“Joint Employer” Rule Passes in House of Representatives

In early January, the U.S. House of Representatives voted 206-177 to pass a resolution set to take effect in February, repealing the National Labor Relations Board’s final “joint employer” rule.

The resolution introduced under the Congressional Review Act has been moved to the Senate, which will vote on the bill in its upcoming session. If passed in the Senate, the White House says President Joe Biden would veto the resolution.

According to Reuters, the resolution would treat companies as “joint employers” of contract and franchise workers when they have control over key working conditions such as pay, scheduling, discipline and supervision.

If a company is designated as a “joint employer” it must bargain with unions representing contract and franchise workers and can be held liable for violating those workers’ rights under federal labor law.

The new rule would increase liabilities for businesses of all sizes by expanding the definition of a “joint employer” under federal law. The resolution has been criticized by the National Retail Federation (NRF), which sent a letter to the House of Representatives in 2022 formally opposing the proposed rules.

“Partnerships between retailers and specialty service providers are vital to the industry’s success,” says David French, NRF senior vice president of Government Relations. “The ability of retailers to enter into these legal and common contractual relationships is now hindered by these new rules.”

Last year, the NRF joined a coalition of business organizations and filed a lawsuit against the rule.

“The House has rightly acted to repeal the administration’s new flawed joint employer rules,” French says. “The rules are so broad as to establish a joint employment relationship if a firm shares even indirect, unexercised or potential control of another company’s employees.”

The U.S. Chamber of Commerce filed a lawsuit in November in hopes of blocking the rule from taking effect. It claims the rule violates U.S. labor laws by expanding who counts as an employer and could cause problems in various industries.

“Retailers need a definitive line regarding joint employment, and we commend the House’s effort to reinstate the longstanding, workable rules that foster job growth and free enterprise in the retail community,” French says.