NLRB Rule That Would Hurt Franchisors Voted Down by US Senate

A National Labor Relations Board rule that would make franchisors liable for franchisee labor-law violations could be reversed after an April 11 U.S. Senate vote — but will likely face a presidential veto.

The Senate narrowly passed a Congressional Review Act proposal that would reverse the NLRB’s joint employer rule. The Senate’s vote comes just shy of three months after the House of Representatives passed the resolution. The Congressional Review Act is a legislative tool that can be used to repeal rules made by federal agencies like the NLRB. Both votes fell along largely partisan lines. 

The joint employer rule would potentially have a big and adverse impact on franchisors as reported by Franchise Times:

“The NLRB announced the new standard in October 2023, but it has yet to go into effect because of challenges in federal court. If it were to take effect, a franchisor could share the liability for labor law violations with franchisees, and a legal obligation would exist for the franchisors to negotiate with unions.”

Forty-eight Republicans voted for the resolution in the Democratically controlled Senate. Democratic Sen. Joe Manchin of West Virginia joined independent Sens. Angus King (Maine) and Kyrsten Sinema (Arizona) in voting with the Republicans.

More than 5,000 signatures “from the franchise community” were delivered to President Joe Biden by the International Franchise Association in a show of support for the legislation, FT reports.

The association’s senior vice president of government relations and public affairs, Michael Layman, told FT the Senate move was a “historic legislative victory for franchising.”

Biden has promised to veto such legislation. The White House declined to comment to Reuters.