An Obama-era regulation that one study said cost the nation more than 300,000 jobs is being brought out of mothballs by House Democrats.
The 2015 regulation, which made parent companies liable for labor violations that franchisees or contractors committed, was killed off by the Trump administration when the National Labor Relations Board and the Department of Labor revised the joint employer rule earlier this year.
On Monday, Democratic Rep. Rosa DeLauro of Connecticut, who chairs the House Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies, essentially called for a return of the former rule in legislation that would fund education and job training programs in the 2021 fiscal year.
“The bill includes new provisions prohibiting funds from implementing Department of Labor and National Labor Relation Board rules that allow corporations not to be liable for wages and working conditions at their franchisees or contractors,” a description of the bill on DeLauro’s website reads.
But going back to the way the Obama administration viewed employers is bad news for the economy, said Rep. Virginia Foxx of North Carolina, the ranking Republican on the House Committee on Education and Labor.
“The Obama administration’s overly broad and confusing joint employer guidance deprived millions of Americans of entrepreneurial opportunities,” Foxx told the Washington Free Beacon.
“If successful, this ploy from the Democrats will be bad news for everyone who hopes to own a small business and pursue the American dream,” she said.
Foxx had hailed the revised rule in April.
“Since 2015, the confusion and uncertainty created by the Obama administration’s extreme joint employer standard has threatened American job creation and hurt employees and employers alike. We consistently hear from job creators that the Obama-era scheme is impacting their ability to grow their businesses,” she said in a statement at the time.
The International Franchise Association is also opposed to the Democratic proposal.
An IFA study published in January 2019 said that the Obama approach had “led to 376,000 fewer job opportunities” since 2015.
Restoring that rule could be worse this time around due to the fragile economy, IFA senior vice president Matthew Haller said.
“America’s 730,000 franchise businesses have been serving as modern-day ‘Good Samaritans’; feeding essential workers, sanitizing businesses, caring for the sick, elderly and vulnerable, and providing groceries, hardware, supplies and other critical products and services throughout the pandemic,” Haller told the Free Beacon.
“Given the historic response by Congress and the Administration to keep the economy afloat right now, it would be devastating to have these same small franchise employers face costly new regulations at a time of economic uncertainty for small businesses and their employees,” he said.
The new Trump administration rule is the subject of a lawsuit by the state of New York, joined by other states, which seeks to block it.
However, multiple business group support the rule, according to a June news release on the IFA website. The groups include the IFA, U.S. Chamber of Commerce, National Retail Federation, American Hotel & Lodging Association, Associated Builders and Contractors, and HR Policy Association.
“The DOL’s new joint employer rule is well reasoned, grounded in sound legal principles, and provides needed certainty to complex legal issues relevant to franchising,” Haller said in June. “It’s unfortunate that these attorneys general have chosen to focus their mid-pandemic time, energy, and taxpayer money into a lawsuit that will hurt business reopening and economic growth in their states. IFA is proud to defend this important rule on behalf of America’s 733,000 franchise businesses and their employees.”
Truth and Accuracy
We are committed to truth and accuracy in all of our journalism. Read our editorial standards.