Capitol Building by Andrew Malone is licensed under CC BY 2.0.
After the House took action in January, it is now up to the Senate to safeguard American businesses from a harmful Biden joint employer rule, which promises to cost franchises billions, slash jobs, and dramatically increase workplace litigation.
With a floor vote expected on Wednesday, the resolution of disapproval for the joint employer rule under the Congressional Review Act (CRA) aims to roll back Biden’s radical departure from traditional employer designations, ensuring that American small businesses are protected from wide-sweeping economic harm.
Americans for Tax Reform urges Senators to pass the joint employer CRA, which will protect a commonsense joint employer standard and strengthen American small business.
In October 2023, the National Labor Relations Board (NLRB) broadly expanded the parameters for the joint employer standard, which traditionally viewed businesses as joint employers only if they exerted both direct and immediate control over their workers. This model allowed business models like franchising, staffing agencies, and temporary work arrangements to thrive, resulting in the establishment of countless small businesses.
In contrast, Biden’s new rule asserts that businesses can be held as joint employers on the basis of “indirect control.” This indirect control is defined by an employer’s ability to govern “essential terms and conditions of employment.” Under Democrat supervision, the NLRB has introduced seven categories for these “terms and conditions,” ranging from wage distribution to shift scheduling. If a business is found to influence any of these seven factors, it automatically assumes liability as a joint employer, even if it is not an employee’s direct supervisor.
For many dynamic industries such as franchising, these new liability requirements will have a chilling effect on the way that businesses interact. In fact, Americans have already seen this same situation play out before. Prior to the Obama administration, traditional joint employer standards allowed franchises to thrive, creating many first-time small business owners. But a similarly expansive 2015 NLRB rule cost franchise businesses more than $33 billion a year. In addition, nearly 376,000 jobs were shed from the American economy while workplace litigation saw a rise of 93 percent.
Despite these debilitating losses, the Biden administration hasn’t learned its lesson. Instead, this new NLRB rule threatens even higher costs than its Obama-era predecessor, inviting more job losses, business closures, and costs to economic productivity in the coming years. As has been the case throughout Biden’s tenure, the costs of these policy failures will be passed down to consumers in the form of higher prices. In an economy already plagued by overregulation and runaway inflation, American businesses cannot afford to relive the mistakes of the NLRB.
Americans for Tax Reform urges Senate Republicans to pass the joint employer CRA, which will free small businesses from the shackles of unwarranted liability disputes. By restoring commonsense standards to employer jurisdiction, dynamic sectors of the American economy will once again be allowed to thrive, enabling countless Americans to realize their dream of owning a small business.