AHLA and Partners Take NLRB to Court Over Controversial Joint-Employer Regulation

In a legal move, the American Hotel & Lodging Association (AHLA), along with the U.S. Chamber of Commerce and other plaintiffs, filed a lawsuit in the U.S. District Court for the Eastern District of Texas challenging the National Labor Relations Board’s (NLRB) recently implemented “joint-employer” regulation.

The lawsuit argues that the NLRB has violated the National Labor Relations Act, alleging arbitrary and capricious actions in violation of the Administrative Procedure Act.

The NLRB’s new joint-employer standard, effective from Dec. 26, mandates hotel brands to engage in collective bargaining with franchised employees, even when they have no direct control over them. Under the previous standard, a company could only be considered a joint employer if it had “substantial direct and immediate control” over a group of employees.

AHLA President & CEO Chip Rogers stated, “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.”

The lawsuit aims to restore the longstanding rule of law governing joint-employment designation for almost four decades and prevent the potential harm to the franchise business model.

For decades, the definition of a joint employer depended on maintaining “substantial direct and immediate control” over workers’ terms and conditions of employment. AHLA supports the right to form a union and collectively bargain with employers that have direct control over workers, opposing the NLRB’s new rule that establishes indirect or unexercised control as sufficient for joint employer status.