The impact of repealing the National Labor Relations Board Rule: What HR leaders need to know

The recent decision by the US House of Representatives to repeal a rule set by the National Labor Relations Board (NLRB) has significant implications for HR leaders and employees across the country.

The rule, which was set to take effect in February 2024, would have treated companies as the employers of many contract and franchise workers, requiring them to bargain with those workers’ unions. Proponents of the rule argued that it would empower workers to negotiate for better pay, benefits, and safer working conditions. However, opponents, mainly from the business community, expressed concerns about increased costs for employers and potential job losses.

The repeal of this rule, which was heavily criticized by business groups, has been seen as a victory for businesses, particularly those that rely heavily on contract and franchise workers. However, it also raises important questions about the rights of these workers and the responsibilities of companies towards them.

What does this mean for HR teams?

For HR leaders, the repeal of the NLRB rule means that they will need to navigate a complex landscape of labor relations without the guidance that the rule would have provided. The rule would have clarified the status of contract and franchise workers, making it clear that companies have a responsibility to bargain with their unions.

Without this rule, HR leaders will need to make their own determinations about how to handle these relationships, potentially leading to inconsistencies and confusion.

A breach of employee rights?

The repeal of the rule also has significant implications for employees, particularly those who work as contractors or for franchises.

The recent decision by the US House of Representatives to repeal a rule set by the National Labor Relations Board (NLRB) has significant implications for HR leaders and employees across the country.

The rule, which was set to take effect in February 2024, would have treated companies as the employers of many contract and franchise workers, requiring them to bargain with those workers’ unions. Proponents of the rule argued that it would empower workers to negotiate for better pay, benefits, and safer working conditions. However, opponents, mainly from the business community, expressed concerns about increased costs for employers and potential job losses.

The repeal of this rule, which was heavily criticized by business groups, has been seen as a victory for businesses, particularly those that rely heavily on contract and franchise workers. However, it also raises important questions about the rights of these workers and the responsibilities of companies towards them.

What does this mean for HR teams?

The repeal of the NLRB joint employer rule will likely bring relief to many employers, particularly those in the franchise industry, who have been vocal about the potential negative consequences of the rule.

Business groups have argued that the rule would burden employers with additional costs and regulatory requirements, making it harder for them to operate and grow. The joint employer rule was seen as a threat to the traditional franchise model, where franchisees are typically considered independent entities responsible for their own employment practices.

Without the joint employer rule in place, employers can continue to operate with more flexibility, maintaining the distinction between franchisors and franchisees. This means that franchisors will not bear joint liability for labor law violations committed by their franchisees.

However, for HR leaders, the repeal of the NLRB rule means that they will need to navigate a complex landscape of labor relations without the guidance that the rule would have provided. The rule would have clarified the status of contract and franchise workers, making it clear that companies have a responsibility to bargain with their unions.

Without this rule, HR leaders will need to make their own determinations about how to handle these relationships, potentially leading to inconsistencies and confusion.

A breach of employee rights?

The repeal of the rule also has significant implications for employees, particularly those who work as contractors or for franchises.

One of the primary concerns raised by opponents of the rule is the potential loss of job opportunities. Critics argue that the rule would discourage companies, particularly in the franchise industry, from expanding and creating new jobs due to the increased liability and regulatory burden associated with joint employment.

Additionally, these workers may find themselves without the protections that the rule would have provided, leaving them vulnerable to potential exploitation. Without the requirement for companies to bargain with their unions, these workers may struggle to negotiate fair wages and working conditions.

On the other hand, proponents of the rule believe that it would strengthen workers’ rights by holding multiple companies accountable for labor law violations. They argue that joint employment relationships often lead to a lack of accountability, with employers shifting responsibilities and avoiding legal obligations. The rule was seen as a way to address this issue and ensure that workers can negotiate for better working conditions and fair treatment.

However, it’s important to note that the repeal of the NLB rule does not mean that companies can ignore the rights of their contract and franchise workers. Existing labor laws still provide protections for these workers, and companies that fail to respect these rights may find themselves facing legal challenges.

In conclusion, while the repeal of the NLRB rule may provide more flexibility for businesses, it also creates uncertainty for HR leaders and potential risks for contract and franchise workers. As the situation continues to evolve, HR leaders will need to stay informed and be prepared to adapt their strategies to ensure that they are meeting their obligations to all of their employees.

These workers may find themselves without the protections that the rule would have provided, leaving them vulnerable to potential exploitation. Without the requirement for companies to bargain with their unions, these workers may struggle to negotiate fair wages and working conditions.

Additionally, the rule’s opponents contend that it could lead to higher costs for employers, which may result in reduced wages and benefits for workers.

On the other hand, proponents of the rule believe that it would strengthen workers’ rights by holding multiple companies accountable for labor law violations. They argue that joint employment relationships often lead to a lack of accountability, with employers shifting responsibilities and avoiding legal obligations. The rule was seen as a way to address this issue and ensure that workers can negotiate for better working conditions and fair treatment.

However, it’s important to note that the repeal of the NLB rule does not mean that companies can ignore the rights of their contract and franchise workers. Existing labor laws still provide protections for these workers, and companies that fail to respect these rights may find themselves facing legal challenges.

What happens next?

With the House of Representatives passing the resolution to overturn the NLRB joint employer rule, the focus now shifts to the Senate. The resolution will need a simple majority to pass in the Senate. Several House Democrats joined Republicans in voting for the measure, indicating potential bipartisan support in the Senate as well.

However, even if the resolution succeeds in Congress, it is likely to face a major obstacle in the form of President Joe Biden, who has expressed his intention to veto the measure. It is worth noting that Biden has previously rejected multiple resolutions seeking to overturn regulatory actions from executive agencies under his administration.

In addition to the congressional repeal, the NLRB joint employer rule also faces legal challenges brought by business advocacy groups. The International Franchise Association, representing major franchises like McDonald’s and Subway, has vowed to fight the rule through legal means. These legal challenges are expected to play out in the coming months and may further shape the fate of the joint employer rule.

Looking ahead, the future of the joint employer rule remains uncertain. While the House’s decision to repeal the rule is a significant development, its ultimate fate will depend on the Senate and President Biden’s actions. If the resolution fails in the Senate or is vetoed by the President, the joint employer rule will remain in effect.

HRD Connect Curators of the New Business Landscape. HRD Connect produces industry-recognized content for senior HR leaders. Through articles, case studies, Q&As, podcasts, events, and more, we offer truly progressive and cutting-edge insights designed to help people leaders address core HR challenges and add greater value to their business.

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