IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF TEXAS 

TYLER DIVISION 

CHAMBER OF COMMERCE OF THE 

UNITED STATES OF AMERICA; 

AMERICAN HOTEL AND LODGING 

ASSOCIATION; ASSOCIATED BUILDERS 

AND CONTRACTORS; ASSOCIATED 

GENERAL CONTRACTORS OF AMERICA; 

COALITION FOR DEMOCRATIC 

WORKPLACE; INTERNATIONAL 

FRANCHISE ASSOCIATION; LONGVIEW 

CHAMBER OF COMMERCE; NATIONAL 

ASSOCIATION OF CONVENIENCE 

STORES; NATIONAL RETAIL 

FEDERATION; RESTAURANT LAW 

CENTER; TEXAS ASSOCIATION OF 

BUSINESS; and TEXAS RESTAURANT 

ASSOCIATION, 

Plaintiffs, 

v. 

NATIONAL LABOR RELATIONS BOARD; 

LAUREN MCFERRAN, Chair; MARVIN 

KAPLAN, Board Member; GWYNNE 

WILCOX, Board Member; and DAVID 

PROUTY, Board Member, 

Defendants. 

Civil Action No. 

COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF 

Plaintiffs Chamber of Commerce of the United States of America, American Hotel and 

Lodging Association, Associated Builders and Contractors, Associated General Contractors of 

America, Coalition for a Democratic Workplace, International Franchise Association, Longview 

Chamber of Commerce, National Association of Convenience Stores, National Retail Federation, 

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Restaurant Law Center, Texas Association of Business, and Texas Restaurant Association allege 

and state as follows: 

INTRODUCTION 

1. On October 27, 2023, the National Labor Relations Board, over a strong dissent, 

promulgated a new rule titled Standard for Determining Joint Employer Status, 88 Fed. Reg. 

73,946, codified at 29 C.F.R. § 103.40 (“Joint Employer Rule”). 

2. The Rule is as destabilizing as it is unlawful. It displaces widely accepted 

common-law standards governing the scope of employment relationships, establishes entirely new 

tests of employer liability, reconfigures relationships among legally separate entities, erases 

distinctions between contractors and employers, and threatens billions of dollars in liability and 

costs. 

3. These sweeping changes were not made in response to any new law, judicial 

decision, or factual circumstances. Instead, the Board rammed them through because—it says—

the 90-year-old National Labor Relations Act (“NLRA”) has been misinterpreted for most of its 

existence. The Board’s newfound interpretation, moreover, conveniently “requires” reversal of a 

rule the Board promulgated just three years ago. 

4. The Board’s decision to repeal and replace its previous rule suffers from three 

crucial errors. First, the Board’s interpretation of who is a “joint employer” under the NLRA is 

overbroad and directly contradicts the established common-law definition that limits joint 

employment to relationships of actual and substantial control. The new Rule imposes 

joint-and-several liability on virtually every entity that hires contractors subject to routine 

parameters, defines the terms of those contracts, or collaborates with a third party of any kind in 

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achieving common goals that have an incidental or indirect effect on the third party’s employees. 

Nothing in the NLRA or common law compels the Board’s approach. 

5. Second, the Board abandons one of the most important limiting principles in the 

NLRA: to be an employer, let alone a joint employer, one must possess sufficient control over 

workers’ essential terms and conditions of employment to permit meaningful collective bargaining. 

The new Rule includes no such limit. 

6. Third, the Rule replaces a clear standard, under which employers have tailored their 

business arrangements, with an arbitrary and uncertain standard that threatens chaos and 

indeterminacy in national labor relations across major industry sectors. 

7. Plaintiffs and their members do not oppose regulations that require employers to 

meet their collective-bargaining obligations under the NLRA. In fact, Plaintiffs have long 

supported the development of a clear joint-employment standard. But the Board’s new Rule 

jettisons the common-law boundaries that define the NLRA and harms the workers, labor unions, 

and employers the Board purports to protect. 

8. In short: the Joint Employer Rule transgresses the NLRA and is otherwise unlawful 

under the Administrative Procedure Act (“APA”). So too is the Board’s rescission of its previous 

rule on the flawed premise that it is contrary to common-law principles. The Court should vacate 

the Board’s rescission of the previous rule and its promulgation of the new Joint Employer Rule, 

and enjoin the Board from enforcing its new Rule. 

JURISDICTION AND VENUE 

9. The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331 (federal 

question) and 5 U.S.C. §§ 701-706 (APA). 

