Financing

Effort to kill the 'joint employer' redefinition draws support in the Senate

Sens. Joe Manchin and Bill Cassidy say they'll seek a seldom-used law to block what they termed NLRB overreach.
"I intend to fight this all the way to the end," Manchin pledged during an IFA press conference. | Photo: Shutterstock

Sens. Joe Manchin (D-W.Va.) and Bill Cassidy (R-La.) say they will try to kill the National Labor Relations Board’s controversial new definition of “joint employer” by petitioning Congress to exercise its seldom-used power to review and reject rules set by federal regulators.

“We’re going to move as quickly as we possibly can to see if we can get hearings on this,” Manchin pledged during a press conference presented by the International Franchise Association, or IFA. “You’ve got me lock, stock and barrel. I intend to fight this all the way to the end.”

Congress has the authority under a little-known 1996 law called the Congressional Review Act to overturn regulations that are promulgated by a federal regulatory body. The measure was adopted to give the legislative branch a means of scuttling rules put in place by an outgoing executive administration.

Although more than 200 proposals to invoke a Congressional regulatory veto have been aired since the Act was adopted, only a few dozen have triggered action. After President Trump left office, for instance, only three of his administration’s rules were overturned under the Act. Sixteen from the Obama administration were killed.

The franchise community has been looking for ways of blocking the National Labor Relation Board from implementing its new joint-employer standard as planned on Dec. 26. Last week the agency broadened the definition of joint employer to include franchisors who merely have the potential to influence franchisees’ interactions with employees.

The re-definition is expected to qualify far more brand owners as joint employers of their franchisees’ staffs, meaning they’d be liable for any labor lapses by the licensees. The IFA has predicted that lawsuits filed by workers against a franchise chain will increase by 98%.

“As you would expect, we strongly object to last week's NLRB ruling,” McDonald’s CEO Chris Kempczinski told financial analysts Monday. We think it's going to undermine small business ownership in the U.S….We expect it's going to be contested.”

The efforts to thwart the redefinition will almost certainly include court challenges. During the IFA press conference, former NLRB Chairman John Ring said the new standard is likely to be overturned via litigation because it arbitrarily contradicts the common-law definition of “joint employer” as someone wielding the actual powers of a boss.

“This new rule is a complete change,” Ring said. “Historically, there had to be direct control over another business’ employees. Now all that is required is the possibility of control, even if that right is never exercised.”

The IFA has already indicated that it plans to explore its courtroom options.

During the press event, Manchin offered to help the association counter the redefinition in any way he can. His support carries weight because of the senator’s high profile on Capital Hill. He noted that thwarting the new standard already has bipartisan support vis-à-vis the willingness of Sen. Cassidy, a Republican, to ally himself with the West Virginian.

McDonald’s Kempczinski was even-keeled in his assessment of what might happen.

“How it all plays out in time, I think it's tough to say,” the CEO told Wall Street, “but this is something that's going to affect everybody…It's going to affect the industry writ large.”

 

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