The American Hotel & Lodging Association has joined with several business-related organizations to sue the Biden administration over the new rule determining joint-employer status.
In a news release, the AHLA said it has filed suit along with the U.S. Chamber of Commerce and other plaintiffs with the U.S. District Court for the Eastern District of Texas to challenge the legality of the National Labor Relations Board’s new final rule on determining when two companies could be considered joint employers of workers.
The plaintiffs argue the NLRB’s rule goes against the National Labor Relations Act and “is acting arbitrarily and capriciously” in violation of the Administrative Procedure Act, according to the news release.
“The goal of this lawsuit is to reestablish the rule of law that has governed joint-employment designation for nearly four decades. It will also prevent the destruction of the franchise business model that has provided prosperity for tens of thousands of American small business hoteliers,” AHLA President and CEO Chip Rogers said in the news release.
The NLRB issued its final rule on Oct. 26, and it goes into effect Dec. 26. The new standard states that “an entity may be considered a joint employer of a group of employees if each entity has an employment relationship with the employees and they share or co-determine one or more of the employees’ essential terms and conditions of employment.”
Those terms and conditions are:
- Wages, benefits and other compensation.
- Hours of work and scheduling.
- Assignment of duties to be performed.
- Supervision of the performance of the duties.
- Work rules and directions governing the manner, means and methods of the performance of duties and grounds for discipline.
- The tenure of employment, including hiring and discharge.
- Working conditions related to the safety and health of employees.
The joint-employer standard has changed several times in recent years. Before the 2015 Browning Ferris NLRB decision, two companies could only be considered joint employers if they shared or co-determined matters that governed an employee’s terms and conditions of employment.
After the 2015 decision, the standard broadened from what was known as “direct control” to “indirect control,” but a 2020 rule change by the NLRB reversed that. This newest rule is essentially another reversal.
The new standard will change the liability exposures for businesses that work together. More specifically for the hotel industry, it will affect the relationships between hotel franchisors and franchisees, hotel owners and third-party managers, and hotel operators and staffing agencies, among others.