Texas federal judge blocks new rule National Labor Relations Board, which would make it easier for millions of workers to form unions in large companies.
The rule, which was set to take effect Monday, would have set new standards for determining when two companies should be considered “joint employers” in labor negotiations.
Under the current NLRB rule, which was adopted by the Republican-dominated board in 2020, a company like McDonald’s is not considered a joint employer of the majority of its workers because they work directly for franchisees.
The new rule would expand that definition by stating that companies can be considered joint employers if they have the ability to control—directly or indirectly—at least one term of employment. Terms and conditions include wages and benefits, hours and schedule, assignment of duties, work rules and hiring.
Read more: Amazon joins Trader Joe’s and Elon Musk’s SpaceX in calling National Labor Relations Board unconstitutional
The NLRB argues that changes are needed because the current rule makes it too easy for companies to evade their legal responsibility for negotiating 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 November in federal court for the Eastern District of Texas to block the rule. They argued that the new rule would change decades of precedent and could hold companies liable for workers they don’t employ at businesses they don’t own.
In a ruling Friday granting the plaintiffs’ motion for summary judgment, U.S. District Court Judge J. Campbell Barker concluded that the new NLRB rule is “contrary to law” and that it is “arbitrary and capricious” in how it will operate . change an existing rule.
Barker found that by setting out a number of new conditions that will be used to determine whether a company meets the joint employer standard, the new NRLB rule goes beyond “common law boundaries.”
The NRBL is reviewing the court’s decision and considering its further actions in the case, the agency said in a statement on Saturday.
“The District Court’s decision to overturn the Board’s decision is a disappointing setback, but it is not the last word in our efforts to return our joint employer standard to the common law principles that have been endorsed by other courts,” said Lauren McFerran, Judge Chair of the NLRB.