HELENA — On Wednesday, the U.S. Senate passed a resolution that would repeal a federal rule that expands which businesses have to be involved with certain labor negotiations – though it’s likely to face a veto from President Joe Biden. Montana’s two senators were split on the vote.
Senators voted 50-48 for a resolution to officially disapprove the National Labor Relations Board’s new “joint employer rule.” Most Republicans, including Sen. Steve Daines, were joined by one Democrat and two independent senators in support of the resolution. The remaining Democrats, including Sen. Jon Tester, voted against it, along with one Republican.
The U.S. House passed the resolution in January, so it will now go to Biden. If he vetoes it, as his administration said at that time he would, it would take two-thirds of both chambers to overturn the rule.
The new rule says companies that can exert control over the terms and conditions of someone’s employment – like wages, schedule, hiring and working conditions – have to be involved in collective bargaining for that employee, even if the control is indirect and even if it isn’t actually exerted. A similar rule was enacted during the Obama administration, then it was changed under the Trump administration to say a business is only a joint employer if they have “substantial direct and immediate control” over terms and conditions of employment.
Daines was a cosponsor of the resolution to stop the new joint employer rule.
“I’m glad to see the Senate pass my effort to push back on this burdensome rule,” he said in a statement to MTN. “Montanans should have the freedom to start businesses and create jobs without heavy-handed regulations passed down by Washington bureaucrats threatening their livelihoods. I hope to see the President do the right thing and abandon this anti-small business rule.”
Tester said he voted to uphold the rule to stand with workers.
“Montana’s workers show up day in and day out to power our state’s economy, and I’ll always have their backs,” he said in a statement. “I voted to hold large corporations accountable and ensure that workers will have a seat at the table to bargain for a fair wage and reasonable working conditions. At the end of the day, hardworking Montanans deserve the respect to negotiate directly with the company that is calling the shots.”
Business groups had called on Tester to support the repeal, which they said would put extra burdens on a wide variety of business arrangements. Particular opposition came from franchises – businesses, like chain restaurants, that are part of a larger brand but have independent local owners for each location.
Mike Layman, senior vice president of government relations and public affairs for the International Franchise Association, said Montana has more than 3,000 franchise businesses with more than 32,000 employees.
“They're both separate businesses, they both employ their own people, they both pay their own taxes,” he said. “They're held together with a brand relationship, but they're very independent businesses, and a brand really has nothing to do with the hiring and employment policies at a store-by-store level.”
Layman said the new rule would lead to significant costs for businesses trying to make sure they remain in compliance.
The NLRB said the rule was not going to make all franchisors and franchisees joint employer, and they would be considered case-by-case – but Layman said that case-by-case standard would only mean more uncertainty for businesses. He said the current joint employer rule is a fair balance.
“If a construction company has direct control over their welding firm, they're going to be a joint employer; if a franchise brand has direct control over its franchisees, employees, they're going to be named a joint employer,” he said. “That's current law. That makes sense. That's fair for everybody, so that bad actors are held liable and there's a balance in any business relationship. What President Biden has proposed doing through this regulation is to tilt that balance way over to the side.”
But labor groups said the current rule has a loophole that allows some businesses to skirt around fair bargaining practices.
“The last administration had made a change, to where it made the employers a lot easier to circumvent collective bargaining and dealing with those issues,” said Erin Foley, secretary-treasurer of Teamsters Local 2 and president of the Montana AFL-CIO. “The rule that we're looking at now actually gives access to us, to be able to bargain with the corporate who should be at the table.”
Foley said they’re concerned about situations like large shopping companies that use third-party firms for drivers and warehouse workers, or local hospitals and nursing homes that partner with larger ones. She said, in many cases, the parent companies appear to have prominent roles in employees’ everyday working conditions, but they don’t have to come to the bargaining table. She said it’s been a challenge for unions to prove in hearings that a company is a joint employer.
“Essentially, they're exploiting the weak labor law to avoid liabilities and responsibilities of our economy,” she said.
Foley said, without the updated rule, unions might not be able to get access to key information from the parent companies, as they bargain for better wages and working conditions.
For the moment, the new joint employer rule isn’t coming into effect regardless of whether Biden vetoes this resolution. A federal judge in Texas vacated the rule last month. The administration could still appeal that decision.
