The American Hotel & Lodging Association (AHLA) has sued the Biden administration over what it calls a franchise-model destroying regulation.
AHLA has teamed up with the U.S. Chamber of Commerce and other plaintiffs and filed a lawsuit in the U.S. District Court for the Eastern District of Texas challenging the legality of the National Labor Relations Board’s (NLRB) new “joint-employer” regulation.
AHLA and the other plaintiffs claim that the NLRB has breached the National Labor Relations Act and is “acting arbitrarily and capriciously” in violation of the Administrative Procedure Act, AHLA said in a release.
“The NLRB’s joint-employer regulation is all about coercing businesses to the bargaining table with workers they do not actually employ to increase unionization. To achieve this, the NLRB is intentionally taking a wrecking ball to one of America’s great economic engines – the franchise model – and jeopardizing millions of small-business jobs,” said AHLA President & CEO Chip Rogers.
The lawsuit seeks to re-establish the rule of law that has governed joint-employment designation for almost four decades to prevent the destruction of the franchise business model that has provided prosperity for tens of thousands of American small business hoteliers, Rogers added.
On October 26, NLRB issued a final labor regulation expanding the definition of “joint employer,” making companies liable along with their franchisees for labor terms and conditions like union contracts, scheduling, hiring, pay and firing.
As per the new rule, a company that is found to be a joint employer might have to become more involved in establishing and enforcing workplace policies and negotiating with unions.
Companies can be considered joint employers only if they have “substantial direct and immediate control” over a group of employees. Slated to be enforced from December 26 under the new rule, a company can be treated as a joint employer and mandated to collectively bargain even when it has no actual control over workers, AHLA said.
An employer can only be considered a joint employer if it maintained “substantial direct and immediate control” over the terms and conditions of employment of its workers, AHLA said.
Employers and employees have relied on this definition, with courts rejecting several attempts to infuse a subjective legal standard to obligate third parties to bargain collectively.
While supporting the right to form a union and collectively bargain with employers that have direct and immediate control over workers’ terms and conditions, AHLA does not support the new rule. The subjective definition will create predisposed outcomes irrespective of genuine facts and circumstances, AHLA added.