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10. The Court has the authority to grant the requested declaratory and injunctive relief 

under the APA, 5 U.S.C. §§ 702, 705-706, and the Declaratory Judgment Act, 28 U.S.C. §§ 2201-

2202. 

11. Plaintiffs have associational standing to bring this suit on behalf of their various 

members. To begin, Plaintiffs’ members are directly and adversely affected by the Board’s Joint 

Employer Rule and thus have standing to sue in their own right. Specifically, Plaintiffs’ 

member-employers participate in business arrangements such as franchising and contracting that 

are more likely to expose them to joint-employer liability under the Rule. Those employer 

members face a greater risk of union campaigns, enforcement actions, and litigation relating to 

collective bargaining. Those employers will also experience substantial compliance costs as they 

modify their business and other practices to account for those risks. 

12. The Rule also conflicts with each Plaintiff’s policy objectives, and challenging the 

Rule is germane to each Plaintiff’s purpose. Neither the claims asserted nor the relief requested 

requires Plaintiffs’ individual members to participate in the suit. 

13. Venue is proper in this district under 28 U.S.C. § 1391(e)(1). Plaintiff Longview 

Chamber of Commerce is located in Longview, Texas, and several other Plaintiffs have members 

located in the Eastern District of Texas. 

PARTIES 

14. Plaintiff Chamber of Commerce of the United States of America (“U.S. Chamber”) 

is the world’s largest business federation, with approximately 300,000 members, including 

members in the Eastern District of Texas. Among other things, the U.S. Chamber represents the 

interests of its member-employers in employment and labor-relations matters—including matters 

arising under the NLRA—as part of its overall mission to advocate for policies designed to help 

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businesses create jobs and grow the national economy. In advancing its mission, the Chamber 

seeks to preserve the ability of its members to enter into contracting relationships, joint ventures, 

or franchise agreements, and to acquire subsidiaries or interests in other businesses, without 

incurring liability for workplace issues that the Chamber’s members do not actually control. 

15. Plaintiff American Hotel and Lodging Association (“AHLA”) is the national 

association representing all sectors and stakeholders in the U.S. lodging industry, including 

owners, REITs, chains, franchisees, management companies, independent properties, suppliers, 

and state associations. AHLA strives to be an indispensable resource serving, supporting, and 

advocating on behalf of the American hospitality industry to build a vibrant and united hospitality 

industry that powers America’s economy. For decades, AHLA has been following the Board’s 

activity and keeping members informed about relevant policy changes. 

16. Plaintiff Associated Builders and Contractors (“ABC”) is a national construction 

industry trade association representing more than 22,000 members. Founded on the merit shop 

philosophy, ABC and its 68 chapters help members develop people, win work, and deliver that 

work safely, ethically, and profitably for the betterment of the communities in which ABC and its 

members operate. ABC’s membership represents all specialties within the U.S. construction 

industry and primarily comprises firms that perform work in the industrial and commercial sectors. 

As set forth in ABC’s bylaws, ABC’s mission is to protect and promote free and open competition 

in the construction industry. This mission includes protecting ABC’s member contractors from 

harmful labor regulations such as the new Joint Employer Rule. 

17. Plaintiff Associated General Contractors of America (“AGC”) is the nation’s largest 

and most diverse trade association in the commercial construction industry, now representing more 

than 27,000 member companies, including over 6,800 general contractors, 9,100 specialty 

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contractors, and 11,600 service providers and suppliers to the industry through a nationwide 

network of chapters in all 50 states (including 11 chapters in Texas), the District of Columbia, and 

Puerto Rico. AGC represents both union- and open-shop employers engaged in building, heavy, 

civil, industrial, utility, and other construction for both public and private property owners and 

developers. AGC’s mission is to serve our nation’s construction professionals, and therefore the 

public interest, by promoting the skill, integrity, and responsibility of those who build America. 

18. Plaintiff Coalition for Democratic Workplace (“CDW”) represents hundreds of 

employer associations, individual employers, and other organizations that together represent 

millions of businesses of all sizes. CDW’s members employ tens of millions of workers across 

the country in nearly every industry. Its purpose is to combat regulatory overreach by the Board 

that threatens the wellbeing of employers, employees, and the national economy. 

