©Reuters. The headquarters of the National Labor Relations Board (NLRB) is seen in Washington, DC, U.S., May 15, 2021. REUTERS/Andrew Kelly/File Photo
By Daniel Wiessner
(Reuters) -A federal judge in Texas on Friday struck down a U.S. National Labor Relations Board (NLRB) rule, contested by major business groups, that would treat many companies as employers of certain contract and franchise workers and impose them to negotiate with the unions that represent them. .
U.S. District Judge J. Campbell Barker in Tyler agreed with opponents of the “joint employer” rule, including the American Chamber of Commerce, that it is too broad and violates federal labor law. The rule, issued in October, was supposed to take effect on Monday.
A spokesperson for the NLRB and the Chamber of Commerce did not immediately respond to requests for comment after hours Friday. The NLRB is expected to appeal Barker’s decision to the New Orleans-based 5th U.S. Circuit Court of Appeals.
Industries such as manufacturing and construction rely heavily on staffing agencies and contractors to supply workers, and franchises such as McDonald’s (NYSE:), Burger King and Dunkin’ Donuts are typically not involved in franchisees’ day-to-day workplace matters .
The rule would treat companies as “joint employers” of contract and franchise workers when they have control over key working conditions such as pay, scheduling, discipline and supervision, even if that control is indirect or not exercised.
The NLRB and many unions have said the rule is needed to ensure that companies have a seat at the bargaining table and can be held accountable for labor law violations when they have control over the working conditions of these contract or temporary workers. franchising.
But business groups and many Republicans have said that would create confusion over when companies are considered employers of workers, disrupting franchising and routine contractual arrangements.
Joint employment has been one of the most contentious labor issues for many U.S. companies since 2015, when the NLRB under Barack Obama’s presidency adopted a similar new standard that trade groups said was unworkable and would disrupt the franchising industry .
The rule issued by President Joe Biden’s administration would repeal the one put in place during Donald Trump’s presidency.
In 2018, the U.S. Court of Appeals for the District of Columbia Circuit sided with a sanitation company challenging the Obama-era standard, finding that the NLRB had not adequately explained what type of indirect control could have led to a conclusion of joint work. In 2020, the council adopted a rule favored by business groups that requires companies to have “direct and immediate” control over workers to be considered joint employers.