The National Labor Relations Board voted 3-2 Thursday to expand the federal definition of "joint employer" to cover franchise employees or contract workers, dealing a blow to many business groups that argue such a move would harm the economy.

Unions and other labor advocates celebrated the board's decision, saying the update was needed to ensure worker protections remain in place as more companies adopt nontraditional business models. However, the National Retail Federation viewed that change as an unacceptable break in "30 years of clear precedent."

"This is further evidence that the NLRB has given up its position as an objective arbiter of workplace issues and sees itself as an advocate for organized labor as a means of imposing new workplace obligations and legal liabilities on well-known corporations," NRF Senior Vice President for Government Relations David French said.

Fast-food franchises like McDonald's will be hit hard by the decision. As a result, the National Restaurant Association said NLRB "is stacking the deck against small business."

"The NLRB is already using its new rationale to dismantle the franchisor-franchisee model, which would stifle entrepreneurship and obstruct small businesses' ability to continue to create jobs in an increasingly challenging economic and regulatory environment," said Angelo Amador, NRA's senior vice president of labor and workforce policy and regulatory counsel.

The International Franchise Association issued a lengthy response to the decision, saying it overturned 50 years of bipartisan policy and decades of court and regulatory rulings.

"IFA and its allies are asking Congress to intervene to halt these out-of-control, unelected Washington bureaucrats to preserve the established joint employer standard relied upon by America's 780,000 franchise businesses and the 8.5 million jobs they directly create," CEO Steve Caldeira said.

MORE CEO DATELINE

• American Trucking Associations fire back at former employee's criticism of industry
• Internet Association worried student privacy bill goes too far
• Food groups to Congress: No new taxes
• Advertising association to offer patent troll insurance
• Sierra Club lashes out at NAM with ‘rebranding' effort