19. Plaintiff International Franchise Association (“IFA”) is the world’s oldest and 

largest organization representing franchising worldwide. IFA represents all aspects of the 

franchise business model, with approximately 1,200 franchise brands and 10,000 franchise 

business owners in addition to approximately 600 industry suppliers who support the franchise 

sector. For over 60 years, IFA has worked through its government relations, public policy, media 

relations, and educational programs to advocate for the protection, promotion, and enhancement 

of franchising and the approximately 790,000 franchise establishments that support nearly 8.4 

million direct jobs, $825.4 billion of economic output for the U.S. economy, and almost three 

percent of the gross domestic product. IFA members include franchise companies in over 300 

different industries, individual franchisees, and companies that support franchising in marketing, 

technology solutions, development, operations, and more. As set forth in IFA’s bylaws, IFA’s 

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mission is to protect, promote, and enhance franchising. This mission includes protecting the 

franchise sector from harmful labor regulations such as new Rule at issue here. 

20. Plaintiff Longview Chamber of Commerce is the leading advocacy organization in 

Gregg County, Texas representing the interests of business. Its members include over 1,000 

businesses and professional organizations in Gregg County and 11 adjacent counties (the 

“Longview Trade Area”). Its mission is to engage in and promote projects that have a positive 

economic impact on the Longview Trade Area, serving its members and their 50,000+ employees. 

21. Plaintiff National Association of Convenience Stores (“NACS”) is an international 

trade association representing the convenience store industry with more than 1,500 retail and 1,600 

supplier companies as members, the majority of which are based in the United States. NACS 

advocates for the interests of the industry on a regular basis before the executive, legislative and 

judicial branches of government. NACS regularly comments on labor laws and regulations 

including by submitting comments to the NLRB, the Department of Labor, and Congressional 

committees with jurisdiction over labor policy. 

22. Plaintiff National Retail Federation (“NRF”) is the world’s largest retail trade 

association—representing discount and department stores, home goods and specialty stores, Main 

Street merchants, grocers, wholesalers, chain restaurants, and Internet retailers from the United 

States and more than 45 countries. For over a century, NRF has been a voice for every retailer and 

every retail job, educating, inspiring, and communicating the powerful impact retail has on local 

communities and global economies. 

23. Plaintiff the Restaurant Law Center (“RLC”) is a public policy organization 

affiliated with the National Restaurant Association, the largest foodservice trade association in the 

world. The RLC routinely advocates on matters of labor-relations policy and represents the 

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interests of its members in labor and workforce matters before courts and regulatory agencies. It 

is the only independent foodservice membership organization created specifically for this purpose. 

RLC members include corporate-owned foodservice establishments, franchisees, and independent 

operators. 

24. Plaintiff Texas Association of Business (“TAB”) is the state chamber of commerce 

for Texas and the largest general business association in the state. TAB represents member 

companies—large and small—to create a policy, legal, and regulatory environment that allows 

them to thrive in business. 

25. Plaintiff Texas Restaurant Association (“TRA”) is a non-profit organization that 

regularly advocates for and educates its members on legal issues, legislation, labor and 

employment law, and other issues relating to the regulation of the restaurant industry. The TRA is 

the leading business association for Texas’s restaurant and foodservice industry, which spans over 

55,000 locations throughout the state, employing a workforce of over 1.4 million—roughly 12% 

of the state’s employment. The TRA represents a diverse group of businesses, operators, 

employees, suppliers, educators, and students across the state, including members in the Eastern 

District of Texas. TRA members include single-location family-run restaurants, multinational 

franchise operations, and every iteration between. 

26. Defendant NLRB is an independent federal agency in the Executive Branch and is 

subject to the APA. The Board is headquartered in Washington, D.C. 

27. Defendant Lauren McFerran is the Chairman of the Board. Chairman McFerran is 

sued in her official capacity. 

28. Defendant Marvin Kaplan is a Member of the Board. Member Kaplan is sued in 

his official capacity. 

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29. Defendant Gwynne Wilcox is a Member of the Board. Member Wilcox is sued in 

her official capacity. 

30. Defendant David Prouty is a Member of the Board. Member Prouty is sued in his 

official capacity. 

BACKGROUND 

31. Congress enacted the NLRA in 1935 to promote stable collective-bargaining 

relationships. 29 U.S.C. §§ 151 et seq. To that end, the Act gives employees the right to unionize, 

prohibits employers and labor unions from violating workers’ right to free association, and imposes 

obligations on employers to bargain collectively with employee representatives. 

32. When the NLRA applies, failing to bargain can expose an employer to suits for 

injunctive relief and monetary penalties. And failing to comply with collective-bargaining 

agreements can expose an employer to suits as well. 

