Restaurant Law Center, US Chamber of Commerce sue NLRB over joint employer rule

Dive Brief:

The Restaurant Law Center and the U.S. Chamber of Commerce, together with a coalition of business groups, sued the National Labor Relations Board over its new joint employer standard. The Texas Restaurant Association and nine other associations are part of the complaint.
The suit, filed last week, claims the NLRB violated the National Labor Relations Act and calls for the standard to be rescinded.
The new joint employer rule makes it more likely that franchisors will be on the hook for franchisee infractions, increasing “the liability risks in the franchisor-franchisee relationship, as well as those of service providers and third-party companies,” the National Restaurant Association said in an emailed statement.

Dive Insight:

The rule must still be reviewed by Congress, which means it could be rejected by the legislative branch should it pass a joint resolution of disapproval.

In the suit, the RLC and accompanying coalition write that the new joint employer standard “erases distinctions between contractors and employers, and threatens billions of dollars in liability and costs.”

The suit also emphasizes that the new rule could make franchisors more vulnerable to union campaigns and “litigation related to collective bargaining,” which would come with extra costs to ensure that restaurants are in compliance with new business standards.

“The new Joint Employer Standard is already raising a plethora of legal questions across the restaurant industry,” said Angelo Amador, executive director of the Restaurant Law Center. “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.”

The suit follows the International Franchising Association’s creation of the IFA Law Center, which was designed in response to the joint employer rule and intended to advance the concerns of franchisors in court.