The NLRB’s joint employer rule threatens the American dream — Congress must strike it down 

Amid persistent inflation, rising interest rates and global uncertainty, the Biden administration has deemed it the perfect time to unleash a massive new regulation that will drag down small businesses, raise prices for consumers, and place a pall of uncertainty across the entire franchise system.  

The National Labor Relations Board’s (NLRB) joint employer rule, released this week, is everything wrong with the out-of-control regulatory state, and Congress needs to fight back with every tool it has — most notably, the Congressional Review Act (CRA). 

The NLRB’s new rule poses an existential threat to the American franchising model by making the franchisor (like McDonald’s or Great Clips) and the franchisee (the local small-business owner) “joint employers” of the workers who staff each establishment. 

Let’s say you own a single McDonald’s restaurant, like my dad did when I was growing up. Currently, you are the sole employer of your workers. You decide when to hire them, how to structure their hours, how to manage them, and if and when to let them go. This localized, decentralized control is exactly what makes the franchise business model so successful. When you own a franchise, you’re the boss. 

Not anymore, according to the NLRB.  

Under the new rule, McDonald’s is now equally responsible for the employee and will have no choice but to get more involved in your decisions as a business owner. This will kill your autonomy, create a confusing environment for workers, and cause a chilling effect on companies who might otherwise be eager to franchise their brands. It will stall and likely reverse the growth of a sector that contributes an astonishing $825 billion to our national GDP. 

It will do so by imposing an extraordinary increase in costs and legal risks for franchisors and franchisees alike. We know this for a fact, because it’s happened before.  

A similar rule implemented between 2015 and 2017 led to a staggering $33 billion per year in extra operational costs for franchise businesses, not to mention a 93 percent increase in lawsuits. This will happen again if the NLRB gets its way. It will lead to a drastic reduction in opportunities for would-be entrepreneurs and a stifling of the very spirit of innovation and independence that defines the American dream. 

That brings me back to the CRA, one of Congress’s most potent mechanisms for reining in regulatory overreach. Enacted in 1996, the CRA allows Congress to review and, if necessary, overturn new federal regulations. A simple majority vote in both the House and Senate, followed by a presidential signature, is all that’s needed to nullify a rule. It’s a direct, constitutionally sound way to keep regulatory agencies in check, and it’s a tool Congress should be using more often as the agencies grow increasingly hyperactive. 

Now is the time for both franchise owners and policymakers to rally around the use of the CRA to counter the NLRB’s joint employer rule. Fortunately, Sens. Joe Manchin and Bill Cassidy have already proposed a CRA resolution to overturn the rule. As they prove, this is not a partisan issue; it’s a commonsense American issue. It’s about preserving the robustness and integrity of an economic model that has proven its worth time and time again. It’s about standing up for entrepreneurs like my dad, and the countless kids today who want to one day own their own business. 

The NLRB’s joint employer rule is not a minor tweak to the existing legalese; it’s a direct challenge to the franchising model and a roadblock to entrepreneurial growth and opportunity. It’s exactly the kind of overreach that the CRA was designed to counteract. As our regulatory state grows increasingly complex and invasive, the use of mechanisms like the CRA to safeguard our economic foundations becomes not just an option but a necessity. 

Congress has both the power and the responsibility to act. The American dream might very well depend on it. 

Rodney Davis, a five-term former U.S. representative for Illinois’ 13th district, currently works as managing director at Cozen O’Connor Public Strategies.