As sober observers will know, the Biden redefinition wasn’t about protecting workers. It was about empowering large, powerful, politically connected unions to pressure deep-pocketed corporations instead of having to organize at the local level where workers can decide for themselves.

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If you’re a plaintiffs’ attorney or Big Labor union boss, what better way to cynically target deep-pocketed American businesses than to grossly broaden the definition of who constitutes an “employer?”  

Although it understandably flew a bit under the news radar during an eventful past week, the Trump Administration just notched another significant policy victory for American jobs and our economy by rebuffing that campaign.  

Specifically, the Trump Administration’s National Labor Relations Board (NLRB) formally withdrew the Biden Administration’s misguided “Joint Employer Rule,” which upended literally centuries of American employment law.  

Big Labor union bosses and plaintiff lawyers loved the novel Biden Administration’s rule, because it enlarged the number of deep pockets that could be sued or targeted by unions.  For small businesses and especially the franchising economy, however, it posed a potentially catastrophic threat.  

Although the term “joint employer” may sound like esoterica, the underlying doctrine essentially holds multiple businesses legally liable for the same employee, even if those businesses exercised no direct control over the hiring, firing, salaries, terms or conditions of employment.  

Naturally, expanding the definition of “employer” serves the goals of plaintiff lawyers and unions, who seek to more conveniently sue or organize small businesses scattered across the nation as a single business.  Under the Biden Administration’s rule, businesses that allow franchising or use subcontractors, independent contractors or even temp agencies could be deemed “joint employers” for unionization or lawsuit purposes.  

That contravenes traditional and common-sense legal principles, under which an “employer” had to actually exercise substantial, direct and immediate control over essential terms and conditions of employment — things like hiring, firing, discipline, wages and supervision.  

In other words, you were responsible only if you were truly in charge.  

As a favor to union bosses and plaintiff attorneys, the Biden Administration’s 2023 redefinition abandoned that common-sense and longstanding rule, replacing it with an expanded definition to target deep-pocketed companies that never exercised authority over working conditions at issue.  

Here’s how that would play out in real-world practice:  A distant national franchisor that sets routine quality standards for its brand — things like requiring uniform signage, customer service guidelines or product specifications — could suddenly find itself legally responsible for employment decisions made by a local franchisee.  Or a contractor that outlines general safety requirements in a contract could be deemed a joint employer of another company’s workforce.

Accordingly, the Joint Employer Rule wasn’t a minor tweak, but a sweeping expansion of liability and bargaining obligations upending our nation’s franchise model, destabilizing contracting relationships and chilling economic growth.  

In March 2024, a lower federal court ruled the Biden Administration’s redefinition illegal, but any effort to appeal that ruling was just rendered moot with the Trump NLRB’s formal withdrawal of the rule and reinstatement of the traditional standard.  

The reinstated standard returns to a simple and fair test: A company must actually possess and exercise direct and immediate control over essential terms of employment to be deemed a joint employer. 

As sober observers will know, the Biden redefinition wasn’t about protecting workers.  It was about empowering large, powerful, politically connected unions to pressure deep-pocketed corporations instead of having to organize at the local level where workers can decide for themselves.  

By reinstating the traditional standard, the Trump Administration brings relief to businesses engaged in the franchising model.  That model remains one of the great engines of upward mobility in America, allowing small entrepreneurs to own and operate their own businesses while benefiting from established brands.  Had national franchising brands been forced to abide by the Biden rule, they would rationally respond by tightening control, reducing franchise opportunities or abandoning the model altogether in favor of corporate-owned outlets.  

That would’ve meant fewer opportunities for aspiring small business owners, fewer jobs in local communities and less flexibility in the U.S. labor market.  

That same logic applies to contractors and subcontractors.  Construction, logistics, hospitality and countless other industries rely on clearly defined relationships between firms.  If those arms-length relationships can suddenly create “joint employer” status, businesses would hesitate before entering into them.  Compliance costs would rise, legal risks would multiply and hiring would slow.  

The Trump Administration’s restoration of employment sanity relieves whipsawed businesses and provides employers more predictable rules allowing them to invest, expand and hire with confidence.  

The Joint Employer Rule fight, however, is far from over.  

Union bosses will continue to challenge the Trump restoration in court, seeking a broader joint employer standard that makes it easier to organize national brands and apply pressure at the top of the corporate pyramid.  Meanwhile, Big Labor’s allies in Congress and state legislatures will continue to pursue both federal and state-level expansions of joint employer liability.  

For now, however, this is a victory worth applauding.  In an era of regulatory overreach, pulling back another destructive rule constitutes the latest significant step in favor of freedom over bureaucratic sclerosis.