Opponents of a new joint employer standard from the National Labor Relations Board scored a victory Friday with congressional action taken to rescind the rule.
The U.S. House of Representatives voted 206-177 on a Congressional Review Act resolution, which allows legislators to reverse an agency’s action. The resolution was supported by 198 Republicans and eight Democrats, with 50 representatives abstaining.
The NLRB released its rule on the joint employer standard in late October and it took effect December 26. Under the new standard, a franchisor shares liability for labor law violations and it sets a legal obligation to negotiate with unions.
The new rule is a switch from one approved by the NLRB in 2020. The notice of the change was first published in September 2022 and a feedback period was open until December of that year, with more than 13,000 comments submitted. The new rule is similar to one that was in effect during Barack Obama’s presidency.
The passage of the rule was met immediately with opposition from the International Franchise Association, the National Restaurant Association, the U.S. Chamber of Commerce and several other industry organizations. The NRA and IFA, with support from other groups, filed a lawsuit against the NLRB in November.
Resistance also came from several members of Congress, namely U.S. Sens. Bill Cassidy (R-LA) and Joe Manchin (D-WV), who initiated calls for a Congressional Review Act resolution soon after the NLRB’s announcement. With the House voting in favor, the bill will now go to the Senate, where Cassidy has introduced companion legislation that has 44 co-sponsors.
IFA President and CEO Matt Haller
“We commend lawmakers for defending franchising on a bipartisan basis by rejecting a rule that needlessly harms the franchise business model that provides upward mobility for employees and business ownership opportunities,” said IFA president and CEO Matt Haller in a release.
Related: Franchise Community Urges Action on Joint Employer Rule
According to the IFA, the previous standard during the Obama administration resulted in a 93 percent increase in lawsuits and cost small businesses $33.3 billion.
“This bipartisan vote not only demonstrates that support for franchising spans the political spectrum,” said Haller. “But also recognizes the Biden Administration’s joint employer policy is yet another component of their economic agenda that favors Washington insiders and union leadership over working Americans and small businesses.”
Michael Layman, senior advisor of the Coalition to Save Local Businesses, which includes the IFA and NRA, also weighed in.
“We are grateful to the hundreds of organizations across the country, as well as countless small businessmen and women, who provided powerful testimonies in opposition to the NLRB’s joint employer rule,” Layman said. “Given today’s vote in the House, we are confident this momentum will result in a similar result in the Senate, and Congress will send a bipartisan and bicameral message to the White House on behalf of small business owners and working families across the country.”