NLRB Drops Joint-Employer Push

The International Franchise Association (IFA) applauded the decision of the National Labor Relations Board (NLRB) to withdraw its appeal of the March ruling by the Fifth District Court of Texas that struck down the NLRB's joint-employer rule.

"This announcement means that the latest attempt to implement joint employer is finally finished and represents a landmark victory for franchise small businesses in communities across America," said Matthew Haller, IFA president and CEO. "The franchise business model is the best vehicle for American workers to generate upward mobility and create small business ownership from all walks of life. Make no mistake: While today's news means the current threat is behind us, IFA will remain vigilant against any attempts to target the franchise model or our members."

The expanded joint-employer rule, issued in October 2023, would have deemed franchisors and franchisees jointly liable, taking away the independence of franchise owners—the hallmark of the franchise business model. When a similar rule was issued in 2015, it cost franchised businesses $33.3 billion per year and resulted in 376,000 lost job opportunities, according to the IFA.

Haller also called for the Senate to reject the nomination of NLRB Chair Lauren McFerran, one of the architects of the proposed expanded joint-employer rule, for a third five-year term. If McFerran is confirmed by the Democratic-controlled Senate, the five-member board would continue to have a Democratic majority until August 2026 when the term of Biden appointee David Prouty expires.

"We intend to work shoulder to shoulder with our bipartisan coalition of allies and champions in the House and Senate to prevent the NLRB from implementing the expanded joint-employer rule by other means," Haller said.

In the ruling, the Fifth District Court ruled that the NLRB exceeded the scope of its authority and violated the Administrative Procedure Act by failing to respond to comments regarding the rule's harmful economic consequences.