cuts in employee hours, delayed expansion plans, lower investment in worker training and benefits, or business closure.

The bill's mandatory arbitration framework contains no meaningful safeguard for small employers or their employees. While arbitrators are instructed to consider an employer's financial condition, they are not required to ensure that imposed contract terms are compatible with a firm's long-term viability, competitiveness, or ability to maintain and grow its workforce. Government-appointed arbitrators bear no responsibility if an imposed agreement ultimately leads to layoffs, reduced hours, canceled investments, or business failure. Small business owners and workers bear those consequences.

The FLCA also risks reducing the flexibility and benefits that many employees value. Entrepreneurial firms frequently use performance-based compensation, flexible scheduling arrangements, bonuses, profit-sharing incentives, and customized workplace policies that reflect the needs of their workforce. A government-imposed contract may not adequately account for these arrangements or the unique circumstances of individual businesses and employees. Workers could ultimately find themselves subject to terms that neither they nor their employer had a meaningful role in shaping.

The legislation is especially concerning for startups and high-growth firms, as they often experience rapid changes in staffing needs, compensation structures, and operating conditions as they scale. Their ability to adapt quickly is often what allows them to innovate, compete, attract investment, and create new jobs. A government-imposed labor contract lasting two years could significantly constrain that flexibility, reducing opportunities for growth, innovation, and limiting future employment opportunities for workers.

The FLCA would also create incentives that make first-contract negotiations more adversarial, not less. The current system requires good-faith bargaining while preserving the principle that neither side can be compelled to accept terms it has not agreed to. The prospect of binding arbitration changes those incentives. Rather than encouraging compromise, parties may be encouraged to hold out in hopes of securing a more favorable outcome from arbitrators. This framework shifts leverage away from voluntary agreement and toward strategic delay, increasing the likelihood of contentious negotiations rather than productive workplace cooperation.

America's small businesses thrive when labor-management relationships are built on direct communication, flexibility, innovation, and mutual agreement - not government-imposed outcomes.

SBE Council urges all members of the U.S. House of Representatives to VOTE NO on H.R. 5408 and reject any effort to impose compulsory first-contract arbitration on America's small businesses and workers. The FLCA would create unnecessary risks for entrepreneurs, growing businesses, and employees alike while undermining the flexibility and cooperation that are essential to workplace success and economic growth.

Sincerely,

Karen Kerrigan
President & CEO