Biden rejects attempt to repeal US labor board rule affecting contract and franchise workers

President Joe Biden vetoed a Republican-backed measure on Friday that aimed to repeal a U.S. labor board rule treating companies as the employers of many contract and franchise workers. The rule requires companies to bargain with workers’ unions, even if they are indirect employers.

The proposal to repeal the National Labor Relations Board rule narrowly passed Congress, but it is unlikely that Republicans can muster the two-thirds majority needed to override Biden’s veto. A federal judge had previously blocked the rule from taking effect in March, but that decision is expected to be appealed.

In a memo to lawmakers, Biden stated that the rule would prevent employers from evading their legal obligations by controlling workers through contractors. He criticized Republicans for siding with union-busting corporations over the needs of workers and their unions.

Critics of the rule, including many Republicans and major business groups, argue that it would be improper to force companies to the bargaining table when they have little control over working conditions. Groups representing franchise businesses warn that the rule could disrupt the franchise model by requiring companies like McDonald’s to bargain with franchisee employees.

Matthew Haller, president and CEO of the International Franchise Association, expressed concern that the rule would disproportionately harm underrepresented groups who often turn to franchising for business ownership opportunities.

The rule was initially set to take effect in February but was delayed and ultimately blocked by U.S. District Judge J. Campbell Barker in Texas. Barker, a Trump appointee, deemed the rule invalid as it would treat some companies as employers without meaningful control over working conditions. The NLRB has until later this month to appeal Barker’s ruling.