Business groups are scrambling to get the Senate to undo a recent move by the National Labor Relations Board, the federal government’s top labor law enforcement agency, that restored an Obama-era rule that vastly expanded corporate legal liability.
The unusual way the NLRB restored the “joint employer” rule means that even appointing a Republican majority to the five-member board may not help businesses, so Congress is their only hope.
“We have a renewed sense of urgency,” said Matt Haller, senior vice president of government relations for the International Franchise Association. “There is a lot at stake. Joint employer is an existential issue for the franchise industry.”
It’s made harder by the fact that the NLRB was widely thought to have resolved the issue last year. In a December case called Hy-Brand, the board voted to overturn a 2015 decision called Browning-Ferris that created the joint employer standard business groups oppose.
Joint employer refers to when one business can be held legally responsible for the workplace policies at another business. Until 2015, that required one business to have “direct control” over the other’s policies. Browning-Ferris changed that to the much vaguer “indirect control,” potentially making any franchiser business liable for all of its franchisees, which merely rent out the corporate brand. The Hy-Brand ruling restored it to “direct control.”
The previous month the House had passed, in a bipartisan 242-181 vote, a bill called the Save Local Business Act that would restore direct control as the standard. The board’s decision in Hy-Brand the following month appeared to stall its momentum.
“I don’t think there were a lot of people who didn’t think we shouldn’t still pass it anyway,” said Rep. Bradley Byrne, R-Ala., who authored the bill. “But there may not have been the urgency to do it.”
That changed Monday when the NLRB abruptly vacated the Hy-Brand decision, having determined that board member William Emanuel, a Trump appointee, should have recused himself from voting in the case, following an inquiry by Democratic lawmakers led by Sens. Patty Murray of Washington and Elizabeth Warren of Massachusetts. Vacating Hy-Brand restored Browning-Ferris as the standard.
The news set off alarm bells for business groups. “We are asking our members to contact their senators to support immediate consideration of H.R. 3441, the Save Local Business Act. … Now we need the Senate to act,” the National Restaurant Association said in an email to members Tuesday.
“For those who don’t follow this, the joint employer rule could be the … end of the franchising business as we know it,” White House budget director Mick Mulvaney told the Chamber of Commerce Thursday.
“I’ll put my OMB hat on for a second and say we’ll look into that,” he said about the Save Local Business Act.
Lobbyists are focusing on getting a bill through Congress rather than trying to get another case before the NLRB because the board is now unlikely to revisit the issue. Emanuel would be under pressure to recuse himself should a similar case come up. Even if the Senate confirms business lawyer John Ring to fill an open seat on the board, Republicans would have a 3-2 majority on the board. Another Emanuel recusal would leave the board split 2-2.
“That is a concern,” Haller said.
The Senate has yet to take up the Save Local Business Act. Asked about it Thursday, Sen. Lamar Alexander, R-Tenn., chairman of the Health, Education, Labor and Pensions Committee, conceded he wasn’t aware of the House bill. “I have a hard enough time keeping up with the Senate,” he told the Washington Examiner. Alexander did laud the bill when it passed the House in November
Alexander is one of the Senate’s top critics of the Obama-era joint employer standard. In a committee hearing Thursday morning on Ring’s nomination, he called Browning-Ferris “the biggest attack on the owners of 780,000 franchise locations that this country has seen in a long time” and called for overturning it.
“I think if we are going to get it on the Senate’s radar we have got some work to do,” said a lobbyist for one top trade association.
