Judge Blocks Joint Employer Rule

The rule was set to go into effect today and would have had major implications for c-stores.

March 11, 2024

On Friday, a judge in Texas struck down a U.S. National Labor Relations Board (NLRB) rule that would treat companies as joint employers of contract and franchise workers. The NLRB rule would have had major implications for convenience retailers. (NACS explained how c-stores should be preparing for the rule in a webinar in November.)

Judge J. Campbell Barker agreed with the challengers to the rule that it is too broad and violates federal labor law, Reuters reported.

Barker wrote that the NLRB 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."

“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,” according to Reuters.

The NLRB issued a statement saying the decision “is not the last word on our efforts to return our joint-employer standard to the common law principles that have been endorsed by other courts. The agency is reviewing the decision and actively considering next steps in this case.”

The lawsuit against the NLRB was filed by the U.S. Chamber of Commerce and a coalition of business advocacy groups, including NACS, in November. At the time, the Chamber of Commerce stated that “a previously expanded joint employer rule was in place from 2015 to 2017 and cost franchise businesses, a majority of which are small businesses, $33 billion per year. That resulted in 376,000 lost job opportunities and led to 93% more lawsuits.”

Read more about the court action from Associated Press.