Judge blocks US labor board rule on contract and franchise workers

investing.com:

By Daniel Wiessner

(Reuters) -A federal judge in Texas on Friday struck down a U.S. National Labor Relations Board (NLRB) rule that would treat many companies as employers of certain contract and franchise workers and require them to bargain with unions representing them.

U.S. District Judge J. Campbell Barker in Tyler agreed with the challengers to the «joint employers» rule, including the U.S. Chamber of Commerce, that it is too broad and violates federal labor law. The rule, issued in October, had been set to take effect on Monday.

Barker said the rule is invalid because it would treat some companies as the employers of contract or franchise workers even when they lacked any meaningful control over their working conditions.

The rule «would treat virtually every entity that contracts for labor as a joint employer because virtually every contract for third-party labor has terms that impact, at least indirectly… essential terms and conditions of employment,» the judge wrote.

An NLRB spokeswoman and the Chamber of Commerce did not immediately respond to requests for comment after hours on Friday. The NLRB is expected to appeal Barker's decision to the New Orleans-based 5th U.S. Circuit Court of Appeals.

Industries such as manufacturing and construction rely heavily on staffing agencies and contractors to provide workers, and franchisers such as McDonald's (NYSE:MCD), Burger King, and Dunkin' Donuts that are not typically involved in franchisees' day-to-day workplace issues.

The rule would treat 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.

The NLRB