US labor board drops bid to revive rule on contract, franchise workers

The U.S. National Labor Relations Board on Friday dropped its appeal of a judge’s ruling striking down a rule that would have treated many companies as employers of certain contract and franchise workers and require them to bargain with unions representing them.

The NLRB in a filing told the New Orleans-based 5th U.S. Circuit Court of Appeals that it continues to believe its “joint employers” rule complies with federal labor law but has decided to withdraw its appeal of a lower-court judge’s March ruling.

The agency said that given the current litigation posture of the rule, it had decided it instead wanted the opportunity to further consider the issues identified in the ruling by U.S. District Judge J. Campbell Barker in Tyler, Texas.

The rule issued in October, 2023, would have treated companies as “joint employers” of contract and franchise workers when they have control over key working conditions such as pay, scheduling, discipline and supervision, even if that control is indirect or not exercised.

Joint employment has been one of the most contentious labor issues for many U.S. businesses for years. The 2023 rule replaced a Trump-era regulation the board adopted in 2020 requiring companies to have “direct and immediate” control over workers in order to be considered joint employers, which was favored by business groups. The 2020 rule had replaced an Obama-era standard heavily criticized by business groups.

Barker, an appointee of Republican former President Donald Trump, had sided with challengers to the rule, including the U.S. Chamber of Commerce in finding the rule was too broad and violated federal labor law.