Joint-Employer Veto Override Falls Short
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Joint-Employer Veto Override Falls Short

Joint-Employer Veto Override Falls Short

A bipartisan coalition of lawmakers in the U.S. House failed to override President Joe Biden's veto of H.J. Res. 98, the Congressional Review Act resolution to overturn the National Labor Relations Board's (NLRB) expanded joint-employer rule.

"We are grateful to the bipartisan group of House members who once again stood up for franchising against the NLRB's rulemaking," said Michael Layman, International Franchise Association senior vice president of government relations and public affairs. "Three times Congress has voted to nix this policy. The president's decision to veto the repeal of the expanded joint-employer rule during National Small Business Week shows where his support lies, but we greatly appreciate the swift and steady rebuke by the House to protect local franchises. While it's unfortunate the veto override fell short, we will stand with our congressional champions who fought for franchising, and we won't forget those lawmakers who turned their back on local franchises when the stakes were highest."

The veto took place after 5,300 franchise community leaders from all 50 states sent a petition to the White House last month urging President Biden to sign the legislation to protect small businesses. The expanded joint-employer rule, issued in October 2023, would deem franchisors and franchisees jointly liable, taking away the independence of franchise owners—the hallmark of the franchise business model. When a similar rule was issued in 2015, it cost franchised businesses $33.3 billion per year, resulted in 376,000 lost job opportunities, and led to 93% more lawsuits.

In March, a judge with U.S. District Court for the Eastern District of Texas struck down the rule following an IFA and coalition-led lawsuit, taking aim at the NLRB for exceeding the scope of its authority and violating the Administrative Procedure Act by failing to respond to comments regarding the rule's harmful economic consequences. The rule will not go into effect as a result of court action. The NLRB is appealing to the Court of Appeals for the Fifth District of Texas.

Published: May 21st, 2024

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