Joint Employer Rule Set to Take Effect

Congress Takes Action to Protect Franchising and Small Businesses

In a powerful display of support for the franchise model and small business owners, Congressional Representative John James introduced a bill to overturn the National Labor Relations Board’s (NLRB) joint employer rule. This significant development is a testament to Congress’s value in fostering a stable and fruitful business environment. In this blog post, we will dive into the proposed resolution, explore the implications for the business community, and shed light on the collective efforts to protect franchise operators and small business owners.

A Push to Overturn the Joint Employer Rule

Recently, the NLRB reintroduced the joint employer rule, causing concerns within the business community. The rule, which seeks to make companies jointly liable with their franchisees for labor terms and conditions, has sparked uncertainty and raised questions about increased liability. In response to these concerns, Congressional Representative John James has introduced H.J. Res. 98, a Congressional Review Act resolution of disapproval. This resolution seeks to render the NLRB’s joint employer rule ineffective and address the anxieties plaguing franchise operators and small business owners.

Protecting Franchise Operators and Small Business Owners

H.J. Res. 98 has already garnered support from the National Restaurant Association, an influential business community representative. They argue that the joint employer rule creates business sector ambiguity and increases liability for franchise operators. The association firmly believes franchising has long been a pathway to business ownership and economic growth. They contend that the NLRB’s rule threatens this tried-and-true model, urging support for the resolution to preserve a stable and conducive business environment where all restaurant industry sectors can thrive.

Joining Forces: A Lawsuit Against the NLRB

In addition to the Congressional resolution, the joint employer rule faces opposition through legal channels. The Restaurant Law Center, the Texas Restaurant Association, and several organizations led by the U.S. Chamber of Commerce have filed a lawsuit against the NLRB. This united front, in the form of a collective lawsuit, aims to contest the authority of the NLRB in implementing this rule and ensure that the best interests of franchise operators and small business owners are protected.

A Contentious History: The Journey of the Joint Employer Rule

The joint employer rule has endured a complex history, marked by legal challenges and shifts in policy across different presidential administrations. The pivotal Browning-Ferris Industries decision in 2015, during the Obama administration, set a precedent by holding franchisors legally accountable for upholding labor standards, even with limited control over employees. However, this rule was subsequently overturned in 2017 during the Trump administration. In 2020, a new version of the rule emerged, which did not hold franchisors responsible for franchisees’ adherence to labor regulations. The current rule, passed under the Biden administration, resembles the 2015 rule but includes more explicit parameters in response to past criticisms.

A Collective Effort to Strengthen Franchising and Empower Small Businesses

Congressional Representative John James’s bill and the ongoing legal challenges send a powerful message of unity and support for the franchise model and small businesses. By overturning the NLRB’s joint employer rule, companies are coming together to ensure a stable and favorable environment for franchise operators and independent companies. As the resolution progresses through committee sessions and potentially reaches the House floor, its success can shape the labor landscape and reaffirm the integral role of franchising in fostering economic growth and opportunity.

At MBE CPAs, we understand the complexities and implications of the joint employer rule and are here to guide you through the process. Our team of experienced advisors is equipped with the expertise and knowledge to help you navigate this. We will provide personalized guidance and support, ensuring you make informed decisions that align with your unique circumstances and goals. With our commitment to your success and our deep understanding of franchises, we are your trusted partner in maneuvering the complexities of this critical decision. Let us be your compass on this journey; together, we will navigate the path towards a more prosperous future.

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