House Rejects Joint Employer Rule

The U.S. House of Representatives voted 206-177 on Jan. 12 to pass a Congressional Review Act (CRA) resolution to overturn the National Labor Relations Board’s (NLRB’s) new joint employer rule. The resolution now awaits a Senate vote. If it passes, it will go to President Joe Biden, who has pledged to veto it.

“Workers have the right to bargain for fair wages and working conditions with every company that directly or indirectly controls their terms and conditions of employment,” the White House Office of Budget and Management said in a statement on Jan. 8. “Too often, companies deny workers this right by hiding behind subcontractors, staffing agencies, and temporary agencies.”

What’s In the Rule

The final rule states that two entities are considered joint employers if they share or co-determine the employees’ essential terms and conditions of employment, such as pay, benefits, scheduling, hiring, discharge and discipline. The previous standard implicated joint employers only when they had direct and immediate control over working conditions, but the new standard applies even when there’s indirect or unexercised control. Joint employers must participate in collective bargaining if employees for one of the organizations are represented by a union.

​Twenty-two Democratic senators applauded the new rule in a letter to the NLRB, arguing that it correctly interprets employers’ legal obligations under the National Labor Relations Act (NLRA).

“Through their unions, workers should be able to negotiate for higher pay, better benefits, and safer workplaces,” Rep. Bobby Scott, D-Va., said Jan. 12 on C-SPAN. “This is not the case for millions of Americans, including janitors, housekeepers, cooks, and many others who are employed through sub-contractors or temporary agencies.”

However, Republicans mostly opposed the rule. Rep. Virginia Foxx, R-N.C., said the rule will impose unnecessary costs and burdens on businesses and threaten the franchise business model. Rep. John James, R-Mich., said the rule will kill jobs.

Business Groups Respond

A lawsuit making its way through the courts could impact the situation. Several business groups recently sued the NLRB, alleging the joint employer standard is unlawful. The coalition includes the U.S. Chamber of Commerce, the National Retail Federation, the International Franchise Association, the American Hotel and Lodging Association, Associated Builders and Contractors, Associated General Contractors of America, and the National Association of Convenience Stores.

Evan Jenkins, senior vice president of government affairs for the U.S. Chamber of Commerce, said the new standard “will expose businesses of all sizes to potential liability for workers they do not actually employ and workplaces they do not actually manage.”

David French, senior vice president of government relations for the National Retail Federation in Washington, D.C., said, “Retailers need a definitive line regarding joint employment, and we commend the House’s effort to reinstate the long-standing, workable rules that foster job growth and free enterprise in the retail community.”

Likewise, Matt Haller, president of the International Franchise Association in Washington, D.C, said, “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.”