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A federal judge in Texas blocked a new rule from the National Labor Relations Board that would have made it easier for millions of workers to form unions at large companies.
A federal judge in Texas blocked a new rule from the National Labor Relations Board that would have made it easier for millions of workers to form unions at large companies.
The rule, which was set to take effect Monday, would have established new standards for determining when two companies should be considered “joint employers” in labor negotiations.
Under the current NLRB rule, which was passed by a Republican-dominated board in 2020, a company like McDonald’s is not considered a joint employer of most of its workers since they are directly employed by franchisees.
The new rule would have expanded that definition to say that companies can be considered joint employers if they have the ability to control, directly or indirectly, at least one condition of employment. Conditions include wages and benefits, hours and schedules, assignment of duties, work rules, and hiring.
The NLRB argued that a change is necessary because the current rule makes it too easy for companies to avoid their legal responsibility to bargain with workers.
The U.S. Chamber of Commerce and other business groups (including the American Hotel and Lodging Association, the International Franchise Association and the National Retail Federation) sued the NLRB in federal court in the Eastern District of Texas in November to block the rule.
They argued that the new rule would upend years of precedent and could make companies responsible for workers they do not employ in workplaces they do not own.
In his decision Friday granting the plaintiffs’ motion for summary judgment, U.S. District Court Judge J. Campbell Barker concluded that the NLRB’s new rule would be “contrary to law” and was “ arbitrary and capricious” as to how it would be applied. change the existing rule.
Barker found that by establishing a series of new conditions that will be used to determine whether a business meets the joint employer standard, the new NRLB rule exceeds “the limits of the common law.”
The NRLB is reviewing the court’s decision and considering next steps in the case, the agency said in a statement Saturday.
“The District Court’s decision to vacate the Board’s rule is a disappointing setback, but it is not the final word in our efforts to return our joint employer standard to common law principles that have been upheld by other courts,” said NLRB Chair Lauren McFerran.