A federal judge in Texas has issued a ruling blocking a new National Labor Relations Board rule. The rule would have simplified the process for workers in large companies to unionize, affecting millions across the country. Set to take effect on Monday, the rule aimed to redefine the criteria for identifying “joint employers” in labor negotiations, a shift from the previous standards established by a board dominated by Republicans in 2020.
The existing NLRB rule states that companies like McDonald’s are not classified as joint employers because most workers are employed directly by franchisees. However, the new rule broadened the definition to include companies that exert control, whether directly or indirectly, over aspects of employment such as wages, benefits, scheduling, duties, work rules, and hiring.
The NLRB defended the revision, arguing that the current rule allows companies to evade their obligations to negotiate with workers. In response, industry groups like the U.S. Chamber of Commerce, the American Hotel and Lodging Association, the International Franchise Association, and the National Retail Federation filed a lawsuit against the NLRB to block the new rule, citing concerns about the potential liability for unaffiliated workers and workplaces.
In a recent ruling, U.S. District Court Judge J. Campbell Barker sided with the industry groups, deeming the NLRB’s new rule as legally flawed and arbitrary in its modifications to the existing regulation. Barker concluded that the expanded conditions outlined in the rule surpassed the parameters of common law, prompting the court to invalidate the regulation.
The NLRB is currently reviewing the court’s decision and evaluating its next course of action. Despite the setback, NLRB Chairman Lauren McFerran expressed determination to uphold traditional joint-employer standards endorsed by previous legal precedents. The ruling marks a pivotal moment in the ongoing debate around labor relations and the extent of employer responsibility in the modern workplace.