Biden's veto bodes ill for the US economy and job market
The Biden administration's National Labor Relations Board recently adopted a new and ideologically charged standard on joint employment. This new joint-employer rule, which threatens to create uncertainty and multiple new burdens for employers who contract out part of their work, is currently mired in litigation.
Congress, on a bipartisan basis, recently attempted to settle the issue by passing a resolution under the Congressional Review Act that would have just scrapped the new rule. Unfortunately, President Biden just vetoed their effort last week.
Biden's veto represents a significant policy shift that will adversely affect the business landscape, particularly in a time when economic stability is paramount. This veto not only rejects clear bipartisan legislative action but also imposes additional burdens on businesses already navigating a challenging economic environment.
The NLRB’s revised joint employer standard notably lowers the threshold for determining when two businesses are considered joint employers. Under the previous administration, the standard required that a company must have “direct and immediate” control over the terms and conditions of employment to be considered a joint employer.
The new rule broadens this definition, allowing a business to be deemed a joint employer even if it has only indirect influence over the employment conditions of another company's workers. The old standard provided clarity and stability for businesses engaging with contractors and franchisees, but the new standard seems to create ambiguity on purpose.
What does Biden have to gain from all of this? Union votes. But how many votes will he lose if this new rule dampens the economic recovery in an election year?
The bipartisan resolution under the CRA aimed to maintain the previous, stricter standard. The support for it from both sides of the aisle underscored a shared understanding of the importance of a stable and predictable legal environment for businesses. However, with Biden's veto, the resolution was blocked, paving the way for the implementation of the NLRB’s very clearly anti-business criteria.
The veto will have significant implications. First, the new joint employer standard will certainly lead to increased litigation, as the boundaries of "indirect" and "potential" control are tested in courts. The resulting legal uncertainty will burden businesses with additional costs and discourage the formation of beneficial business relationships, particularly in sectors like franchising and contracting, where such relationships are common.
As the U.S. Chamber of Commerce has pointed out, this rule change could "result in decreased business formation and growth, and create significant costs for both large and small companies."
Moreover, in an economy still recovering from the COVID-19 pandemic, the timing of such a regulatory shift seems particularly counterproductive. Businesses are currently facing a myriad of challenges, from supply-chain disruptions to inflationary pressures. The added uncertainty and potential liability under the new joint employer standard could hinder recovery efforts.
During economic recoveries, it is crucial for policies to foster an environment of growth and stability, not increase the regulatory burdens on businesses that are the backbone of the economy.
The broader implications for labor relations cannot be overlooked either. While supporters of the new standard argue that it will ensure more businesses are accountable for labor violations and provide greater bargaining power to workers, this perspective does not consider the negative effects it will have on the labor market. Increased liabilities could lead employers to tighten control over their business practices, potentially leading to fewer job opportunities and less flexibility in employment arrangements.
The veto also speaks to a larger trend of regulatory changes being pushed through without sufficient legislative backing. This rule undermines the role of Congress and the legislative process in shaping labor and employment law. When such significant changes are made through regulatory agencies rather than through legislation, it bypasses elected representatives and the constituents they serve, weakening the democratic process and potentially leading to a governance model that relies too heavily on executive action and regulatory interpretation.
In conclusion, Biden’s decision to veto the bipartisan CRA resolution is a mistake — a missed opportunity to reinforce a bipartisan approach to labor and employment issues. It imposes a regulatory framework that will doubtlessly have deleterious effects on the economic landscape, increasing costs and legal risks for businesses, and potentially stifling economic recovery and growth.
This veto not only affects businesses, but also sets a precedent for future regulatory actions that might prioritize expediency and partisanship over consensus, further polarizing our political and economic environment.
As we move forward, it is crucial for policymakers to consider the broader economic effects of such regulatory changes and strive for solutions that foster business stability and growth, particularly in uncertain times. Engaging with all stakeholders to find a balanced approach should be the priority rather than unilateral decisions that will have far-reaching consequences for both businesses and workers alike.
John-Paul S. Deol is a partner and head of the employment law practice at Dhillon Law Group.
Date: | |
Tag: | Joe Biden |
Topics
Filter
-
Economy Losing Steam as Labor Market Tightens
Weekly jobless claim numbers decline as the impact of higher interest rates starts to hit key business sectors like homebuilding and manufacturing.Inc. - Business -
America’s class of 2024 graduates into an uncertain job market
US employers say they will cut their hiring of freshly-minted graduates by 5.8% this yearFinancial Times - Business -
Are the US and Chinese economies really about to start ‘decoupling’?
Experts say Biden’s tariffs on Chinese clean tech goods are not the trade-war move some fearFinancial Times - Business -
Soaring debt and deficits causing worry about threats to the economy and markets
Government debt that has swelled nearly 50% is capturing increasing worry both on Wall Street and in Washington.CNBC - Business -
London insurance market jobs hit highest level in decade
Industry benefits from specialist knowledge of everything from shipwrecks to cyber attacksFinancial Times - Business -
Trump turns trial into circus as Biden tries to focus minds on economy
As a slew of Republicans went to the hush-money trial to show their fealty to their boss, the president tried to rise above it. Donald Trump last week turned his New York fraud trial into a political circus and a platform for his election campaign ...The Guardian - World - Joe Biden -
Biden's proposed tax hike would crush workers and the economy
Biden is eager for more hard-earned money from U.S. taxpayers, and he is willing to drive businesses overseas again by raising corporate tax rates.The Hill - Politics - Joe Biden -
US prisoners are being assigned dangerous jobs. But what happens if they are hurt or killed?
An Associated Press investigation into prison labor in the United States found that prisoners who are hurt or killed on the job are often being denied the rights and protections offered to other American workersABC News - Top stories -
Takeaways from the AP's investigation into how US prisoners are hurt or killed on the job
An Associated Press investigation into prison labor in the United States found that prisoners who are hurt or killed on the job are often being denied the rights and protections offered to other American workersABC News - Health -
US green energy push expected to generate $47bn market in tax credits
Oil companies, banks, private equity and others partner with renewables developers to offset liabilitiesFinancial Times - World
More from The Hill
-
Colorado tackles discrimination in AI
Welcome to The Hill's Technology newsletter {beacon} Technology Technology The Big Story Colorado governor signs AI law Colorado will require developers of artificial intelligence (AI) to avoid discrimination in high-risk systems as part of a ...The Hill - Politics -
What is the ICC?
The International Criminal Court (ICC) was in the global spotlight Monday after its prosecutor requested arrest warrants for two Hamas leaders, along with Israeli Prime Minister Benjamin Netanyahu and his defense minister, claiming the court has ...The Hill - Politics -
US lashes out after Israeli officials targeted with arrest warrants
U.S. officials went on the offensive Monday after the International Criminal Court (ICC) filed arrest warrants against two top Israeli leaders over the war in Gaza, a move that Congress and the White House slammed for equating Israel's conduct ...The Hill - Politics - Israel -
Evening Report — Prosecution rests after tough day on the stand for Michael Cohen
A quick recap of the day and what to look forward to tomorrow {beacon} Evening Report Monday, May 20 © Angela Weiss/Pool Photo via AP/Andres Kudacki Prosecution rests after a tough day on the stand for Michael Cohen Prosecutors for the ...The Hill - Politics -
FDIC chair says he'll resign once successor is confirmed
Federal Deposit Insurance Corp. (FDIC) Chair Martin Gruenberg announced Monday he will resign once his successor is confirmed by the Senate after several reports documented a culture of sexual harassment, misconduct and retaliation at the agency ...The Hill - Politics