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Nov. 20, 2023

Restaurant and Business Groups File Lawsuit to Halt Revised Joint Employer Rule

The Texas Restaurant Association, U.S. Chamber of Commerce, and other business advocacy organizations have filed a lawsuit against the National Labor Relations Board to halt its new joint employer rule.

The revised rule, published at the end of October, has met strong opposition from businesses because it greatly expands the scope of which companies qualify as joint employers. Rather than the “direct and immediate control” standard established in February 2020, the new rule defines a joint employer as “two or more common-law employers of the same employees who share or codetermine those matters governing those employees’ essential terms and conditions of employment.” This has the potential to greatly broaden liability for employers and would require joint employers to bargain collectively even for employees they do not have direct control over.

The impact on both the operations and finances of companies could be far reaching. According to the U.S. Chamber of Commerce, a previously expanded version of the joint employer rule that was in place from 2015 to 2017 cost franchise businesses $33 billion per year – resulting in 376,000 lost job opportunities and 93 percent more lawsuits.

“The NLRB’s new joint employer rule is the latest in a string of actions to promote unionization at all costs, even when harmful to workers, employers, and our economy,” Glenn Spencer, senior vice president of the U.S. Chamber of Commerce’s Employment Policy Division, said. “It defies common sense to say that businesses can be held liable for workers they don’t employ at workplaces they don’t own or control. The NLRB has been overturning numerous precedents at the behest of labor unions, so the Chamber is suing to rein in this out-of-control agency.”

The new rule could especially hamper the restaurant association, where many store-level employees work for a franchisee of a larger chain. “The NLRB issued this new joint employer standard arbitrarily and capriciously just three years after codifying the 2020 standard,” said Angelo I. Amador, executive director of the Restaurant Law Center, one of the groups that has joined the lawsuit. “The new joint employer standard is already raising a plethora of legal questions across the restaurant industry. While the National Restaurant Association attempts to educate operators on the vague, confusing and sometimes contradictory new standards, the Restaurant Law Center will fight to restore the workable joint employer standard that has existed for nearly 30 years based on the direct and immediate control of employees.”

Other groups participating in the lawsuit include the Texas Restaurant Association, the American Hotel and Lodging Association, the Coalition for a Democratic Workplace, and the National Association of Convenience Stores, among others.


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