33. Sometimes two entities can be considered an employer, or “joint employer,” of 

particular employees—making each employer obligated to bargain collectively with those 

employees. But the NLRA does not define the term “joint employer.” The Act instead requires 

the Board and courts to determine the existence of such a relationship by reference to the common 

law. See NLRB v. Town & Country Elec., Inc., 516 U.S. 85, 94-95 (1995) (noting definition of 

“employer” under NLRA is governed by “common-law agency principles”). 

34. For decades, the Board drew from the common law a straightforward framework: 

firms were “joint employers” if they exercised “direct,” “immediate,” and “substantial” control 

over the same employees’ essential terms of employment. The Board also ensured that putative 

joint employers had enough control over employees’ essential terms and conditions of employment 

to permit meaningful collective bargaining. 

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35. But in 2015, the Board abruptly changed the test. The Board decided through 

adjudication that “compelling policy reasons” warranted a different approach. Browning-Ferris 

Indus. of Cal., Inc., 362 NLRB 1599, 1600, 1612 (2015). The Board thus announced a new 

framework, allowing a “joint employer” finding whenever a firm exercised “indirect” control over 

the terms of employment for another firm’s employees, or even just a “reserved right” to control 

the same. 

36. The D.C. Circuit held the Board “overshot the common-law mark” and thus 

reversed in part, holding that the Board (i) “provided no blueprint for what counts as ‘indirect’ 

control,” (ii) “failed to differentiate between those aspects of indirect control relevant to status as 

an employer, and those quotidian aspects of common-law third-party contract relationships,” and 

(iii) “never delineated what terms and conditions” of employment the two firms needed to control 

to make collective bargaining “meaningful.” Browning-Ferris Indus. of Cal., Inc. v. NLRB, 911 

F.3d 1195, 1216, 1220-1222 (D.C. Cir. 2018). Although the court found that indirect and reserved 

control could be relevant to determining joint employer status, it declined to decide whether 

indirect or reserved control alone would be sufficient to establish such status. 

37. In response to the D.C. Circuit’s decision, the Board promulgated a new rule that 

addressed the court’s admonitions and largely reinstated the longstanding joint-employer standard. 

See Joint Employer Status Under the National Labor Relations Act, 85 Fed. Reg. 11,184 (Feb. 26, 

2020), codified at 29 C.F.R. § 103.40 (“2020 Rule”). 

38. The 2020 Rule provided that an entity is “a joint employer of a separate employer’s 

employees only if the two employers share or codetermine the employees’ essential terms and 

conditions of employment.” 29 C.F.R. § 103.40(a). And it included an exhaustive list of discrete 

“[e]ssential terms and conditions of employment” drawn from the common law—namely, wages, 

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benefits, hours of work, hiring, discharge, discipline, supervision, and direction. Id. § 103.40(b).

Under this standard, “[e]vidence of the entity’s indirect control over essential terms and conditions 

of employment” was “probative,” but not dispositive. Id. § 103.40(a). Rather, to “establish” joint 

employer status, the 2020 Rule required that “the entity must possess and exercise such substantial 

direct and immediate control” with “a regular or continuous consequential effect on an essential 

term or condition of employment” so as to permit “meaningful[]” collective bargaining. Id.

§ 103.40(a), (d). 

39. But the rule did not last long. In 2022, a newly constituted Board proposed to 

rescind and replace the 2020 Rule. In October 2023, the Board did just that when it promulgated 

the new Joint Employer Rule and vacated the 2020 Rule. See Standard for Determining Joint 

Employer Status, 88 Fed. Reg. 73,946, codified at 29 C.F.R. § 103.40. And the Board did so on 

the premise that the NLRA and common law required the Board to reverse course. 

40. As relevant here, the Board’s new Rule provides that firms are “joint employers” if 

they “possess the authority to control (whether directly, indirectly, or both)” or “exercise the power 

to control (whether directly, indirectly, or both), one or more of the employees’ essential terms and 

conditions of employment.” The upshot is that reserved or indirect control over a single essential 

term of employment, even if never exercised, suffices to make a firm an “employer” of another 

firm’s employees. 

41. The Rule also discards the former limiting principle that, to establish joint employer 

status, it is necessary to show that “the putative joint employer possesses sufficient control over 

employees’ essential terms and conditions of employment to permit meaningful collective 

bargaining.” Browning Ferris, 362 NLRB at 1600. 

