A federal judge in Texas has blocked a new National Labor Relations Board rule that would have made it easier for millions of workers to form unions at large companies.
The rule, which was supposed to take effect Monday, would have established new standards for determining when two companies should be considered “joint employers” in employment negotiations.
Under the current NLRB rule, approved by a Republican-dominated board in 2020, a company like McDonald’s is not considered a joint employer of most of its employees because they are hired directly by franchisees.
The new rule would have expanded that definition to say that companies can be considered joint employers if they have the ability to control – directly or indirectly – at least one employment condition. Conditions include wages and benefits, hours and scheduling, assignment of tasks, work rules, and hiring.
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The NLRB argued that a change is needed because the current rule makes it too easy for companies to shirk their legal responsibility to bargain with workers.
The U.S. Chamber of Commerce and other business groups — including the American Hotel and Lodging Association, the International Franchise Association and the National Retail Federation — sued the NLRB in federal court in the Eastern District of Texas in November to block the rule. They argued that the new rule would upend years of precedent and could make companies liable for workers they don’t employ in workplaces they don’t own.
In his decision Friday to grant the plaintiffs’ motion for summary judgment, U.S. District Court Judge J. Campbell Barker concluded that the NLRB’s new rule would be “contrary to law” and that it would be “arbitrary and capricious ” about what it would look like to change the existing rule.
Barker found that by establishing a set of new conditions to be used to determine whether a business meets the standards of a common employer, the NRLB’s new rule exceeds “the limits of common law.”
The NRLB is reviewing the court’s decision and considering next steps in the case, the agency said in a statement Saturday.
“The District Court’s decision to quash the Council’s regulation is a disappointing setback, but it is not the final word on our efforts to return our co-employer standard to the common law principles that have been approved from other courts,” said Lauren McFerran, The Chair of the NLRB.