Daniel Wiessner
(Reuters) – A federal judge in Texas on Friday struck down a National Labor Relations Board (NLRB) rule, challenged by big business groups, that treats many companies as employers of certain contract and franchise workers and requires them to negotiate with the trade unions representing them. .
U.S. District Judge J. Campbell Barker in the Tyler case agreed with challengers to the “joint employer” rule, including the U.S. Chamber of Commerce, that it was too broad and violated federal labor law. The rule, issued in October, was scheduled to take effect Monday.
A spokesman for the NBRB and the Chamber of Commerce and Industry did not immediately respond to requests for comment after the close on Friday. The NLRB is expected to appeal Barker’s decision to the Fifth U.S. Circuit Court of Appeals in New Orleans.
Industries such as manufacturing and construction rely heavily on staffing agencies and contractors to provide labor, as well as franchisors such as McDonald’s (NYSE:), Burger King and Dunkin’ Donuts, which are typically not involved in the day-to-day concerns of franchisees. at work.
The rule will treat companies as “joint employers” of contract and franchise workers if they control key working conditions such as pay, schedule, discipline and supervision, even if that control is indirect or not exercised.
The NLRB and many unions have said the rule is necessary to ensure that companies come to the bargaining table and can be held accountable for labor law violations when they control the working conditions of these contract or franchise workers.
But business groups and many Republicans said it would create confusion about when businesses would be considered workers’ employers, upsetting the franchise system and normal contractual arrangements.
Job-sharing has been one of the most contentious labor issues for many U.S. businesses since 2015, when the NLRB during Barack Obama’s presidency adopted a standard similar to the new one that trade groups said was unworkable and would upend the franchising industry.
The rule, issued by President Joe Biden’s administration, reverses a rule put in place during Donald Trump’s presidency.
The U.S. Court of Appeals for the District of Columbia Circuit in 2018 sided with a sanitation company challenging the Obama-era standard, finding that the NLRB failed to adequately explain what type of indirect control can lead to a search for joint employment. In 2020, the board adopted a rule endorsed by business groups requiring companies to have “direct and immediate” control over workers to be considered joint employers.