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42. The Rule is set to go into effect on December 26, 2023. But given the sea change 

it brings about, affected entities already feel the Rule’s effects. Indeed, as explained further below, 

many face business-altering decisions. 

CLAIMS FOR RELIEF 

43. The APA provides that “[a] person suffering legal wrong because of agency action, 

or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is 

entitled to judicial review thereof.” 5 U.S.C. § 702. 

44. The APA further provides that “final agency action for which there is no other 

adequate remedy in a court” is “subject to judicial review.” 5 U.S.C. § 704. 

45. Under the APA, courts “hold unlawful and set aside” agency action that is 

“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” “in excess 

of statutory jurisdiction, authority, or limitations, or short of statutory right,” or “unsupported by 

substantial evidence.” 5 U.S.C. § 706(2)(A), (C), (E). 

46. The Board’s rescission of the 2020 Rule and its promulgation of the Joint Employer 

Rule are “final agency action” within the meaning of the APA. 

COUNT I —AGENCY ACTION CONTRARY TO LAW 

AGAINST ALL DEFENDANTS 

47. Plaintiffs re-allege and incorporate by reference each of the preceding paragraphs 

and allegations. 

48. Under the longstanding common-law principles incorporated into the NLRA, a 

joint-employer relationship has two main requirements: (1) the joint employer must exert direct, 

immediate, and substantial control over the employees’ essential terms and conditions of 

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employment, and (2) the joint employer’s control is different from, and more substantial than, the 

control a firm has over a common-law independent contractor. 

49. The Board’s new Joint Employer Rule rides roughshod over both. 

50. First, the Rule mandates a “joint employer” finding whenever a firm has the mere 

“authority” to control a single essential term of employment, even if never exercised. The Rule 

also explicitly makes “indirect” control alone sufficient. And the Rule allows a firm to be declared 

a “joint employer” even when the control available to that firm is de minimis, sporadic, or isolated. 

Yet none of those principles is permitted, let alone required, by the common-law precedent that 

defines the NLRA’s terms. See Adams & Assocs., Inc. v. NLRB, 871 F.3d 358, 378 (5th Cir. 2017) 

(unexercised, reserved control was “insufficient to establish a joint-employer finding, absent 

evidence that the right was ever exercised”). 

51. Second, the Rule obscures the formerly clear dividing line between employees, on 

the one hand, and independent contractors, on the other. The Rule permits standards formerly used 

to determine whether a worker is an independent contractor or an employee (i.e., whether a worker 

has an employer at all) to determine joint employer status (i.e., whether a worker has a second

employer in addition to her indisputable employer). In particular, by permitting indirect and 

reserved control alone to qualify a firm as a joint employer, and by offering a list of capacious and 

vague categories (such as “work rules and directions” and “safety and health”) to define the 

relevant aspects of a joint employer’s “control,” the rule fails to differentiate the truly “essential” 

terms and conditions of employment from the “quotidian aspects of common-law third-party 

contract relationships.” Browning-Ferris, 911 F.3d at 1220. 

52. The Rule is unlawful for yet another reason: the structure and purpose of the NLRA 

require an employer to possess enough control over employees’ essential terms and conditions of 

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employment such that collective bargaining between the two is “meaningful.” Yet the Rule 

abandons that condition. It does not require putative joint employers to have control over all or 

even most of the employees’ traditional mandatory subjects of bargaining; control over just one is 

enough. And even then, the Rule renders irrelevant the extent of control necessary to make 

informed decisions and tradeoffs at the bargaining table. 

53. In addition, the Board’s decision to rescind the 2020 Rule on the premise that the 

rule is inconsistent with longstanding common-law principles is contrary to law because the 2020 

Rule is consistent with those principles. 

54. Thus, the Board’s rescission of the 2020 Rule and its promulgation of the new Joint 

Employer Rule are contrary to law. 

COUNT II —ARBITRARY AND CAPRICIOUS AGENCY ACTION 

AGAINST ALL DEFENDANTS 

55. Plaintiffs re-allege and incorporate by reference each of the preceding paragraphs 

and allegations. 

56. The APA “requires that agency action be reasonable and reasonably explained.” 

FCC v. Prometheus Radio Project, 141 S. Ct. 1150, 1158 (2021). “[R]easonable regulation 

ordinarily requires paying attention to the advantages and the disadvantages of agency decisions.” 

Michigan v. EPA, 576 U.S. 743, 753 (2015). 

