Business
Column: A Trump judge eviscerates a pro-worker regulation at the request of big employers
The Biden administration’s support of worker rights and union organizing has become a byword.
President Biden has restored the National Labor Relations Board to its traditional role as protector of collective bargaining rights. He walked the United Auto Workers picket line during its ultimately successful contract negotiations with the Big Three automakers.
He has nominated and renominated the outstanding worker advocate Julie Su as secretary of Labor. And he swept a gaggle of Trump-appointed union-busters and anti-union ideologues out of a key federal agency responsible for ruling on disputes involving government union contracts.
As major companies have consciously invested in building brands…as the cornerstone of their business strategy, they have also shed their role as the direct employer of the people responsible for providing their products and services.
— David Weil, “The Fissured Workplace”
But now he has run up against a brick wall of hard-right anti-union ideology put in place by his predecessor: another Trump-appointed ultra-partisan federal judge using his perch in an obscure courthouse to make policy for the entire nation.
We’re talking about J. Campbell Barker of the U.S. District Court of Tyler, Texas. Last week Barker, ruling in a lawsuit brought by the U.S. Chamber of Commerce and 12 other business lobbies, invalidated an NLRB rule aimed at broadening the standard by which big corporations could be held jointly responsible for the welfare and unionization rights of workers employed by their franchisees.
Barker was appointed by Trump in 2019 after a career as a Texas state lawyer writing briefs to restrict voting rights and LGBTQ+ rights, supporting Trump’s travel ban on Muslim-majority nations and attacking access to contraceptives and abortion.
On March 8, he ruled that the NLRB’s joint-employer regulation, issued in October, was so broad that it would “treat virtually every entity that contracts for labor as a joint employer.”
Many workers whose wages or workplace conditions were effectively dictated by big companies that fobbed their responsibilities onto franchise owners would consider that anything but a drawback.
The NLRB is certain to appeal Barker’s decision, probably to the New Orleans-based 5th Circuit Court of Appeals, which has set its own standard for far-right judicial overreach. The board had earlier argued that Barker shouldn’t have taken the lawsuit in the first place, because by law NLRB final rules can be appealed only to the federal appeals court in the District of Columbia. Barker rejected that argument.
Big business has been fighting efforts to broaden legal interpretations of joint-employer status for decades. The plaintiffs in this lawsuit included lobbies for builders, restaurants, hotels and convenience stores.
Many of them base their business models on their ability to control workplace conditions from afar while pushing legal liability for labor violations onto franchise owners, whom they often describe (inaccurately) as small mom-and-pop operations just scraping by.
Among the plaintiffs is the Chamber of Commerce of Longview, Texas. Longview is a small city in the east Texas oil patch; presumably its chamber was recruited because the plaintiffs figured that its presence would give them standing to sue in the federal district court in Tyler, which has two judges, both appointed by Donald Trump, including Barker. They got their wish.
Another plaintiff is the Coalition for a Democratic Workplace. You might suppose that an organization bearing that name represents the whole panoply of business stakeholders, from fast-food workers to corporate employers, but no.
“Democratic” here means much the same thing as it did when “German Democratic Republic” signified a Communist dictatorship in East Germany, which was anything but a democratic workers’ paradise. The coalition comprises 600 employer groups “joined by their mutual concern over regulatory overreach by the National Labor Relations Board.”
Now let’s turn to the lawsuit itself. If you surmise that its opening brief, filed on Nov. 9, bristled with disinformation, you would be right.
The brief stated that the NLRB “rammed” the rule changes through on the claim that “the 90-year-old National Labor Relations Act has been misinterpreted for most of its existence.” (Actually, the board is only 88 years old.)
A couple of points here. First, it’s a little unclear what the plaintiffs meant by “ramming through” the new rule. The NLRB first proposed the rule in September 2022, and didn’t promulgate it until 13 months later. In the interim it put the proposal out for public comments, of which it received 13,000.
The plaintiffs implied that the NLRB’s joint-employer rules have been static since the board’s founding in 1935. Nothing could be further from the truth.
The standard came before the Supreme Court more than once, starting in 1964. The board amended it, sometimes narrowing and sometimes expanding its definition of joint employer, in 1982, 2002, 2007, 2018 and 2020, before the latest version was issued in October.
