On November 9, several large U.S. business groups sued a federal labor board to remove a rule that said many companies had to deal with their unions as employers of contract and franchise workers.
In a lawsuit filed in a federal court in Tyler, Texas, the groups led by the U.S. Chamber of Commerce, the country's most prominent business lobby, said that the rule, which goes into effect on December 26, breaks U.S. labor law and unfairly helps unions.
Other business groups, such as the American Hotel and Lodging Association, the International Franchise Association, and the National Retail Federation, joined the U.S. Chamber of Commerce and sued the NLRB last week to stop the rule.
New Franchise Worker Rule
The groups said the rule would negatively impact many businesses and cost billions of dollars. Some industries that would be affected are retail, building, hospitality, and healthcare.
The National Labor Relations Board's (NLRB's) new rule says that companies are "joint employers" of contract and franchise workers when they control necessary working conditions like pay, hours, punishment, and supervision, even if that control is indirect or not used.
Companies that work with other companies can be sued for breaking workers' rights to organize, and they may have to negotiate with unions that represent contract or franchise workers.
In their lawsuit, the groups said, "The new rule put joint-and-several liability on almost every entity that hires contractors subject to routine parameters."
Meanwhile, a spokeswoman for the NLRB refused to clarify anything at all.
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"Judge Shopping"
The lawsuit was made in a court with two judges. Republican former President Donald Trump chose both of them.
President Joe Biden's administration has said that trade groups and states run by Republicans were "judge shopping" when they brought similar challenges to federal rules to courts that were already full of Trump appointees, especially in Texas.
The new NLRB rule replaces a rule from the Trump administration that said companies had to have "direct and immediate" control over workers to be called joint employers. Business groups supported this rule.
The board said that the old way of doing things was illegal and that companies would not be held responsible for breaking labor laws, so they made the new rule.
The groups that sued on Thursday said the rule didn't match up with federal labor law's stricter meaning of an employer.
They also said that the labor board had not given a good reason for overturning the Trump-era rule, which was against the law governing how government agencies make rules.
U.S. Labor Board Delays Unionization Rule
On the other hand, in a recent report, the federal government is postponing a new rule that may let millions of workers unionize after business groups fought it in court.
The NLRB announced Thursday that the December-due rule will take effect Feb. 26. The board said the postponement will allow it to overcome legal issues.
Congress is also against the new rule. Louisiana Republican U.S. Sen. Bill Cassidy, the ranking member of the Senate Health, Education, Labor, and Pensions Committee, sent a letter to the NLRB this week saying it wasn't following the rules for waiting 60 days before significant rules go into action. On October 27, the Federal Register published the new regulation.
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