A federal judge in Texas blocks an American Labor Council rule that would make it easier for workers to join a union

A federal judge in Texas has blocked a new rule by the National Labor Relations Board that would make it easier for millions of workers to form unions at big companies.

The rule, which was scheduled to take effect Monday, would have established 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 is not considered a joint employer for most of its workers because they are employed directly by franchisees.

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

The NLRB argued that the change is necessary because the current rule makes it too easy for companies to avoid their legal responsibility to bargain with workers.

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 the Eastern District of Texas in November to block the rule.

They argued that the new rule would overturn years of precedent and could make companies liable for workers they do not employ in workplaces they do not own.

In his decision Friday granting the plaintiffs' motion for summary judgment, U.S. District Judge J. Campbell Parker noted that the NLRB's new rule would be “against the law” and that it was “arbitrary and capricious” in how it would be applied. Change the current rule.

Parker found that by creating a set of new conditions that would be used to determine whether a company meets the joint employer standard, the NRLB's new rule goes beyond “common law boundaries.”

The NRLB is reviewing the court's decision and considering its next steps in the case, the agency said in a statement Saturday.

“The district court’s decision to strike down the board rule is a disappointing setback, but it is not the last word in our efforts to return our joint employer standards to common law principles recognized by other courts,” said Attorney General Lauren McFerran. Chairman of the NLRB.