Who’s the Labor Radical Now?

Biden vetoes a bipartisan repeal of his joint-employer rule

WSJ editorial. 

"President Biden likes to portray Republicans as policy radicals, but then how do you explain what happened Friday on Capitol Hill? The President vetoed a bipartisan Congressional resolution overturning the National Labor Relations Board’s rule redefining who is a joint employer.

The NLRB rule issued last year redefined franchise and contract-based businesses so unions can bargain collectively with any employer with “indirect control” over working conditions. Previously the employer had to have direct control. The change is intended to help unions organize more than 800,000 franchise firms, most of them small businesses.

Democrats had tried and failed to pass the joint-employer standard when they ran all of Congress in 2021-2022, but these days that failure hardly matters. The administrative state writes the laws and runs our lives no matter what Congress does. Mr. Biden’s veto killed the repeal resolution that had passed the Senate, 50-48, with Democrats Joe Manchin (W.Va.), Kyrsten Sinema (Ariz.) and Maine’s Angus King voting yes. It passed the House 206-177, with eight Democrats in support.

There’s no need to speculate about the harm the joint-employer rule will do because the NLRB has tried it before. The agency first broadened its definition of “employer” during the Obama Administration in 2015, causing franchisers to restructure their operations. A 2019 study by economist Ronald Bird found that the policy led to 376,000 fewer jobs and $33.3 billion in lost output across the economy, until the agency rescinded it under President Trump in 2020.

The next line of business defense is the courts. A federal judge blocked the new joint-employer rule in March days before it took effect. “Treating a general contractor as an employer of a subcontractor,” wrote Judge Campbell Barker, “runs headlong into the Supreme Court.” He cited NLRB v. Denver Building & Construction Trades Council (1951), in which the High Court upheld the independence of contractors.

Businesses are safe for now, though the NLRB may appeal. Had the repeal vote succeeded, the labor board would not have been able to reissue a similar rule. Mr. Biden’s rule by regulation and veto shows he’s out of step with majority sentiment in Congress on labor law. It also helps explain why his job approval rating on the economy is underwater."