WASHINGTON (Oct. 26, 2023) – American Hotel & Lodging Association (AHLA) President & CEO Chip Rogers is speaking out today after the National Labor Relations Board issued a final regulation unjustifiably expanding the “joint-employer standard” under the National Labor Relations Act. The standard is used to determine when two or more employers are jointly responsible for a shared group of workers’ essential terms and conditions of employment and thus jointly liable for violations of the National Labor Relations Act and have joint bargaining responsibilities for unionized employees. The NLRB’s expansion, effective Dec. 26, 2023, will impact business-to-business relationships in a manner that will limit opportunities for small businesses and entrepreneurs and threaten the franchising model.
“NLRB’s actions today are devastating to the hotel industry and the millions of people we employ. This is a partisan gambit to force unions on hotel franchisees and their employees as well as countless other small businesses and workers across the country,” said AHLA President & CEO Chip Rogers. “NLRB’s goal is to coerce businesses to the bargaining table with workers they do not actually employ to artificially increase unionization. This dramatic shift will effectively dismantle the franchise business model – the single greatest avenue to successful entrepreneurship in American history and a system that has helped our industry build millions of well-paying jobs and careers. AHLA is reviewing opportunities to legally challenge this regulation to restore certainty for America’s lodging industry.”
AHLA previously filed formal comments outlining the industry’s concerns regarding the draft of the final rule. For decades, an employer was only a joint employer if it maintained “substantial direct and immediate control” over workers’ terms and conditions of employment. Employers and employees came to depend on this definition, and courts rejected myriad attempts to insert a more subjective legal standard to obligate third parties to collectively bargain.
AHLA fully supports the right to form a union and collectively bargain with employers that have direct and immediate control over workers’ terms and conditions. We do not support, however, the NLRB’s new rule, which codifies a new standard that establishes indirect or unexercised control as sufficient to trigger joint employer status. This subjective definition will create predisposed outcomes irrespective of genuine facts and circumstances.
The regulation will create new liability for hoteliers and potentially invalidate existing franchise agreements. It will cause businesses to reevaluate relationships and marginalize franchisees’ control over their own operations. It may also lead to fewer opportunities for small business owners to enter the market by causing consolidation in an effort to mitigate risk.