WASHINGTON (dpa-AFX) - A federal judge in Texas has blocked a rule by the U.S. National Labor Relations Board or NLRB, which would have expanded the definition of employers to include franchise and contract workers, requiring them to bargain with unions of those workers.
The contested rule states that the companies would be considered joint employers if they exert control, directly or indirectly, over the significant aspects of workers' condition, such as wages and benefits, hiring, work scheduling and work assignment.
US District Judge J. Campbell Barker of the Eastern District of Texas defined the rule as overly broad and contrary to law. He stated that the rule would classify some companies as employers of contract and franchise workers, even if they do not possess control over their working conditions.
The U.S. Chamber of Commerce, which had led the lawsuit against the rule, called the verdict 'a major legal victory for American businesses of all sizes, including franchises and contractors, employers and workers.'
Notably, manufacturing and construction industries, and franchisers such as McDonald's, Burger King, and Dunkin' Donuts would have been affected gravely due to the joint-employers rule.
'This ruling is a major win for employers and workers who don't want their business decisions micromanaged by the NLRB,' U.S. Chamber of Commerce President and CEO Suzanne Clark commented. 'It will prevent businesses from facing new liabilities related to workplaces they don't control and workers they don't actually employ.'
Meanwhile, NLRB Chairman Lauren McFerran stated that the decision was 'a disappointing setback, but is not the last word on our efforts to return our joint-employer standard to the common law principles that have been endorsed by other courts. The Agency is reviewing the decision and actively considering next steps in this case.'
The NLRB is expected to file an appeal against the ruling to the 5th U.S. Circuit Court of Appeals in New Orleans.
The rule supposed to come into effect from March 11, was issued on October 26, 2023, by the labor board to determine whether two or more employers are joint employers of particular employees within the meaning of the National Labor Relations Act.
'Under the new standard, an entity may be considered a joint employer of a group of employees if each entity has an employment relationship with the employees and they share or co-determine one or more of the employees' essential terms and conditions of employment,' the NLRB said in October.
Within weeks of the announcement, the new rule was challenged by the U.S. Chamber of Commerce and a coalition of business groups, who called the newly-issued joint-employer rule unlawful and filed a lawsuit to strike it down stating it as arbitrary and capricious.
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