The National Labor Relations Board (NLRB) has pushed back the start date of its "Joint Employer Rule" to February 26, 2024, instead of the original December 26, 2023 deadline.
This change happens as the rule faces many legal battles and political questions, showing how complex and controversial it is.
The delay gives businesses more time to prepare for the new rules while ongoing legal and political discussions still shape how the law will finally appear.
NLRB Rule Redefines Joint Employer, Sparks Industry Concerns
On Thursday, the National Labor Relations Board announced a significant new rule about who counts as a joint employer. This rule, which started being developed in 2022, is set to go into effect on December 26 unless Congress steps in.
According to a fact sheet from the NLRB, the rule expands the idea of a joint employer. It includes employers who can control essential job conditions, even if they don't use this power, and whether they manage it directly or indirectly. This change means that companies that grant franchises are more likely to be considered employers by the NLRB.
The National Restaurant Association and the International Franchise Association have objected to this rule. They argue that it could cause problems for those running restaurants, particularly those who give out franchises and those who own them.
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NLRB Updated Rule
However, NLRB has revised its rule, making it easier to label franchisors as joint employers responsible for their franchisees' labor practices. Before, franchisees alone were accountable for following labor laws with their workers.
A company might be considered a joint employer if it controls just one of seven vital job-related areas. It is a significant shift from the old, stricter rules and could affect more businesses. Experts believe this could change how employer-employee relationships work in many fields, not just franchising.
This new rule could shake up the franchise industry, worth $825 billion, leading to higher legal costs and more control from franchisors. It's a significant change for franchises and businesses that work with subcontractors, affecting how they handle labor issues and their contracts.
Franchisors might have to change their business plans and contracts to avoid risks and stay within the law.
Impact of NLRB's Joint Employer Rule to Business
Because of how much the new rule could change things, it's recommended that businesses, particularly those in franchising or working with subcontractors, closely examine their contracts and how they handle labor.
With its wider reach, this rule might change how companies manage their workers and business deals. Legal experts are telling businesses to keep an eye on any new updates and to talk to a lawyer to help them understand and adjust to these new rules.
About NLRB
The National Labor Relations Board is a separate agency the federal government runs. Its job is to protect the rights of employees to form groups and decide if they want unions to speak for them.
The agency also works to stop and fix unfair actions in the workplace by private companies and unions.
NLRB services aid with union concerns and labor practices. An information officer at their local Regional Office can help people file election petitions to organize, join, or decertify unions. Offices in the regions can help those who believe an employer or labor group has violated them submit NLRA charges.
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