US labor board delays new employment rule after business groups sue

Starbucks workers and union supporters march the picket line in the parking lot of the Jonesboro location during the "Red Cup Rebellion" strike action on Thursday, November 16, 2023. (Matthew Pearson/WABE)

The federal government is delaying a new rule that could make it easier for millions of workers to unionize after business groups challenged it in court.

The National Labor Relations Board said Thursday that the rule — which was scheduled to go into effect in December — will now be effective Feb. 26. The board said the delay will give it time to resolve legal challenges.

The rule sets new standards for determining when two companies should be considered “joint employers” in labor negotiations. Under the current NLRB rule, which was passed by a Republican-dominated board in 2020, a company like McDonald’s isn’t considered a joint employer of most of its workers since they are directly employed by franchisees.

But the new rule would expand that definition, saying companies may be considered joint employers if they have the ability to control — directly or indirectly — at least one condition of employment. Conditions include wages and benefits, hours and scheduling, the assignment of duties, work rules and hiring.

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 federal court in Texas last week to block the rule.

They say the rule upends years of precedent and could make companies liable for workers they don’t employ at workplaces they don’t own. But the NLRB says the current rule makes it too easy for companies to avoid their legal responsibility to bargain with workers.

The new rule also faces opposition in Congress. U.S. Sen. Bill Cassidy, a Louisiana Republican and ranking member of the Senate Health, Education, Labor and Pensions Committee, sent a letter to the NLRB this week saying it was out of compliance with a required 60-day delay before major rules take effect. The new rule was published in the Federal Register on Oct. 27 and was initially scheduled to go into effect on Dec. 26.

Cassidy and other lawmakers, including Democratic Sen. Joe Manchin of West Virginia, have also introduced a resolution to overturn the rule. But that resolution would need to pass the Senate and House and be signed by President Joe Biden to take effect.