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Biden vetoes congressional effort to toss NLRB joint employer rule

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Dive Brief:

  • President Joe Biden vetoed a congressional joint resolution Friday that would have overturned the National Labor Relations Board’s October 2023 rule updating National Labor Relations Act joint employer regulations.
  • The rule had been set to take effect in March but was swiftly challenged by business groups. The Senate voted to approve the joint resolution just weeks after the U.S. District Court for the Eastern District of Texas vacated the rule.
  • In a statement, Biden said employers “could more easily avoid liability simply by manipulating their corporate structure” without the rule. He also said Republicans “are siding with union-busting corporations over the needs of workers and their unions,” but eight Democratic representatives, one Democratic senator and two independent senators joined Republicans in voting to approve the resolution.

Dive Insight:

With its rule, the Board seeks a return to the joint employer standard articulated in Browning-Ferris Industries nearly a decade ago. The rule states that entities may be considered joint employers of another employer’s employees if they share or codetermine essential terms and conditions of employment with the other employer.

The Congressional Review Act allows the House and Senate to pass joint resolutions which overturn agency regulations. The president must then sign such resolutions for them to take effect. Congress also may override a presidential veto of a joint resolution via a two-thirds vote in both legislatures, but this is an unlikely outcome for the NLRB rule given Congress’ political makeup.

In a statement following the Senate’s vote on the joint resolution, Joe Manchin, D-W.Va., said the rule would cause uncertainty for small businesses and franchise entities.

“If, under their brand, there are uniform standards for their products or they require hair nets be worn, they would then be found as a joint employer,” Manchin, who voted to approve, said in reference to franchise businesses specifically. “This is despite the fact that they have no responsibility or role in hiring, firing, or wage decisions for employees.”

Biden, however, said in Friday’s statement that the right of workers to collectively bargain under the NLRA “is rendered futile” when they cannot do so with each of the entities who may control separate terms and conditions of employment.

NLRB’s rule provides an exhaustive list of essential terms and conditions over which potential joint employers could possess or exercise either direct or indirect control, including: wages, benefits, hours of work, assignment of duties, hiring, discharge, discipline, supervision, direction and working conditions.

The Board has not appealed the district court’s decision vacating the rule. In March, NLRB Chairman Lauren McFerran said the agency was “reviewing the decision and actively considering next steps in this case.”

Employer-side attorneys previously told HR Dive that the agency could still pursue joint employer issues in spite of the judge’s ruling, and it could do so via separate rulemakings as well as case-based decisions on joint employer issues.

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