Biden Admin Surrenders in Challenge to Federal Rule That Threatens American Workers

After facing extensive opposition and losing a lawsuit in federal court, the Biden Administration today waved the white flag and dropped its appeal of the decision striking down the National Labor Relations Board’s (NLRB)  harmful “joint employer” rule. The rule—which would have decimated the restaurant industry and other franchised businesses—is now officially dead.

As the Institute previously detailed, the joint employer rule would have effectively destroyed the franchise business model by eliminating the boundary of legal liability between franchisors and franchisees. Under the NLRB’s rule, when franchisees were sued, franchisors could be held liable, even if the franchisor had little interaction with the franchisee or no knowledge of the cause for liability. The same would have also occurred for prime contractors and subcontractors, another large segment of the economy that relies on the legal protections of these types of business relationships.

The Goldwater Institute’s formal comment to the NLRB during the rulemaking process—which was cited twelve times in the final rule documents—played a pivotal role in defeating the rule, as did comments from other coalition partners. The NLRB struggled to adequately respond to the flood of opposition when trying to justify the rule, which did not go over well for them in court.

The Institute had warned that “[t]he proposal would significantly constrain the ability of American and Arizona businesses alike to contract with each other for the goods and services that businesses need to operate as efficiently and productively as possible.” The NLRB was forced to admit that the rule would have affected millions of businesses and imposed hundreds of millions of dollars in added costs on the U.S. economy. Fortunately, American businesses will be spared this burden, at least for now.

Although this iteration of the rule is dead, the NLRB has suggested that similar policies may resurface in future agency actions. The Goldwater Institute will continue to take the fight to rogue administrative agencies that threaten the American Dream and the right to earn a living.

To read the Goldwater Institute’s full comment submitted to the NLRB, click here.

You can find out more about what Goldwater is doing to confront the Administrative State here. For more on the joint employer rule and other harmful proposals, please visit our friends at the Institute for the American Worker.

Parker Jackson is a Staff Attorney at the Goldwater Institute.