A federal judge in Texas has blocked a new rule created by the National Labor Relations Board that would have made it easier for millions of workers at big companies to form and maintain unions.
The rule was set to go into effect Monday, and would have set new standards regarding when two companies should be considered joint employers in labor negotiations.
Under the current NLRB rule, which was passed in 2020 by a Republican-dominated board, companies such as McDonald’s or Burger King aren’t considered a joint employer of most of its workers since they are directly employed by franchisees. Other industries such as manufacturing and construction heavily rely on staffing agencies and contractors for providing workers.
The new rule would have expanded the definition so that companies may be considered joint employers if they have the ability to control, either directly or indirectly, at least one condition of employment. These conditions include areas like wages and benefits, hours and scheduling, assigning duties, and work rules and hiring.
The NLRB argued a change is necessary because the current rule makes it too easy for companies to avoid their legal responsibility to bargain with workers.
The U.S. Chamber of Commerce and other business groups, which included the American Hotel and Lodging Association, the International Franchise Association and the National Retail Federation, sued the NLRB through federal court in the Eastern District of Texas last November in order to block the rule.
Their argument is that the new rule would upend years of precedent and could make companies liable for workers they don’t employ at workplaces they don’t own.
In his decision Friday, which granted the plaintiffs’ motion for a summary judgment, U.S. District Court Judge J. Campbell Barker concluded the NLRB’s new rule would be contrary to the laws and that it was arbitrary in regards to how the existing rule would be changed.
Barker stated that the establishment of an array of new conditions used in determining whether a company meets the standard of a joint employer would lead the NLRB’s new rule to exceed the boundaries of common laws.
The NLRB is reviewing the court’s decision and is considering the next steps to take in the case, the agency said in a statement Saturday.
The U.S. Court of Appeals for the District of Columbia Circuit in 2018 sided with a sanitation company that challenged Obama-era standards, finding that the NLRB had not adequately explained what kind of indirect control could result in finding joint employment. In 2020, the board adopted a rule favored by business groups that required companies to have direct and immediate control over workers to be considered joint employers.
