By Daniel Wiessner
(Reuters) – President Joe Biden on Friday made good on his promise to veto a Republican-backed measure that would have repealed a U.S. labor board rule that treated the companies as employers of many of their contract and franchise workers and required them to negotiate with those labor unions.
The proposal to repeal the National Labor Relations Board rule narrowly passed Congress and it is unlikely that Republicans will be able to muster a two-thirds majority to override the veto by Biden, a Democrat. A federal judge in March blocked the rule from taking effect, but that ruling will likely be appealed.
In a memo to lawmakers, Biden said the board’s rule would ensure that employers could not evade their legal obligations by controlling workers indirectly through contractors.
“Republicans are on the side of union-busting companies for the needs of workers and their unions,” Biden said.
An NLRB spokeswoman declined to comment. Some Republican supporters of the resolution did not immediately respond to requests for comment.
The rule would treat companies as “co-employers” of contract and franchise workers when they have control over key working conditions, such as pay, hours, discipline and supervision, even if that control is indirect or not exercised.
Critics of the rule, including many Republicans and most major business groups, said it would be inappropriate to force companies to the negotiating table when they have little control over working conditions.
Groups representing franchise companies say this could upend the franchise model by requiring companies like McDonald’s to negotiate with franchisees’ employees.
Matthew Haller, president and CEO of the International Franchise Association, said the rule would cause particular harm to underrepresented groups, including minorities, women and veterans who have often turned to franchising as a form of business ownership.
“President Biden claims to be a champion of small businesses, but today he turned his back on franchising,” Haller said in a statement.
The rule was supposed to take effect in February but was delayed and ultimately blocked by U.S. District Judge J. Campbell Barker in Tyler, Texas, in a lawsuit brought by the U.S. Chamber of Commerce and other business groups.
Barker, appointed by former Republican President Donald Trump, said the rule was invalid because it would treat some companies as employers even when they lack any meaningful control over the working conditions of contract and franchise workers.
The council has until the end of this month to appeal Barker’s decision.
(Reporting by Daniel Wiessner in Albany, New York; Editing by Emelia Sithole-Matarise)
