Last week, a Texas federal court extended a temporary ban on implementation of the National Labor Relations Board’s joint employer rule until March 11. The rule was originally effective in December, but the NLRB delayed the effective date following a legal challenge by business groups.

The joint employer rule says that a non-employer can be deemed a statutory employer under the National Labor Relations Act if it has sufficient authority over one of seven terms and conditions of employment, including wages, safety, and workplace policies. More importantly, the joint employer status applies if the non-employing entity has such authority, even if it never exercises it or has any intent to do so.

If upheld, this rule could have a major impact on franchisors. Organized labor has long contended that franchisors should bear legal responsibility for the actions of their franchisees and should be subject to unfair labor practice claims associated with their organizing efforts.

This delay does not signal the Texas court’s determination of the legal challenge to this rule. Any decision from the district court will inevitably be appealed to the Fifth Circuit Court of Appeals, and potentially to the U.S. Supreme Court.

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