The plaintiffs wring their hands over the fact that the board reversed a rule that it “promulgated just three years ago.” You might ask yourself: Hmm, what changed in Washington between 2020 and 2023?
If you guessed that the Trump administration was turned out of office and replaced by the Biden administration, well done.
The latter gave the NLRB a Democratic majority, just as the former had given it a Republican majority. Presidents have the power to do that and most have done so when they were succeeding a president of the other party. So when the plaintiffs depict the board as an unchanging entity that reversed itself, they’re lying, possibly in the hope that a judge will be too stupid to notice their sleight of hand. Or too partisan to care.
But they can’t avoid explicitly stating their true concern with the joint-employer rule: The rule threatens employers with “billions of dollars in liability and costs.”
Defining joint-employer responsibilities has become more important in recent decades as more businesses turn to the franchise model, which gives fast-food, hotel and retailing behemoths plausible deniability over how their front-line workers are treated and paid.
“As major companies have consciously invested in building brands … as the cornerstone of their business strategy,” labor expert David Weil wrote in his 2014 book “The Fissured Workplace,” “they have also shed their role as the direct employer of the people responsible for providing their products and services.” The trend, Weil wrote, encompasses hotel maids, cable installers, commercial janitors and merchandise pickers in Amazon warehouses — all are actually on the payroll of third-party employment firms.
(By the way, Biden nominated Weil in 2021 to a high-level position at the Department of Labor, but the nomination was killed by opposition from Republicans and Big Business.)
In recent years, the principal target of joint-employer cases at the NLRB has been McDonald’s. That’s unsurprising, since with more than $119 billion in overall international sales it’s the largest franchisor in the world.
The Obama-era NLRB brought a massive case against the company and 29 franchisees in 2014, which turned into what was regarded as the biggest case the board ever instituted, and the longest. The main issue was whether the company had participated in — in fact, helped to run — a nationwide attack on the Fight for $15 union campaign for a higher minimum wage at its restaurants.
Then-NLRB general counsel Richard Griffin alleged at the outset that the franchisees fired, suspended, cut work hours, threatened, spied on and interrogated employees involved in the union campaign, all of which he interpreted as illegal responses to union organizing.
Administrative Law Judge Lauren Esposito cited evidence that the anti-union response was “formulated and implemented” from McDonald’s headquarters in Chicago and that the company provided franchisees with “suggested policies” and legal training in labor relations — so much so that the company was properly regarded as the franchise workers’ joint employer.
By the time Esposito prepared to rule, Trump was president. He replaced Griffin with Peter Robb, whose record as an anti-labor lawyer was well nigh unassailable and whose hostility to the joint-employer rule was manifest. Before Esposito could rule, Robb settled the cases against the franchisees by ordering back pay for the workers who were fired or had their hours cut. But the settlements didn’t involve McDonald’s Corp., which therefore skated on the joint-employer issue.
Esposito rejected the settlements, but she was overruled by the NLRB’s new, Republican majority. The sole dissent came from Lauren McFerran, an Obama appointee who was the only Democrat then on the board.
“A finding of joint-employer status,” she wrote, “would have important collateral consequences for McDonald’s, in both unfair labor practice proceedings involving its franchisees and … if workers employed at McDonald’s franchisees sought to organize (that is, unionize).”
In other words, the Trump NLRB moved heaven and earth to keep McDonald’s from being declared a joint employer.
McFerran is now chair of the NLRB, presiding over a 3-1 Democratic majority. (One seat on the five-member board is vacant.)
The NLRB’s joint-employer rule would bring millions of workers — typically low-wage workers without health or retirement benefits and virtually no job security — under the umbrella of their well-heeled ultimate employers. It’s possible, if not certain, that they would see an improvement in their working lives, through better wages and more opportunity to unionize.
Even big franchisees or labor brokers don’t have to care about their public image — most customers don’t even know they exist. But McDonald’s, Marriott, Walmart and Amazon have a lot to lose in public esteem by getting tagged as an abuser of workers.
