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April 15, 2024

Senate Votes to Rescind Expanded Joint Employer Rule

The Senate passed a resolution on April 10 to repeal the National Labor Relations Board’s (NLRB) new joint employer rule, sending the matter to President Joe Biden, who previously vowed to veto the measure.

The resolution was introduced under the Congressional Review Act (CRA), which allows Congress to repeal rules implemented by federal agencies, such as the NLRB. The House approved the resolution in January on a 206-177 vote, while the Senate vote was much narrower at 50-48. Sen. Joe Manchin (D-WV) and independent senators Angus King (I-ME) and Krysten Sinema (I-AZ) joined Republicans in voting for the resolution.

Last November, the NLRB released a final rule that created a new standard for joint-employer status that significantly expanded the scope of companies that could be considered joint employers of an individual worker. Under the new rule, a joint employer is defined as “two or more common-law employers of the same employees who share or codetermine those matters governing those employees’ essential terms and conditions of employment.” The rule also requires a joint employer to bargain collectively over the terms of employment for any employee under its control.

The expansion of which companies can be considered a joint employer has been strongly opposed by business groups and trade associations. In March, the U.S. District Court for the Eastern District of Texas sided with businesses by blocking the rule, finding that the NLRB’s broad definition meant that there was effectively no situation where a company would not be considered a joint employer.

The passage of the resolution by Congress seeks to further invalidate the NLRB’s revised joint employer rule. “Yesterday’s Senate vote delivers a clear bipartisan mandate, rejecting the NLRB’s harmful joint employer rule and protecting American businesses and workers from more red tape,” said Lauren Williams, associate vice president of government relations for the National Association of Wholesaler-Distributors. “We call on President Biden to sign this CRA and firmly support small businesses. We sincerely thank Leader Mitch McConnell and Sens. Bill Cassidy and Joe Manchin for their strong leadership.”

The vote was also commended by the National Restaurant Association, as the new joint employer standard would especially affect the restaurant industry because of the prevalence of the franchise model. “At a time when it’s next to impossible to get something passed in both Houses of Congress, yesterday the Senate came together to express their support of business owners by voting to overturn the National Labor Relation Board’s overreaching joint employer rule,” said Sean Kennedy, executive vice president for public affairs at the National Restaurant Association. “This vote echoes the support of House members, and we hope President Biden will give serious consideration to signing the resolution.

“The NLRB’s 2023 joint employer rule threatens the foundation upon which nearly a third of the restaurant industry is built,” Kennedy continued. “Restaurant ownership — especially for the franchisees that will be most impacted by the rule — grew significantly under the previous rule, opening doors for people who may not otherwise have been able to become an entrepreneur.”


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