A federal judge in Texas has halted the implementation of a new rule by the National Labor Relations Board (NLRB), which aimed to streamline the process for workers to form unions at large corporations.
Scheduled to take effect on Monday, the rule sought to establish revised criteria for determining “joint employers” in labor negotiations, potentially impacting millions of workers.
Under the existing NLRB rule, enacted by a Republican-led board in 2020, companies such as McDonald’s are generally not considered joint employers of their workers, as they are directly employed by franchisees.
The proposed rule aimed to broaden this definition, stating that companies could be deemed joint employers if they have the ability to exert control over at least one aspect of employment conditions, including wages, benefits, scheduling, duties, work rules, and hiring.
Advocates argued that the change was necessary to prevent companies from evading their legal obligation to negotiate with workers.
However, the U.S. Chamber of Commerce and several business organizations, including the American Hotel and Lodging Association, the International Franchise Association, and the National Retail Federation, filed a lawsuit against the NLRB in November to block the rule. They contended that it would disrupt established precedents and potentially hold companies accountable for workers they do not directly employ or workplaces they do not own.
In a ruling issued on Friday, U.S. District Court Judge J. Campbell Barker granted the plaintiffs’ motion for a summary judgment, declaring the NLRB’s new rule “contrary to law” and “arbitrary and capricious” in its approach to altering the existing regulation.
Judge Barker determined that the NLRB’s expansion of conditions to determine joint employer status exceeded the boundaries of common law.
The NLRB has indicated that it is reviewing the court’s decision and considering its options for further action in the case.
In response to the ruling, Lauren McFerran, chairperson of the NLRB, expressed disappointment, emphasizing that while the setback is significant, it does not mark the end of efforts to restore the joint employer standard to established common law principles.