If the NLRB had its way, they would no longer be getting away with shedding their responsibilities. Let’s hope that Judge Barker’s ruling is a temporary obstacle to making the world work better.
Four years ago, California startup Theta Labs’ cryptocurrency was soaring, and its future appeared bright when it landed a partnership with pop star Katy Perry.
The Bay Area company had built a marketplace for digital collectibles known as nonfungible tokens, or NFTs, and had teamed up with Perry to launch NFTs tied to her Las Vegas concert residency. Its THETA token jumped by more than 500% in early 2021, reaching a peak of more than $15, making it one of the world’s most valuable cryptocurrencies. Later in the year, the spotlight shone on the company when it announced the Perry partnership.
“I can’t wait to dive in with the Theta team on all the exciting and memorable creative pieces, so my fans can own a special moment of my residency,” Perry said in a June 2021 news release.
Today, like many cryptocurrencies, THETA is 95% off its 2021 peak. It took a hit this week after former executives accused it of manipulating markets to dupe consumers into buying its products. On Tuesday, it was trading at less than 30 cents.
Two former executives from Theta Labs sued the startup, alleging in separate lawsuits that the company and its chief executive, Mitch Liu, engaged in fraud and manipulated the cryptocurrency market for his benefit. Liu retaliated against them after the employees refused to engage in deceptive business practices and raised concerns, the lawsuits say.
Some of the alleged misconduct involved placing fake bids on Perry’s NFTs, engaging in token “pump and dump” schemes and using celebrity endorsements and “misleading” partnerships with high-profile companies such as Google to deceive the public, according to the December lawsuits filed in Los Angeles Superior Court.
Perry is not accused of any wrongdoing in the suit, and Theta denies the charges.
The lawsuits against Theta Labs are the latest controversy to rattle an industry beset by scandals.
Cryptocurrency exchange FTX collapsed, and its founder, Samuel Bankman-Fried, was sentenced to 25 years in prison in 2024 after being found guilty of multiple fraud charges. Binance founder and former Chief Executive Changpeng Zhao also got prison time after he pleaded guilty to violating money laundering laws, but President Trump pardoned him this year.
The U.S. Securities and Exchange Commission previously charged celebrities such as Kim Kardashian, Lindsay Lohan, Jake Paul and Ne-Yo for promoting crypto without disclosing they were paid to do so.
Theta Labs created a network that rewarded people with cryptocurrency for contributing spare bandwidth and computing power to enhance video streaming and lower content delivery costs. The company describes Theta Network as a “blockchain-powered decentralized cloud for AI, media and entertainment.” The network has two tokens: THETA, used to secure the network, and TFUEL, used to pay users for services and power operations.
The whistleblowers suing Theta Labs are Jerry Kowal, its former head of content, and Andrea Berry, previously the company’s head of business development.
“Liu used Theta Labs as his personal trading vehicle, perpetrating fraud, self-dealing, and market manipulation,” said Mark Mermelstein, Kowal’s attorney, in a statement. “His calculated ‘pump-and-dump’ schemes repeatedly wiped out employee and investor value. This suit is about demanding accountability and proving no one is above the law.”
Theta, Liu and its parent company, Sliver VR Technologies, deny the allegations and “intend to prove with evidence the fallacy of the stories being told in the lawsuits,” according to Kronenberger Rosenfeld, the law firm representing the defendants. The lawsuits are an attempt to paint the company in a negative light in hopes of securing a settlement, a lawyer for the firm said.
Kowal has sued his former employers before. In 2014, he accused Netflix of spreading false claims that he stole confidential information and Amazon of wrongful termination.
The latest lawsuits allege that Liu profited from buying and selling THETA tokens using insider knowledge about partnerships with celebrities, studios and others in the entertainment industry.
“Liu’s true motive in pursuing such partnerships was not to develop a sustainable content business but to generate publicity that could be used to artificially inflate token prices for Liu’s personal gain,” Kowal’s lawsuit says.
Kowal worked for Theta from 2020 to 2025.
In 2020, Liu traded and sold tokens knowing that the company would close a content licensing deal with MGM Studios, according to the lawsuit. After the deal’s announcement, THETA token’s market capitalization increased by more than $50 million in just 24 hours, the lawsuit says.
