The National Labor Relations Board’s new rule for determining whether two businesses jointly employ the same employees looks set to face major challenges, both from litigation and on Capitol Hill. Outlined in the regulation is a directive which establishes joint employers as entities who share liability for unfair labor practices, and have obligations to negotiate with unions.
The International Franchise Association, whose members include renowned companies such as McDonald’s Corp., Yum! Brands Inc., and Subway IP LLC, has pledged to challenge the new rule by any means necessary, including a lawsuit. Additionally, Senators Bill Cassidy (R-La.) and Joe Manchin (D-W.Va.) have indicated they will introduce a Congressional Review Act resolution to nullify the regulation.
The NLRB, with its Democratic majority, has issued a rule that significantly lowers the threshold for multiple companies to be considered joint employers under federal labor law. Scheduled to take effect on Dec. 26, the rule suggests that proof of a company indirectly controlling key job terms and conditions could be sufficient for a joint employer finding.
The new joint employer rule supersedes the 2020 regulation, which was issued by an all-Republican board and required direct and immediate control over workers for joint employer status. This earlier rule had, in turn, overwritten a broader standard from a Democratic-majority board back in 2015.
Among potential challengers to the new regulation, the “major questions doctrine” might be utilized as a basis for a legal dispute. Essentially, this doctrine posits that Congress must explicitly empower agencies to regulate issues of significant import. Recently, the Supreme Court used this doctrine to block the Occupational Safety and Health Administration’s Covid vaccinate-or-test rule and to invalidate the Environmental Protection Agency’s Clean Power Plan.
While there are numerous potential fractures in the new rule’s armor, it’s clear that battles will be waged not only through litigation, but also on the floors of Congress. The outcome of these simultaneous challenges will likely have far-reaching implications for labor laws nationwide.
This article is based on a report by Bloomberg Law.