NLRB's joint employer rule hits the rocks in court

Presented by Blood Money by Peter Schweizer: Delivered every Monday by 10 a.m., Weekly Shift examines the latest news in employment, labor and immigration politics and policy.

Mar 11, 2024 View in browser   By Nick Niedzwiadek Presented by With help from Grace Yarrow QUICK FIX BOGART THAT JOINT (EMPLOYER): A federal judge in Texas on Friday kneecapped the National Labor Relations Board from implementing its stricter joint-employment standard, a major blow to one of the agency’s biggest regulatory moves under the Biden administration. The two-step test at the heart of the NLRB’s rule is inherently flawed, Judge J. Campbell Barker wrote in his 31-page decision. That framework involves determining whether a business qualifies as a “common-law employer” and then assessing whether it holds control over one or more “essential terms and conditions” of a worker’s job — even if that authority is indirect or not actually exercised. “[T]he Board has not been able to come up with any example of an entity satisfying step one but not step two,” Barker, a Trump appointee who previously blocked the Biden administration’s Covid-era federal eviction ban. The NLRB tried unsuccessfully to get Barker to transfer the case to Washington, D.C., where the agency is facing a separate challenge to the rule filed by the labor union SEIU. Business groups brought the lawsuit, arguing that the NLRB’s expansive definition had the potential to expose broad swaths of employers to liability for labor law violations committed by contractors or franchisees. The NLRB acknowledged that the rule was intended to be defined broadly. But Barker sided with arguments that the agency went too far to that end, stating that the new test “would treat virtually every entity that contracts for a labor as a joint employer because virtually every contract for third-party labor has terms that impact, at least indirectly, at least one of the specified ‘essential terms and conditions of employment.’” NLRB Chair Lauren McFerran “is reviewing the decision and actively considering next steps.” “The District Court’s decision to vacate the Board’s rule is a disappointing setback, but is not the last word on our efforts to return our joint-employer standard to the common law principles that have been endorsed by other courts," she said in a statement. The International Franchise Association, whose membership includes big-name fast food sellers and has been one of the most vocal critics of the joint employer standard, called on the Senate to vote to permanently overturn the rule via the Congressional Review Act. The House did just that earlier this year, and the Senate companion has the backing of Sen. Joe Manchin (D-W.Va.), giving it a high chance of passing. “Elected officials on both sides of the aisle talk a big game about standing up for small businesses, and now the U.S. Senate can act on those promises by putting the bipartisan CRA resolution on President Biden’s desk,” IFA President Matt Haller said in a statement. The White House has nevertheless said that President Joe Biden would veto the measure if it reaches his desk, though that of course was before Barker’s decision complicated matters. "This ruling is a major win for employers and workers who don't want their business decisions micromanaged by the NLRB,” U.S. Chamber of Commerce President Suzanne Clark said in a release following the decision. GOOD MORNING. It’s Monday, March 11. Welcome back to Morning Shift, your go-to tipsheet on labor and employment-related immigration. The forces of light have once again prevailed over darkness. Send feedback, tips and exclusives to nniedzwiadek@politico.com and gyarrow@politico.com. Follow us on X, formerly known as Twitter, at @NickNiedz and @YarrowGrace.   A message from Peter Schweizer: In my 30 years as an investigative journalist, nothing even comes close to what I’ve uncovered in my new book Blood Money: Why the Powerful Turn a Blind Eye While China Kills Americans.   Around the Agencies RULE INCOMING: The Department of Labor transmitted draft language of its revised fiduciary rule over to the White House’s regulatory clearinghouse for review, setting it up for publication in the near future. The Office of Information and Regulatory Affairs received DOL’s draft on Friday, typically one of the final steps in the rulemaking process. DOL released its proposal back in October, rankling the investment industry worried that it would reduce the appeal of several types of popular retirement products. Some Democratic members of Congress allied with the industry have also expressed concerns about DOL’s proposal, which the White House has framed as part of the president’s war on “junk fees.” More agency news: “Federal judge orders minority-business agency opened to all races,” from The Washington Post. On the Hill SURVIVE AND ADVANCE: President Joe Biden signed the six-bill funding package not long after the Senate passed the $459 billion bundle Friday night, averting a partial government shutdown over the weekend. The bill takes care of budgets for more than a dozen federal departments and independent agencies that handle transportation, energy, housing, agriculture and veterans programs, our Caitlin Emma and Jennifer Scholtes report. — The package freezes the Equal Employment Opportunity Commission’s budget at $455 million, or about $26 million less than the roughly $481 million the Biden administration had requested for FY24. More Hill news: “House centrists in both parties see their influence sapped by bitter internal tension,” from our Olivia Beavers and Nicholas Wu.   DON’T MISS POLITICO’S HEALTH CARE SUMMIT: The stakes are high as America's health care community strives to meet the evolving needs of patients and practitioners, adopt new technologies and navigate skeptical public attitudes toward science. Join POLITICO’s annual Health Care Summit on March 13 where we will discuss the future of medicine, including the latest in health tech, new drugs and brain treatments, diagnostics, health equity, workforce strains and more. REGISTER HERE.     Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories. IMMIGRATION DOJ MUFFLES UNION: A union representing federal immigration judges — the National Association of Immigration Judges — says it was issued a gag order by the Justice Department’s Executive Office for Immigration Review, barring judges from speaking to the press or Congress. The Feb. 15 directive came amid a heavy backlog in immigration court cases and is in stark contrast from the Biden administration’s pro-union stance, according to Matt Biggs, the president of the International Federation of Professional and Technical Engineers, an organization that the immigration judges’ union is affiliated with. “It's particularly alarming given the Biden administration's posture towards labor unions,” Biggs told Grace. He told Morning Shift that he’s “quite confident” that Biden was unaware of the gag order. “They should have reversed course immediately. We gave them every opportunity to but they didn't. … Quite frankly, it's an embarrassment to the Biden administration.” Representatives from the National Association of Immigration Judges frequently speak to the media and Congress, Biggs said, and can give an informed perspective on the state of U.S. immigration courts. “There’s nothing I can say,” NAIJ Executive Vice President Samuel Cole, a Chicago immigration judge, told Morning Shift. The DOJ’s Executive Office for Immigration Review did not respond to Morning Shift’s request for comment. — Related: “DOJ issues 'gag order' on immigration judges,” from the Government Executive. More immigration news: “Americans Want the Immigration Bill Congress Won’t Pass, WSJ Poll Shows,” from The Wall Street Journal. Even more: “Biden says he regrets using the word ‘illegal’ during State of the Union,” from our Lauren Egan and Myah Ward.   A message from Peter Schweizer:   In the Workplace LINE GOES UP: The job market once again demonstrated its resiliency as Labor Department data released Friday showed the economy grew by about 275,000 jobs — surpassing market expectations. “Friday’s report gave the inflation fighters at the Federal Reserve some encouraging news: Average hourly wages rose just 0.1% from January, the smallest monthly gain in more than two years, and 4.3% from a year earlier, less than expected,” The Associated Press reports. “The latest figures reflected the job market’s sustained ability to withstand the 11 rate hikes the Fed imposed in its drive against inflation, which made borrowing much costlier for households and businesses.” The caveat: The unemployment rate ticked up by 0.2 percentage points, up to 3.9 percent. Still the economy has spent more than two full years below 4 percent unemployment, per the Bureau of Labor Statistics. — Related: “The Shift That Explains Lofty Markets: The Economy Got More Productive,” from The Wall Street Journal.   DON’T MISS AN IMPORTANT TALK ON ACCESS TO AFFORDABLE PRESCRIPTION DRUGS IN CA: Join POLITICO on March 19 to dive into the challenges of affordable prescription drugs accessibility across the state. While Washington continues to debate legislative action, POLITICO will explore the challenges unique to California, along with the potential pitfalls and solutions the CA Legislature must examine to address prescription drug affordability for its constituents. REGISTER HERE.     Unions AWARENESS GAP: A survey of California fast food workers showed that 88 percent lacked information about job benefits and programs and were unaware of their rights at work, according to the Step Forward Foundation and the California Fast Food Workers Union. To conduct and publish the survey, the Step Forward Foundation partnered with the California Fast Food Workers Union, a new group designed to increase union awareness in fast food. A overwhelming majority —  93 percent — of fast food workers in the Golden State had not heard about or didn’t know how to access benefits like sick leave or workers compensation. THE STATES EV INCENTIVE DRIVES AHEAD: Despite criticism from industry and labor groups over details of the program, California regulators approved a program to help ride-hailing drivers purchase electric vehicles, our Alex Nieves reports. The Drivers Assistance Program was approved last week as part of clean energy rulemaking in the state. It will require ride-booking companies to collect a per-ride fee from passengers to invest in low and moderate-income drivers purchasing electric vehicles. A coalition of labor and environmental groups — including SEIU, BlueGreen Alliance and Sierra Club, as well as Lyft — objected to the EV program giving Uber responsibility for collecting the per-ride fees. More (non-) state news: “D.C. Is Raising Restaurant Pay. What Does That Mean for the Rest of Us?” from The New York Times. WHAT WE'RE READING — “How Congress defanged Biden’s big science push,” from our Christine Mui. — “What Gen Z Will Lose if They Don’t Have Friendships at Work,” from The Wall Street Journal. — “OpenAI’s GPT is a Recruiter’s Dream Tool. Tests Show There’s Racial Bias,” from Bloomberg. — “The Era of Abundant Labor Reporting Is Coming to an End,” from In These Times. THAT’S YOUR SHIFT!   A message from Peter Schweizer: It’s often said that China is in a cold war with America. The reality is far worse: the war is hot, the body count is one-sided, and America’s elite are complicit. My new book Blood Money: Why the Powerful Turn a Blind Eye While China Kills Americans exposes corruption on both sides of the aisle and corporate malfeasance from America’s financial behemoths. As is my investigative trademark, Blood Money is packed with hard evidence and relies on zero unnamed sources. You’ll be hearing about these revelations for months to come. Get your copy to learn about tomorrow’s headlines today.     Follow us on Twitter Nick Niedzwiadek @nickniedz Olivia Olander @oliviaolanderr   Follow us

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