WASHINGTON, DC – U.S. Senator Joe Manchin led six bipartisan Senators in urging National Labor Relations Board (NLRB) Chairman Lauren M. McFerran to reconsider the joint employer rule recently proposed by the NLRB.
The proposed rule would have significant impacts on American and West Virginian workers and small businesses, many of whom are continuing to recover from the effect of the COVID-19 pandemic, as well as put the franchise model at risk.
“We write to raise concerns regarding your recent proposed rule and its impact on our nation’s economy,” the Senators said in part. “The joint employer rule has caused confusion for franchise owners for years. At a time when we’re still recovering from a global pandemic we need to support our small businesses, like franchises, not put them at risk.”
On September 7, 2022, the Board published a Notice of Proposed Rulemaking (NPRM), which would replace the 2020 Joint-Employer Rule that focused on “direct and immediate control” with the “indirect, reserved” control standard.
The proposed rule is nearly identical to the standard created by the Board in Browning-Ferris Industries of California, which expanded the standard by asserting that a joint-employer relation could be based on “indirect control.” This decision resulted in an increase in potential joint employers and litigation.
The International Franchise Association (IFA) found that this joint employer standard cost franchise businesses $33.3 billion per year, resulting in 376,000 lost job opportunities and a 93% increase in lawsuits.
“In the United States, there are nearly 775,000 franchises that employ 8.2 million workers and provide $800 billion of economic output. This is projected to grow in 2022 to nearly 800,000 franchises employing 8.5 million workers, and outputting $827 billion to the economy,” the Senators continued. “As Members of Congress, we have sought to protect the franchise model through legislation due to the opportunity franchises provide workers and entrepreneurs… Due to our concern with the potential impact that the proposed rule will have on the franchise model, we request that the Board reconsider moving forward with its proposed rule for determining joint-employer status.”
Senator Manchin was joined by Senators Mike Braun (R-IN), Angus King (I-ME), James Lankford (R-OK), Krysten Sinema (D-AZ), and Susan Collins (R-ME).
The full letter is available below or here.