The government spending bill does not include a provision sought by conservatives and business groups to prevent the National Labor Relations Board, the main federal labor law enforcement agency, from implementing a new rule that would vastly expand legal liability for corporations.
Known as the board's "joint employer" rule, it would dramatically lower the standard for when a business is considered responsible for labor law violations at another business it is affiliated with.
Business associations had lobbied hard against the rule, arguing that the expanded liability would force companies to stop franchising their brands. Conservative lawmakers pushed for legislation and had hoped to include it in an appropriations bill.
The omnibus bill released late Tuesday includes no such provision. The bill calls for $274 million in funding for the board, matching the previous year. Conservative groups such as Heritage Action cited it as one of the reasons lawmakers should oppose the bill.
"Yet another example of negotiators failing to achieve GOP priorities," said Heritage Action Vice President Dan Holler.
Liberals were pleased. "The Obama administration obviously cared about the rule and the Democrats obviously cared enough to push back on it," said Ross Eisenbrey, vice president of the nonprofit Economic Policy Institute.
Privately, lobbyists for business groups complained that lawmakers were following directives from House Speaker Paul Ryan, R-Wis., to avoid any battles over his first major legislation as the chamber's new top lawmaker.
An aide to Sen. Lamar Alexander, R-Tenn., a backer of the Senate version of the prohibition, indicated that lawmakers will have to try to pass the prohibition with a non-appropriations vehicle next year. "Senator Alexander remains committed to passing the Protecting Local Business Opportunity Act to overturn the board's harmful decision, which threatens to steal the American Dream from the owners of the nation's 780,000 franchise businesses," said the aide, who requested anonymity.
Late last year, the board charged McDonald's Corp. as a "joint employer" with its individual franchises in a series of unfair labor practice complaints. In effect, the board argued that McDonald's workers had two bosses: the local business that paid them and its corporate parent. The board's general counsel, Richard Griffin, argued that the corporation's franchising contracts gave the company enough "indirect control" over the restaurants' daily operations that it was a joint employer.
The move and the board's arguments defending it have alarmed business groups since franchises have been understood to be legally separate businesses — most are local entrepreneurs who contract for the right to use the corporate brand. In another case called Browning Ferris decided earlier this year, the board held that a contractor can be legally liable for violations by a subcontractor.
The proposed omnibus spending bill does include a prohibition on "any new administrative directive or regulation that would provide employees any means of voting through any electronic means in an election to determine a representative for the purposes of collective bargaining." Republicans have opposed the use of such electronic voting, saying it would open the process to fraud.
Labor board spokeswoman Jessica Kahanek shrugged it off. "That rider has been in the appropriations bills for a number of years," she said. She declined to comment on the "joint employer" issue.