A recent decision by a federal judge in Texas has struck down a controversial rule proposed by the U.S. National Labor Relations Board (NLRB) that would have treated many companies as joint employers of contract and franchise workers. The rule, set to take effect on Monday, was challenged by major business groups, including the U.S. Chamber of Commerce, for being too broad and violating federal labor law.
Industries such as manufacturing and construction heavily rely on staffing agencies and contractors for workers, as well as franchisers like McDonald’s and Burger King. The rule would have classified companies as joint employers when they have control over key working conditions, such as pay and scheduling, even if that control is indirect or not actively exercised.
While the NLRB and many unions argue that the rule is necessary to hold companies accountable for labor law violations, business groups and Republicans say it would create confusion and disrupt franchising and contracting arrangements.
Joint employment has been a contentious issue for U.S. businesses since 2015, when a similar standard was adopted during the Obama administration. The recent decision by the Biden administration to repeal the rule put in place during the Trump presidency reflects ongoing disagreements over what constitutes joint employment.
The U.S. Court of Appeals previously sided with a sanitation company challenging the Obama-era standard, criticizing the NLRB for not adequately explaining what indirect control would lead to a finding of joint employment. In 2020, the board adopted a rule requiring companies to have “direct and immediate” control over workers to be considered joint employers.
While the NLRB is expected to appeal the recent decision, the debate over joint employment and the implications for businesses and workers continue to be a key issue in the labor landscape. Stay tuned for updates on this ongoing development.
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