A federal judge struck down the National Labor Relations Board’s new joint employer rule, halting the standard before it could take effect Monday, March 11.
In his decision released Friday night, U.S. District Judge J. Campbell Barker ruled in favor of the U.S. Chamber of Commerce, which filed a lawsuit against the NLRB last fall to challenge the updated standard. In October the NLRB announced its new joint employer rule, broadening the definition.
If the rule had been implemented, a franchisor would have shared the liability for labor law violations with franchisees, and would have a legal obligation to be involved with labor union negotiations. Judge Barker in the Eastern District Court of Texas sided with the opposition to the rule, though, which included the International Franchise Association.
Barker wrote in his decision that the rule, “Would treat virtually every entity that contracts labor as a joint employer, because virtually every contract for third-party labor has terms that impact, at least indirectly … essential terms and conditions of employment.”
U.S. Chamber of Commerce President and CEO Suzanne Clark
“The ruling is a major win for employers and workers who don’t want their business decisions micromanaged by the NLRB,” said Chamber President and CEO Suzanne Clark in a release. “It will prevent businesses from facing new liabilities related to workplaces they don’t control, and workers they don’t actually employ.”
“The ruling preserves the franchise business model … by rejecting a flawed regulation enacted solely for the benefit of advancing the political goals of organized labor,” IFA CEO Matt Haller said in a release. “Elected officials on both sides of the aisle talk a big game about standing up for small businesses, and now the U.S. Senate can act on those promises by putting the bipartisan CRA resolution on President Biden’s desk.”
Haller was referring to a Congressional Review Act resolution, which allows legislators to reverse the action of an agency. The resolution to reverse the NLRB’s rule already passed the U.S. House of Representatives in mid-January in a 206-177 vote, with support from 198 Republicans and eight Democrats.
IFA President and CEO Matt Haller
The Senate is expected to take action on the resolution in the near future, though a date for a vote hasn’t been scheduled.
In its press release on Barker’s ruling, the IFA claimed that a similar rule, in effect during the Obama administration, cost businesses $33.3 billion and led to a 93 percent increase in lawsuits.
Lauren McFerran, chair of the NLRB, said in a statement the board is reviewing the judge’s decision and “actively considering next steps in the case.”
“The district court’s decision to vacate the board’s rule is a disappointing setback, but is not the last word on our efforts to return our joint-employer standard to the common law principles that have been endorsed by other courts,” she said.