57. The Board’s sudden about-face here—vacating a vastly different rule the Board 

promulgated just three years ago—fails that test. To start, the Board ignored the many practical 

problems and real-world disruption created by the Joint Employer Rule, claiming relevant 

comments were “misdirected”—and that its hands were tied—given its newfound interpretation 

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of the NLRA. But the Board was wrong to conclude that the NLRA compelled this reversal, and 

the problems it ignored are significant. 

58. Take the Rule’s effects on some major industries as examples: 

a. Restaurants. A significant portion of the restaurant industry operates on the 

franchise model. Under that model, franchisees retain direct and immediate control of the 

day-to-day operation of their businesses and employees (such as who to hire or fire, business hours, 

setting wages and schedules), while franchisors set standards to maintain brand uniformity and 

consistency (such as how workers dress and how food is prepared). But the Rule makes no effort 

to distinguish these normal (and, as discussed further below, sometimes required) contractual 

controls from those indicative of joint employment. As the dissent recognized, the result is 

“significant risk that many franchisors will be held liable as joint employers of their franchisees’ 

employees.” 88 Fed. Reg. at 74,001 (Kaplan, M., dissenting). This will likely lead to one of two 

responses: either franchisors “will exert much greater control over their franchisees, effectively 

turning previously independent owners of franchisees into glorified managers;” or franchisors 

“will distance their franchisees by denying them guidance” previously given, “forcing franchisees 

to incur the expense of obtaining that guidance” elsewhere. Id. Indeed, Plaintiffs’ members have 

reported that the new Rule already has created massive uncertainty and a dramatic rise in 

operational risk-management costs at many franchise restaurants. 

b. Construction. Given the nature of construction, there are usually multiple 

entities operating on any given project. “Each of these parties typically remains the sole employer 

of its own employees. But a general contractor must exert a degree of control over subcontractors 

and their employees to ensure that work on a given project meets efficiency, quality, and safety 

benchmarks.” 88 Fed. Reg. at 74,001 (Kaplan, M., dissenting). In fact, many general contractors 

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must sign standard-form agreements, obligating them “to reserve and exercise some level of 

control over their subcontractors’ employees.” Id. Under the Board’s new Rule, such forms could 

make general contractors a “joint employer” for every employee working on the project. The 

general contractors could then be subject to any enforcement actions under the NLRA against a 

subcontractor, be pulled into labor disputes without the protections from secondary boycotts 

normally accorded to neutral third parties, or be forced to respond to the union-organizing 

campaigns of any subcontractor’s employees. In sum, the Rule will disrupt long-established 

operational methods by which construction service providers work together to build America, and 

will clearly have a harmful effect on both small and large businesses in the construction industry—

many of which are members of the construction-industry Plaintiff associations. 

c. Retail. Like members of the restaurant industry, members of the retail 

industry often operate on a franchise model and will thus suffer the harms described above. But 

retailers also have reason to worry that normal contract relationships will create joint-employer 

liability where there was none before. Retailers regularly contract with other companies for a wide 

range of services, such as janitorial support, lawn care, health and safety inspections, and 

temporary work. When they do, retailers often give the other companies’ employees directions on 

health and safety procedures. Retailers also might implement formal training and impose conduct 

requirements so the other companies’ public-facing employees behave in a manner that avoids 

disturbances for customers or other workers. Under the new Rule, these routine measures could 

make retailers the “joint employers” for these other companies’ employees. Those retailers, in 

turn, could be pulled into labor disputes between the contracted companies and those companies’ 

employees, despite having no role in establishing the workers’ essential terms and conditions of 

employment. 

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d. Hospitality. Like the industries described above, the hospitality industry is 

largely built on the franchise model, and many industry participants rely on a host of contractors 

and vendors to support operations. The many small businesses that make up the industry rely on 

clear rules delineating who is a “joint employer.” Yet the new Joint Employer Rule throws clarity 

to the wayside, forcing hotels and the like to reconsider every vendor and contract agreement they 

sign. Some may choose not to contract at all. Others may change policies, to the detriment of 

employees and the public alike. 

e. Healthcare. The healthcare industry will fare no better. It too depends on 

contracted labor—often to fill staffing gaps for nurses and other critical-care workers. Those 

contracted workers “typically sign a contract with a staffing agency to occupy a temporary position 

at a hospital that can range in duration from several days to a few months.” 88 Fed. Reg. at 74,002 

(Kaplan, M., dissenting). Under the new Rule, though, “a hospital that maintains (or merely has 

the authority to maintain) work rules and schedules” for those workers “will be their joint 

employer”—making the hospital “duty-bound to bargain with the union” that represents the 

workers “directly employed” by the staffing agency. Id. A hospital’s health and safety policies 

will have the same effect. Simply put, the Rule will force hospitals “to spend time and resources 

that could be devoted to patient care on administrative and management issues as it works to 

understand the scope of its joint employer liability [and] revises policies, practices, and contracts 

to address that liability[.]” Id. (first alteration in original). 

