By Lorena Roque

3 min read. 

Last week, a federal judge in Texas struck down the National Labor Relations Board’s (NLRB) joint employer rule. This rule is crucial to protecting workers’ rights, ensuring fair labor practices, and increasing corporate accountability. The joint employer rule would treat companies as joint employers that share control over working conditions of employees who have more than one employer, such as contracting agencies, staffing agencies, and franchises. This rule is especially important to workers earning low wages and in dangerous jobs, who need the protections of the National Labor Relations Act the most: those who are placed in jobs via temp or staffing agencies, and those who work in heavily contracted industries, including janitorial, construction, delivery, manufacturing, home care, and warehousing. 

U.S. District Judge J. Campbell Barker agreed with the challenge to the joint employer rule, stating that it is too broad and violates federal labor law. The judge argued that the rule would treat companies as the employers of contract or franchise workers even when they lacked any “meaningful” control over their working conditions. The judge’s ruling coincides with corporations such as Amazon, Starbucks, and Trader Joe’s desire to ban the NLRB entirely due to the increase in union drives. Therefore, as corporations continue to attack agencies and rules that are meant to hold employers accountable, workers are left in the precarious positions they already find themselves against employers. 

Corporations involved  in lower-wage industries also use subcontracting arrangements that can result in degraded working conditions and less access for workers to collective action and bargaining in the form of a union. In addition, these companies retain both direct and indirect control over working conditions in various ways. For example, new technologies make it easier for employers to keep tabs on workers. These surveillance practices have detrimental effects on workers’ health and affect their ability to organize. The joint employer rule would address this issue.

Not having a joint employer rule will affect the 3.2 million temporary staffing agency jobs in the United States, an industry that is growing faster than other private sector jobs. However, workers outsourced through staffing agencies earn less than direct hires for the same jobs. In fact, staffing agency workers earn 21 percent less in manufacturing jobs, 33 percent less in security jobs, and more than 47 percent less in teaching jobs than direct hires. 

The franchise model and its workers would also be affected by the joint employer rule, which would hold both franchisees and franchisors accountable for workers experiencing wage theft, discrimination, unsafe work environments, and unstable schedules. The structure of the franchise model can incentivize this abuse, as in most franchise models, the franchisee pays a royalty to the franchisor linked to revenue, not profit. The franchisee must follow strict rules around operation, quality of services, and sourcing of input products, which leaves little room for profit. However, a franchisee can control labor costs, and that’s where they squeeze employees. This system can create incentives for franchise operators to violate the law to make a profit on the backs of their employees. 

The NLRB’s proposed standard for joint employer status is critical to protect workers employed by franchises and other subcontractors and ensure that labor laws are enforced. The joint employer rule would ensure workers can effectively negotiate with their corporate employers, who ultimately make massive profits from these workers and tightly control many aspects of their working conditions.