Federal Judge Strikes Down Labor Rule on Contract Workers

On Friday, March 8, 2024. Judge J. Campbell Barker of the U.S. District Court for the Eastern District of Texas invalidated the rule issued last October by the National Labor Relations Board. The rule,  would have made it easier for contract workers at major companies to bargain collectively was set to take effect on Monday, March 11, 2024.

The regulation aimed to broaden the definition of what constitutes a “joint employer,” making companies that use staffing agencies, contractors or franchisees more liable for violations of federal labor laws by those third parties. It would have made those companies potential negotiating partners for union drives involving workers employed by subsidiaries or franchisees.

Business groups like the U.S. Chamber of Commerce, which challenged the rule, have argued that it extended liabilities too far for companies that do not directly control workplace policies, scheduling and pay of contractors’ employees. In his decision, Judge Barker agreed that the new definition went too far.

“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,” Judge Barker wrote.

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The information contained in this article is intended for educational purposes and to provide a general understanding of regulatory events, legislative changes and the law – not to provide specific legal advice. Employers are advised to discuss and/or receive counsel from their licensed legal or accounting professional, prior to implementing any new policy or policy change.