59. The new Rule has an especially pernicious effect on the franchise business model 

generally and the approximately 800,000 franchised businesses operating across hundreds of 

industries in addition to those noted above. Franchising is a method of marketing goods and 

services that depends upon the existence of the franchisor’s control over a trademark, other 

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intellectual property, and often some other commercially desirable interest sufficient to induce 

franchisees to pay to participate in the franchisor’s system by distributing goods or services under 

the franchisor’s trademark or name. 

60. Maintaining brand standards through control over their trademarks allows 

franchisors to maintain the uniformity and quality of product and service offerings and, in doing 

so, to protect their trade names, trademarks, service marks, the goodwill associated with these 

trademarks, and most importantly, the consumer. This likewise benefits franchisees, by allowing 

them to rely on the experience, reputation, recognized brand, and goodwill of the franchisor in 

building their own independent business. Brand standards also help protect consumers by allowing 

them the ability to know they are dealing with a reputable business that offers a quality product. 

Because the essence of franchising is the collective use of marks that represent the source and 

quality of goods and services to the consuming public, action taken to control the uniformity and 

quality of product and service offerings under those marks is an explicit requirement of federal 

trademark law. See 15 U.S.C. § 1064(5)(A) (mark may be cancelled “[a]t any time . . . on the 

ground that the registrant (A) does not control, or is not able legitimately to exercise control over, 

the use of such mark”) (emphasis added). 

61. A franchisor’s exercise of control over brand standards is not day-to-day 

management over the business operations of its franchisees. Yet under the new Rule, 

joint-employer status may be established merely by the indirect or reserved (even if unexercised) 

control over a broad range of matters, including wages, benefits, and other compensation; hours 

of work and scheduling; the assignment of duties to be performed; supervision of the performance 

of duties; work rules and directions governing the manner, means, and methods of performance; 

grounds for discipline; hiring and firing of employees; and working conditions relating to 

Case 6:23-cv-00553-JCB Document 1 Filed 11/09/23 Page 18 of 22 PageID #: 18
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employee health and safety. By enumerating an overbroad list of “essential terms and conditions 

of employment,” the Rule threatens to turn a franchisor’s routine exercise of control to ensure the 

maintenance of brand standards into indicia of joint employment under the NLRA. This in turn 

will harm franchisees, as franchisors, facing the threat of joint employer liability, either: (a) scale 

back on the support, services, and advice they supply to their franchisees; or (b) exert more control 

over their franchisees to protect themselves, essentially transforming franchisees from independent 

business owners to middle managers. 

62. The Rule effectively puts franchisors in the virtually impossible position of either: 

(a) risking forfeiture of their intellectual property in the form of their marks by exerting too little 

control over their brand standards; or (b) incurring joint employer liability under the NLRA by 

exerting or reserving too much control. The Board seeks to elevate (its view of) the goals of federal 

labor law—and its own authority—over the goals of federal law governing trademarks and 

franchising which Congress has expressly set forth in the Lanham Act and elsewhere, thus 

penalizing conduct Congress required franchisors to take under separate federal law. 

63. The new Rule’s breadth also poses problems for collective bargaining more 

generally. Collective bargaining involves negotiating tradeoffs among competing employer and 

employee interests. Yet under the Joint Employer Rule, firms with no meaningful interest and no 

real leverage will find themselves at the bargaining table. And the number of firms at any single 

table will increase dramatically. As the dissent put it: “It is difficult to imagine a better recipe than 

[the new Joint Employer Rule] for injecting chaos into the practice and procedure of collective 

bargaining that the majority claims to promote.” 88 Fed. Reg. at 73,999. 

64. The Board cast all these concerns aside by claiming that its hands were tied. But 

as explained above and in Member Kaplan’s dissent, the Board “misapprehends common-law 

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agency principles in holding that those principles compel the Board to rescind its 2020 Rule . . . 

and replace it with a joint-employer standard not seen anywhere else in the law.” 88 Fed. Reg. at 

73,987 (Kaplan, M., dissenting). Because the Board “fail[ed] to engage in any real policy-based 

choice,” the Board’s actions must be set aside because its view is not “compelled by the common 

law and hence the only permissible construction of the Act.” Id.

