The U.S. Chamber of Commerce, along with other business groups, praised the ruling after challenging the rule. Suzanne P. Clark, chief executive of the chamber, stated, “It will prevent businesses from facing new liabilities related to workplaces they don’t control, and workers they don’t actually employ.”
Lauren McFerran, the chair of the labor board appointed by President Biden, expressed disappointment in the ruling but emphasized that it is not the final decision on the joint-employer standard. If the board decides to appeal, the case will be taken to the conservative U.S. Court of Appeals for the Fifth Circuit. Despite the labor agency’s request to move the case to Washington, Judge Barker denied the request.
The disputed rule, issued by the labor board’s Democratic majority in October, would consider a parent company a joint employer if it has any control over a condition of employment. In contrast, the previous standard set in 2020 by the Republican-led board only classified a company as a joint employer if it directly controlled workers.
For example, nurses hired through a staffing agency may work at a hospital that sets their schedules but doesn’t determine their pay directly. In the case of unionization, the nurses could argue that the hospital indirectly impacts their pay by contracting their work. The October rule would likely categorize the hospital as a joint employer, while the current standard would support the argument that the responsibility lies with the staffing agency.
Judge Barker highlighted in his decision that the new rule would essentially consider every entity that contracts for labor as a joint employer due to the impact of contract terms on essential employment conditions.
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