President Joe Biden has fulfilled his promise by vetoing a Republican-backed measure on Friday that aimed to repeal a U.S. labor board rule. This particular rule treated companies as employers of many contract and franchise workers, thereby requiring them to engage in negotiations with the workers' unions. Despite the measure's narrow passage in Congress, it is unlikely that Republicans can gather the two-thirds majority needed to override Biden's veto, given his Democratic affiliation. In March, a federal judge blocked the rule from taking effect, a decision likely to be appealed.
In a memo to lawmakers, Biden argued that the board's rule prevents employers from evading their legal responsibilities by indirectly controlling workers through contractors. He criticized Republicans for prioritizing the interests of union-busting corporations over workers and their unions.
The rule, if implemented, would consider companies as "joint employers" of contract and franchise workers if they influence key working conditions like pay, scheduling, discipline, and supervision, even indirectly or without direct exercise of control. Critics, including many Republicans and major business groups, argue that it is inappropriate to compel companies to negotiate when they have minimal control over working conditions.
Franchise business groups warn that the rule could disrupt the franchise model by requiring companies like McDonald's to negotiate with franchisee employees. Matthew Haller, president and CEO of the International Franchise Association, expressed concern that the rule would disproportionately harm underrepresented groups, such as minorities, women, and veterans, who often see franchising as a pathway to business ownership.
Although the rule was initially set to take effect in February, it was postponed and ultimately blocked by U.S. District Judge J. Campbell Barker in Tyler, Texas. Barker, appointed by former Republican President Donald Trump, deemed the rule invalid, as it would classify some companies as employers even when they lack significant control over the working conditions of contract and franchise workers.