04.11.24

Hoeven Supports Effort to Reverse Overreaching NLRB Joint Employer Rule

Senator Working to Reverse Rule that Imposes Legal Uncertainty on Franchise Businesses

WASHINGTON – Senator John Hoeven issued the following statement after the U.S. Senate passed the House companion to a resolution of disapproval under the Congressional Review Act (CRA) that he introduced with Senator Bill Cassidy (R-La.) 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.  

Specifically, the rule imposes on franchisers the liability of individual franchise owners, despite having no operational authority over the businesses’ employees. This undermines 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. 

“The NLRB’s joint employer rule creates legal uncertainty, hurting a successful business model while needlessly imposing costs on business owners. Our CRA resolution would restore long-standing legal standards and alleviate the burdens of this new rule, allowing business owners to hire more employees and expand their operations instead of spending those dollars on regulatory compliance and resulting litigation,” said Hoeven.

For over 25 years, it was an established legal precedent 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, who 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. 

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