The House of Representatives passed a resolution on Friday to overturn a federal labor board regulation set to take effect next month that would expand the definition of joint employment.
The chamber voted 207-177 to reject the National Labor Relations Board (NLRB) rule, which would increase the possibility of franchisors being jointly responsible for labor violations committed by their franchisees and require both entities to bargain with employee unions.
The new rule would replace a Trump-era regulation that required companies to have “direct and immediate” control over workers in order to be considered joint employers and expand that standard to include companies with indirect control over working conditions such as pay, scheduling, discipline and supervision, even if that control isn’t exercised.
The House vote marks a victory for Republicans and business groups following a months-long effort to prevent the new rule from taking effect. They say the broader definition of joint employment would upend traditional franchisor-franchisee arrangements and undermine businesses that rely on third-party staffing agencies and other service providers. Proponents, including many Democrats as well as unions and workers advocates, argue the new rule is needed to prevent large employers from using contractors and sub-contractors to circumvent labor negotiations.
In a statement supporting the resolution, the National Restaurant Association said the broader standard could result in unnecessary challenges for restaurant operators, create massive labor uncertainty and risk management concerns, and reduce opportunities for franchisee ownership and independence.
“The NLRB’s latest Joint Employer Rule threatens the foundation upon which nearly a third of the restaurant industry is built,” Sean Kennedy, executive vice president for public affairs at the National Restaurant Association, said in the statement. “The traditional rule has been a fundamental basis for growth and stability in the restaurant industry, especially in opening doors for people to become business owners through restaurant franchising.”
The U.S. Chamber of Commerce and various business associations filed a lawsuit late last year to prevent the rule from taking effect, contending it violates federal labor law by excessively broadening the definition of a joint employer. The NLRB last month asked the judge in charge of the case to rule in its favor. It argued the rule strikes a fair balance between the rights of workers and the rights of businesses.
The disapproval resolution was introduced under the Congressional Review Act. That law enables Congress to repeal agency rules through a simple majority vote in both chambers. It now heads to the Senate where it’s likely to pass or fail by a razor-thin margin. Democrats hold a single-seat majority in the upper chamber, but Senator Joe Manchin from West Virginia has already indicated his opposition to the new rule.
The White House earlier this week said President Joe Biden will veto the resolution if it passes in both houses. A two-thirds majority would be required to block the new rule from taking effect if that happens. Biden rejected several resolutions aimed at rolling back regulatory actions from executive agencies under his administration last year. Congress failed to override the vetoes in each of those cases.