April 10, 2024

Manchin Applauds Senate Vote to Overturn Biden Administration Rule Threatening American Franchise Model, Small Businesses

Washington, DC – Today, U.S. Senator Joe Manchin (D-WV) applauded the Senate passage of the bipartisan Congressional Review Act (CRA) resolution to overturn the National Labor Relations Board’s (NLRB) joint employer rule, which forces liability on companies for another business’ employees even if they do not directly oversee them. Senators Manchin and Bill Cassidy, M.D. (R-LA) introduced the CRA resolution in November 2023. The Senate passed the CRA resolution by a bipartisan vote of 50 to 48 and it will now head to President Biden’s desk.

Prior to the vote, Senator Manchin spoke on the Senate floor to encourage his colleagues to support the CRA resolution.

“In West Virginia, more than 98% of our businesses are small businesses, and they are the heart and soul of our communities,” Senator Manchin said in part. “The NLRB’s joint employer rule would shut the door for thousands of citizens who want to start a business and fulfill the American Dream when we should be focused on bolstering our economic growth and empowering Main Street America. I’m glad our CRA resolution has now passed both the House and the Senate and I encourage President Biden to accept this bipartisan, bicameral rejection of this confusing and unnecessary rule.”

“Saddling franchisers with liability for thousands of franchise owners that actually operate the day-to-day activities of small business would be a sure way to destroy the system of franchising. This model has empowered those underrepresented in the business community, such as women and people of color, to become successful small business owners and create jobs for others,” said Dr. Cassidy. “The Biden administration should support workers and increase economic opportunity, not make it easier to forcibly and coercively unionize workers while undermining the business model of the establishments they work for.”

Representative John James (R-MI) introduced the companion CRA resolution in the House of Representatives, which passed in January 2024 by a bipartisan vote of 206 to 177.

A timeline of Senator Manchin’s work to oppose the joint employer rule is available here.

A video of Senator Manchin’s floor speech can be found here.

Senator Manchin’s remarks as prepared are available below:

M. President, I rise today in support of the joint resolution of disapproval to overturn the National Labor Relations Board’s new joint employer rule.

This rule is just another example of executive overreach and partisan politics.

Small businesses are the heart of our economy and our communities, especially in West Virginia where more than 98% of our businesses are small businesses.

The COVID-19 pandemic was hard on small businesses and franchises, with an estimated 32,700 franchise businesses closing during the first 6 months of the pandemic. The last thing they need is greater uncertainty caused by this rule.

The joint employer rule has caused confusion for franchise owners for years. Telling them they could be held liable for actions taken by businesses with their brand, potentially subjecting them to corporate control.

Franchising is a pathway to entrepreneurship for Americans across the country and helps build generational wealth.

By providing access to capital, training, managerial assistance and a system of support, the franchise model helps many Americans overcome the numerous barriers to owning their own business.

1 out of every 3 franchise owners say they wouldn’t own a small business without the franchise business model.

This unique model is used by over 5,000 independent businesses in West Virginia, providing over 44,800 jobs.

This new rule has further confused this issue and put the franchise model at risk.

Under this rule, businesses are liable for entities they do not control. This makes no sense.

If, under their brand, there are uniform standards for their products or they require hair nets be worn, they would then be found as a joint employer.

This is despite the fact that they have no responsibility or role in hiring, firing, or wage decisions for employees.

Franchisees for years have enjoyed the independence of running their own business and making their own decisions about their employees.

If a franchisor is now held responsible for these decisions, the franchise model would essentially no longer exist.

Bottom line: this rule will shut the door for thousands of Americans who want to start a business and fulfill the American Dream.

That is why I introduced this Congressional Review Act with Senator Cassidy to make clear that this rule does not work.

Businesses should not be liable for entities they do not control.

The National Labor Relations Board moved forward on this rule without bipartisan support.

A member of the Board even found that this rule would be “even more catastrophic” then previous attempts to changes the standard and potentially “harmful to our economy”.

We know previous attempts to change the joint employer standard resulted in a 93% increase in litigation, a loss of over 376,000 job opportunities, and were eventually struck down by the courts.

This does not work.

We should be focused on bolstering our economic growth and protecting Main street businesses, not obstructing them.

I am standing here today for the thousands of small businesses, hard-working employees, and the surrounding communities who will be harmed by this rule.

I encourage my colleagues to vote yes on this resolution, and allow us to continue to work towards a bipartisan, commonsense solution instead of more partisan politics.