Ranking Member Cassidy on Biden Veto of Bipartisan CRA Repealing Joint Employer Rule

WASHINGTON – Today, U.S. Senator Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released a statement following President Biden’s veto of the bipartisan Congressional Review Act (CRA) resolution to repeal the National Labor Relations Board’s (NLRB) joint employer rule. The rule attempts to bolster unionization efforts at the cost of undermining the foundational viability of the franchise business model. On April 10, the U.S. Senate passed the CRA by a bipartisan vote of 50 to 48. The CRA previously passed the U.S. House of Representatives by a bipartisan vote of 206 to 177. 

“Biden’s joint employer rule undermines the American franchise model that has empowered those underrepresented in the business community, such as women and people of color, to live the American dream, becoming successful small business owners as they help create jobs. That’s why Congress voted on a bipartisan basis to reject this policy,” said Dr. Cassidy. “President Biden is disregarding the will of Congress to enact a rule that threatens the livelihoods of nine million American workers that earn a living from a franchise business.”  

Background 

The Biden rule makes franchisers liable for the labor decisions of individual franchise owners despite them not having operational authority over the business’ employees. This new liability threatens the viability of the franchise business model, a system that employs over nine million Americans. 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. Specifically, franchisors may choose to no longer involve themselves in safety training or setting customer service standards in order to avoid legal liability associated with a franchisee.   

For over 25 years, legal precedent established that a company could only be considered a joint employer if they have “direct and immediate” management over another business’ 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” management over their workers. In 2020, the Trump administration returned to the longstanding “direct and immediate” standard, providing legal stability to businesses. 

The CRA to overturn Biden’s joint employer policy is supported by over 170 organizations. 

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