By Daniel Wiessner
(Reuters) - The Republican-led U.S. House of Representatives on Friday voted to repeal a federal labor board rule set to take effect in February that would treat companies as the employers of many contract and franchise workers and require them to bargain with those workers' unions.
The House voted 206-177 to nix the National Labor Relations Board (NLRB) rule, which has been heavily criticized by business groups. The vote sends the proposal to the Senate where Democrats hold a one-seat majority but Senator Joe Manchin, a Democrat from West Virginia, has said he opposes the rule.
The resolution was introduced under the Congressional Review Act, which allows Congress to repeal agency rules through a majority vote in both houses.
The White House earlier this week said Democratic President Joe Biden would veto the resolution if it passes both houses of Congress. A two-thirds majority would be required to overcome a White House veto.
The rule would treat companies as "joint employers" of contract and franchise workers when they have control over key working conditions such as pay, scheduling, discipline and supervision, even if that control is indirect or not exercised.
A company deemed a joint employer must bargain with unions representing contract and franchise workers and can be held liable for violating those workers' rights under federal labor law.
Representative Virginia Foxx of North Carolina, the Republican chair of the House Committee on Education and the Workforce, in a speech ahead of Friday's vote called the NLRB policy an "anti-freedom, anti-growth" rule that would compel small businesses to come under "big government regulation and union boss control."
Democratic Representative Eric Sorensen of Illinois countered that Republicans were making misleading claims how the rule's affect on small business, saying the issue was "simply about whether or not an employer is obligated to come to the bargaining table."
The U.S. Chamber of Commerce and other business groups filed a lawsuit in November seeking to block the rule from taking effect. They claim the rule violates U.S. labor law by defining who counts as an employer too broadly, and will cause disruptions in an array of industries if it takes effect.
The NLRB asked the Texas federal judge who is overseeing the case to rule in its favor last month, arguing that the joint employer rule adopts a long-standing definition of employment and properly balances the rights of workers and businesses.
The board adopted the rule in October, replacing a Trump-era regulation favored by business groups that had required companies to have "direct and immediate" control over workers in order to be considered joint employers.
The board said the rule, which is supported by unions and worker advocates, was necessary to ensure that businesses that effectively exercise control over workers' terms of employment respect their bargaining obligations.
The standard for when companies will be considered joint employers has been in flux since the Obama administration. The new rule is similar to a standard the board had adopted in a 2015 decision.
Critics of the rule, including many Republicans and most major business groups, have said it would be improper to force companies to the bargaining table when they have little control over working conditions.
And groups representing franchise businesses claim it could upend the franchise model by requiring companies such as McDonald's (NYSE:MCD) to bargain with the employees of franchisees.