November 09, 2023

Manchin, Cassidy Lead Effort to Overturn Biden Administration Rule Threatening American Franchise Model, Small Businesses

Washington, DC – Today, U.S. Senators Joe Manchin (D-WV) and Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, introduced a Congressional Review Act (CRA) resolution to overturn the National Labor Relations Board’s (NLRB) new joint employer rule, which forces liability on companies for another business’ employees even if they do not directly oversee them. The Senators were joined by Senate Minority Leader Mitch McConnell (R-KY), as well as Representatives John James (R-MI), Virginia Foxx (R-NC), Chairwoman of the House Education and the Workforce Committee, and House Speaker Mike Johnson (R-LA).

“The franchise system has been a vital driver of entrepreneurship and economic growth across the country, however, the Biden Administration has once again failed to prioritize America’s best interests by inflicting more regulations and red tape on our small businesses,” said Senator Manchin. “I am proud to introduce this bipartisan, bicameral resolution to end this harmful rule and protect job creators, employees and consumers. I urge my colleagues on both sides of the aisle to join this commonsense resolution to remove this impediment to the American Dream.”  

“The Biden administration’s joint employer rule undermines the franchise model that has empowered those underrepresented in the business community, such as women and people of color, to live the American dream and create jobs,” said Dr. Cassidy. “The priority of the Biden administration should be to support workers and foster economic opportunity, not to do whatever makes it easier to forcibly and coercively unionize workers while undermining the business model of the establishments employing them. Our bipartisan resolution will stop this overreach and protect these jobs.”

“The franchise model has meant everything to me. Thank you to Sen. Manchin for his tireless work on behalf of West Virginia small businesses in turning back this Washington DC overreach,” said Clara Osterhage, a West Virginia hair salon owner.

“The NLRB’s joint employer regulation is just the latest attack in the war on small businesses and consumers waged by President Biden’s Big Labor allies,” said Minority Leader McConnell. “Franchising is a pathway to the American Dream, but this new standard will inflict higher prices on American consumers, kill American jobs, and turn successful small business owners into middle managers. Congress should act immediately to overturn this misguided Big Labor attack.”

“The American people just want the opportunity to create a better life for their families and keep the government out of their business. But unfortunately, Bidenomics has created an affordability crisis that is choking our citizens, especially those from the younger generations, and placing unnecessary burdens on our local businesses. And the Joe Biden joint employer rule is among the many weapons used by this administration to drive businesses and jobs overseas,” said Representative James. “I am proud to lead the effort in the House to introduce this resolution to overturn the hurtful joint employer rule. Michigan already struggles to attract new business, and people are fleeing our state in mass because the experiment of unleashing broken leftist policies against our businesses has not worked—no surprise. We should help small businesses grow, create good-paying jobs, and give people the opportunities to succeed. And overturning the Biden joint employer rule is a first step in the right direction.”

“Biden’s joint-employer rule will destroy the business model that has helped countless men and women achieve the American Dream. Simply put, it means higher costs for consumers and fewer jobs for workers. While Biden’s NLRB takes the side of special interests, we are taking the side of workers, small businesses, and the American entrepreneurial spirit. I am pleased to join my colleagues in this effort to block Biden’s reckless joint-employer rule,” said Representative Foxx.

“So many individuals have achieved the American Dream by starting and running a small business. Unfortunately, the Biden administration and partisan NLRB bureaucrats are pushing a job-killing joint employer rule that is making the American Dream harder to reach. This rule is an attack on Main Street America as it will destroy countless livelihoods. It will leave small business owners and working Americans with less freedom and less autonomy to run their own businesses and lives,” said Speaker Johnson.

The new rule saddles franchisers with the liability of individual franchise owners despite having no operational control over the business’s employees. This threatens the viability of the franchise business model, a system that employs over eight million workers and has empowered Americans from all communities to become successful business owners. Additionally, the rule creates uncertainty among small and local businesses on their legal liabilities, leading to higher operational costs and less opportunity to create jobs.

For more than a quarter century, it was an established legal precedent that a company could only be considered a joint employer if they have “direct and immediate” control over another business’s employees. This changed in 2015 under the Obama administration, which forced companies to be liable for another business’ employees if they held “indirect” and “reserved” control over their workers. In 2020, the Trump administration returned to the longstanding “direct and immediate” standard, providing legal stability to businesses.