Hoteliers win as NLRB withdraws joint-employer appeal

WASHINGTON (July 19, 2024) - American Hotel & Lodging Association (AHLA) Interim President & CEO Kevin Carey released the following statement today after the National Labor Relations Board (NLRB) withdrew its appeal of a federal court ruling blocking its joint-employer final rule. That rule would have made it easier for the NLRB to declare joint-employment status in business relationships and allowed unions to organize by company rather than property by property.

"Today marks a huge victory in our fight to preserve the franchise business model for hoteliers across the country. The NLRB's decision to withdraw its appeal will provide our industry with the certainty we have been asking for and protect the franchise business model that has paved the way to the American Dream for tens of thousands of hoteliers," said AHLA Interim President & CEO Kevin Carey. "We couldn't have achieved this outcome without the support of our 30,000-plus dedicated members, and AHLA stands ready to fight any further NLRB attempts to change the joint-employer standard."

Background
In October 2023, the NLRB released a final rule that, starting on March 11, would have changed the standard the federal government uses to determine when two or more employers are jointly responsible for a shared group of workers' terms and conditions of employment. The rule would have made it easier for the NLRB to declare joint employment status in business relationships and enabled unions to organize by company rather than property by property.

The rule was designed to force franchisors to the negotiating table with workers they do not actually employ to increase unionization. It would have complicated relationships between hotel owners, brands, and employees, and would have limited opportunities for franchisees and workers along the way.

In November, AHLA, the U.S. Chamber of Commerce, and other leading business associations filed a lawsuit in the U.S. District Court for the Eastern District of Texas challenging the rule's legality. The court's March 8 decision nullified the new rule and reinstated a 2020 NLRB rule that protects businesses from undue liability for employees over whom they do not have direct control. Under that policy, which had been rescinded by the Biden Administration in 2021, companies will only be seen as a joint employer if they maintain "substantial direct and immediate control" over workers' terms and conditions of employment.

On July 19, the NLRB withdrew its appeal in the U.S. Court of Appeals for the Fifth Circuit that sought to overturn the lower court ruling. As a result, the 2020 joint employer standard favored by hoteliers remains in effect.