A federal judge in Texas has issued a ruling blocking a new rule by the National Labor Relations Board (NLRB) that aimed to facilitate the formation of unions for workers at large companies. The rule, which was set to take effect on Monday, sought to establish revised criteria for determining when two companies should be classified as 'joint employers' in labor negotiations.
Under the current NLRB rule, a company like McDonald’s is not considered a joint employer of most of its workers as they are directly employed by franchisees. The proposed rule would have broadened this definition to include companies that have the ability to control at least one condition of employment, such as wages, benefits, scheduling, duties, work rules, and hiring.
The NLRB argued that the change was necessary to prevent companies from evading their legal obligation to engage in collective bargaining with workers. However, the U.S. Chamber of Commerce and other business organizations filed a lawsuit challenging the rule, contending that it would disrupt established precedents and potentially hold companies accountable for workers they do not directly employ.
In a decision on Friday, U.S. District Court Judge J. Campbell Barker sided with the plaintiffs, deeming the NLRB's new rule as 'contrary to law' and 'arbitrary and capricious.' Barker criticized the rule for expanding the criteria for determining joint employer status beyond the boundaries of common law.
The NLRB is currently reviewing the court's ruling and evaluating its options moving forward. Despite the setback, NLRB Chairman Lauren McFerran expressed determination to align the joint-employer standard with established common law principles endorsed by other courts.
This development underscores the ongoing debate surrounding labor relations and the legal responsibilities of companies towards their workers. The outcome of this case will likely have significant implications for future labor negotiations and the relationship between employers and employees.
