In today’s news and commentary, the District Court for the Eastern District of New York strikes down the state’s labor board law, the Court of Appeals for the D.C. Circuit overturns an NLRB policy under Loper Bright, and a bill codifying a loose joint employer standard reaches the House floor. 

On Monday, Judge Eric Komitee of the Eastern District of New York struck down a law that allowed New York’s Public Employment Relations Board to govern private-sector unions unless the NLRB successfully asserted jurisdiction. The law was passed last June in response to the Board’s lack of quorum and resulting incapacity to hear cases. Judge Komitee initially enjoined the law in November, but in this week’s ruling, he overturned it, holding that the law was preempted by the NLRA. Other states have passed similar laws in the past two years, often written to trigger a state board’s authority when the NLRB is non-functional, earning them the title “trigger laws.” While New York’s law required the NLRB to proactively assert jurisdiction rather than take effect during Board incapacity, it has faced a similar fate: California’s trigger law was enjoined by the District Court for the Eastern District of California in December. 

Meanwhile, on Tuesday, a three-judge panel on the Court of Appeals for the D.C. Circuit sided against the NLRB in Hospital Menonita De Guayama, Inc. v. NLRB II. Previously, the Court of Appeals had deferred to the Board’s policy rationale, allowing it to prohibit successor employers from withdrawing recognition from incumbent unions for one year. The case was heard on remand from the Supreme Court to align with the Loper Bright decision which overturned Chevron deference to federal agencies two years ago. In yesterday’s 2–1 decision, Judge Neomi Rao wrote that this “successor bar” was inconsistent with the NLRA, and therefore outside of the Board’s legal authority to impose. Specifically, the majority held that the successor bar violated the “employees’ right to choose whether and how to collectively bargain and their right to be represented by a union that has majority support,” and had to be evaluated by courts independently of the Board’s judgement. In his dissent, Judge A. Raymond Randolph argued that the original panel’s decision had not relied on a Chevron framework, and thus did not merit the majority’s Loper Bright analysis. Commentators suggest that this decision may provide insight into courts’ approaches to NLRB policymaking power going forward.

Finally, on Tuesday, the House Committee on Education and the Workforce advanced the American Franchise Act. The bill would amend both the NLRA and FLSA to loosen the joint employer standard, protecting franchisors from liability for minimum wage and collective bargaining violations. The proposed language would mean that a parent franchise company could only be treated as sharing employer status with a franchisee, and thus be on the hook for wage or bargaining compliance, if it exercised a high, hands-on level of authority over the franchisee’s staff. Currently, neither the NLRA nor FLSA define joint employer standards, leaving agency regulations and NLRB decisions to shape the legal landscape. These have tended to shift from administration to administration. This change would cement a looser standard, in a victory for franchisor employers. The bill was passed through committee by Republicans in a 18-15 vote along partisan lines. It was one of five bills passed by the Committee on Tuesday that are now pending before the House for a floor vote.