Judge blocks U.S. Labor Commission rule on contract and franchise workers By Reuters
© Reuters. The headquarters of the National Labor Relations Board (NLRB) in Washington, DC, USA is seen on May 15, 2021. REUTERS/Andrew Kelly/File Photo
Daniel Wisner
(Reuters) – A federal judge in Texas on Friday ruled against a U.S. National Labor Relations Board (NLRB) rule challenged by a major business group that would require many companies to treat themselves as employers of certain contract and franchise workers and bargain with the unions that represent them. was dismissed. .
U.S. District Judge J. Campbell Barker in the Tyler case agreed with objectors to the “joint employer” rule, including the U.S. Chamber of Commerce. This rule is too broad and violates federal labor law. The rules, announced in October, were scheduled to take effect on Monday.
An NLRB spokesperson and the chamber 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 U.S. Court of Appeals for the Fifth Circuit.
Industries such as manufacturing and construction rely heavily on staffing agencies and contractors to provide employees for franchises such as McDonald’s (NYSE:), Burger King and Dunkin’ Donuts, which are typically not involved in the day-to-day workplace issues of franchisees.
The rule treats companies as “joint employers” of contract and franchise workers if they have control over key working conditions, such as pay, scheduling, discipline and supervision. This is true even if control is indirect or not exercised.
The NLRB and many unions have said the rule is needed so companies can be held liable for labor law violations when they control the working conditions of contract or franchise workers.
But business groups and many Republicans say it would create confusion and interfere with franchising and routine contractual arrangements if businesses are considered employers of workers.
Joint employment has been one of the most contentious labor issues for many U.S. businesses since 2015, when the NLRB during President Barack Obama’s term adopted new standards similar to those that trade groups said were unworkable and would shake up the franchise industry.
The rules announced by President Joe Biden’s administration repeal rules put in place during President Donald Trump’s presidency.
In 2018, the U.S. Court of Appeals for the District of Columbia sided with a sanitary company challenging the Obama-era standards, ruling that the NLRB failed to adequately explain what types of indirect control could lead to joint employment. In 2020, the board adopted a rule favored by a group of businesses that would require businesses to have “direct and immediate” control over workers to be considered joint employers.
