Millions of workers at major U.S. companies are poised to gain extensive new rights with the implementation of a federal labor rule scheduled to take effect by year-end. The National Labor Relations Board's recently announced rule would designate companies, including franchisees and contractors, as employers if they exert control over fundamental work conditions such as pay, scheduling, and supervision. This change could hold businesses accountable for labor law violations and significantly impact industries relying on contract-based employment, such as fast-food giants, retailers, technology firms, and staffing agencies.
The new "joint employer" rule represents a departure from the Trump administration's approach, which required companies to have "direct and immediate" control over contract and franchise workers to be considered joint employers. Labor experts argue that the previous standard provided an easy escape route for companies facing labor law violations.
John Logan, chair of labor and employment studies at San Francisco State University, emphasized the rule's potential to enhance the rights of millions of employees. Under the new rule, companies classified as joint employers could be compelled to engage in collective bargaining, marking a significant shift in accountability.
While NLRB Chair Lauren McFerran defended the rule as a legally sound return to common-law principles, industry heavyweights such as the U.S. Chamber of Commerce and the National Retail Association (NRA) voiced opposition. Both organizations indicated the possibility of challenging the rule in court, arguing that it holds businesses liable for workers they do not directly employ or control.
The NRA criticized the rule as "unclear, unnecessary, and harmful" to retail employers and their millions of employees. Similarly, the American Hotel & Lodging Association criticized the NLRB's decision, calling it "devastating" to the hotel industry and accusing the agency of attempting to dismantle the franchise business model to artificially boost unionization.
Sens. Joe Manchin and Bill Cassidy have expressed their intent to introduce a resolution to overturn the rule, highlighting the contentious nature of this development in federal labor regulations.
