© Reuters. The headquarters of the National Labor Relations Board (NLRB) 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 that would treat many companies as employers of certain contract and franchise workers and require them to negotiate with unions that hire them. represent.
U.S. District Judge J. Campbell Barker in Tyler agreed with challenges to the “joint employer” rule, including the U.S. Chamber of Commerce, that it is overly broad and violates federal labor law. The rule, issued in October, would go into effect on Monday.
Barker said the rule is invalid because it would treat some companies as employers of contract or franchise workers even when they lacked meaningful control over their working conditions.
The rule “would treat virtually every entity that contracts for labor as a joint employer because virtually all third-party employment contracts have terms that impact, at least indirectly… essential terms and conditions of employment,” the judge wrote.
A spokeswoman for the NLRB and the Chamber of Commerce did not immediately respond to requests for comment after business 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 workers, and franchisors such as McDonald's (NYSE:), Burger King and Dunkin' Donuts typically do not participate in the day-to-day employment matters of franchisees.
The rule would treat companies as “joint employers” of contract workers and franchisees 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 necessary to ensure that companies come to the bargaining table and can be held liable for labor law violations when they have control over the working conditions of these contract or franchise workers.
But business groups and many Republicans have said it would create confusion about when companies are considered employers of workers, upending franchises and routine contractual agreements.
Co-employment has been one of the most contentious labor issues for many American companies since 2015, when the NLRB under President Barack Obama adopted a rule similar to the new one that trade groups said was unworkable and would hurt the manufacturing industry. the franchises.
The rule issued by President Joe Biden's administration would repeal one implemented 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 and concluded that the NLRB had not adequately explained what type of indirect control could lead to a conclusion of joint employment. In 2020, the board adopted a rule favored by business groups that requires companies to have “direct and immediate” control over workers to be considered joint employers.