65. Finally, the new Rule is unreasonable because it fails to articulate a comprehensible 

standard with meaningful guidance to regulated parties. As Member Kaplan points out in dissent, 

the Rule “expressly contemplates that joint-employer status will be determined through 

adjudication under the common law, not under the provisions” of the Rule—which is exactly what 

would happen with no rule at all. 88 Fed. Reg. at 74,005. 

66. The Board’s claim that its new Rule is reasonable because it establishes “a definite, 

readily available standard” that will “assist employers and labor organizations in complying with 

the Act” and “reduce uncertainty and litigation over the basic parameters of joint-employer status” 

is a farce. 88 Fed. Reg. at 73,957. The Rule creates more uncertainties than it solves. 

67. The Board’s rescission of the 2020 Rule and its promulgation of the new Rule are 

therefore arbitrary and capricious as well. 

PRAYER FOR RELIEF 

For the foregoing reasons, Plaintiffs respectfully request that this Court: 

1. Declare unlawful and set aside the Board’s rescission of the 2020 Rule and 

promulgation of the Joint Employer Rule;

2. Declare that the Board’s rescission of the 2020 Rule and promulgation of 

the Joint Employer Rule are arbitrary and capricious;

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3. Enjoin the Board from enforcing its Joint Employer Rule against Plaintiffs’ 

members;

4. Award Plaintiffs their costs and reasonable attorney’s fees; and

5. Grant such other and further relief as the Court deems just and proper. 

Case 6:23-cv-00553-JCB Document 1 Filed 11/09/23 Page 21 of 22 PageID #: 21
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Dated: November 9, 2023 Respectfully submitted, 

 /s/ Laura P. Warrick 

Stephanie A. Maloney 

 D.C. Bar No. 1044276 (pro hac vice to be filed) 

Jordan L. Von Bokern 

 D.C. Bar No. 1032962 (pro hac vice to be filed) 

U.S. Chamber Litigation Center 

1615 H Street, N.W. 

Washington, DC 20062-2000 

Telephone: (202) 463-5337 

smaloney@uschamber.com 

jvonbokern@uschamber.com 

Attorneys for the Chamber of Commerce of the 

United States of America 

Maury Baskin 

 D.C. Bar No. 248898 (pro hac vice to be filed) 

Littler Mendelson 

815 Connecticut Avenue, N.W. 

Suite 400 

Washington, D.C. 20006 

Telephone: (202) 842-3400 

Facsimile: (202) 842-0011 

mbaskin@littler.com 

Counsel to Associated Builders and Contractors 

and International Franchise Association

Angelo I. Amador 

 D.C. Bar No. 480031 (pro hac vice to be filed) 

Restaurant Law Center 

2055 L Street, N.W. 

Suite 700 

Washington, D.C. 20036 

Telephone: (202) 331-5913 

Counsel for the Restaurant Law Center 

Laura P. Warrick 

 Texas Bar No. 24079546 

Akin Gump Strauss Hauer & Feld LLP 

2300 N. Field Street, Suite 1800 

Dallas, TX 75201 

Telephone: (214) 969-4770 

Facsimile: (214) 969-4343 

lwarrick@akingump.com 

Pratik A. Shah (Lead Attorney) 

 D.C. Bar No. 497108 (pro hac vice to be filed) 

James E. Tysse 

 D.C. Bar No. 9787522 (pro hac vice to be filed) 

James C. Crowley 

 D.C. Bar No. 208946 (pro hac vice to be filed) 

Margaret O. Rusconi 

 D.C. Bar No. 1719371 (pro hac vice to be filed) 

Akin Gump Strauss Hauer & Feld LLP 

2001 K Street, N.W. 

Washington, D.C. 20006 

Telephone: (202) 887-4000 

Facsimile: (202) 887-4288 

pshah@akingump.com 

jtysse@akingump.com 

jcrowley@akingump.com 

mrusconi@akingump.com 

Counsel to Plaintiffs Chamber of Commerce of the 

United States of America, American Hotel and 

Lodging Association; Associated Builders and 

Contractors; Associated General Contractors of 

America; Coalition for a Democratic Workplace; 

International Franchise Association; Longview 

Chamber of Commerce; National Association of 

Convenience Stores; National Retail Federation; 

Restaurant Law Center; Texas Association of 

Business; and Texas Restaurant Association

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