When NFTs started to take off in 2021, Kowal closed deals with high-profile partners such as Perry, Fremantle Media and Resorts World Las Vegas for the startup’s NFT marketplace.
As part of the deal with Perry, the singer received $8.5 million and additional warrants for the right to license her image and likeness for the NFTs.
To inflate the price and demand for these digital collectibles, Liu allegedly made bids on NFTs and directed employees to do the same. This led to people overpaying for the Perry NFTs.
Representatives for Perry didn’t immediately respond to a request for comment.
Multiple examples of alleged manipulation are outlined in the lawsuits. In one instance from 2022, the startup launched a new token called TDROP that employees also received as part of a bonus.
Liu gained control of 43% of the supply of the cryptocurrency, according to Kowal’s lawsuit. When the TDROP token reached a high, he then sold the token, and its price collapsed by more than 90% within months.
Berry’s lawsuit also alleges that Theta Labs announced “misleading” or fake partnerships with high-profile companies such as Google and entities including NASA to pump up the value of the THETA token. Theta paid for Google Cloud products but claimed it was a partner when it was a Google customer, according to the lawsuit.
Retired nurse Nancy Reed has been through the ringer trying to get insurance for her home next to a San Diego County nature preserve.
First, she was dropped by her longtime carrier and forced onto the state’s insurer of last resort, the California FAIR Plan, which offers basic fire policies — something thousands of residents have experienced at the hands of fire-leery insurance companies.
But what she didn’t expect was how hard it would be to find the extra coverage she needed to augment her FAIR Plan policy, which doesn’t cover common perils such as water damage or liability if someone is injured on a property.
She secured the “difference-in-conditions” policies from two insurers, only to be dropped by both before finally finding another for her Escondido home.
“I’ve lived in this house for 25 years, and I went from a very fair price to ‘we’re not insuring you anymore’ — and I’ve had three different difference-in-conditions policies,” said Reed, 71, who is paying about $2,000 for 12 months of the extra coverage. “And I’m holding my breath to see if I will be renewed next year.”
Now, a Department of Insurance regulation that would have required the FAIR plan to offer that additional coverage has been blocked by a state appeals court — leaving the plan’s customers to find that insurance in a market widely considered dysfunctional.
The court ruled earlier this month that the order would have forced the plan to offer liability insurance, which was not the intent of the Legislature when it established the plan in 1968 to offer essential insurance for those who couldn’t get it.
“We appreciate that the court confirmed the California FAIR Plan is designed and intended to operate as California’s insurer of last resort, providing basic property coverage when it cannot be obtained in the voluntary market,” said spokesperson Hilary McLean.
Insurance Commissioner Ricardo Lara said he is “looking at all available options” following the decision. “I’ve been fighting so people can have access to all of the coverage the FAIR Plan is required by law to provide,” he said in a statement.
Lara has faced criticism from consumer advocates who’ve called for his resignation over his response to the state’s ongoing property insurance crisis.
A FAIR Plan policy covers fires, lightning, smoke damage and internal explosions, as well as vandalism and some other hazards at an additional cost. But in addition to water damage and liability protection, it doesn’t cover such common perils as theft and the damage caused by trees falling on a house.
The demand for the additional coverage — commonly referred to as a “wrap-around” policy — has become even greater than in 2021 when Lara issued the order overturned on appeal.
The FAIR Plan at the time had about 160,000 active dwelling policies following a series of catastrophic wildfires, including the 2018 fire that nearly destroyed the mountain town of Paradise. By September, that number had grown to 646,000.
The insurance department lists less than two dozen companies that offer wrap-around policies, including major California home insurers such as Mercury and Farmers and a a number of smaller carriers.
Broker Dina Smith said that to find the coverage for her home insurance clients she needs to place about 90% of them with carriers not regulated by the state — with the combined coverage typically costing at least twice as much as a regular policy.
“The [market] is very limited,” said Smith, a managing director at Gallagher.
Safeco has not written California wrap-around coverage since the beginning of the year and will begin non-renewing existing policies next month. Smith also said carriers are being selective, with the ones that offer the coverage often demanding exclusions, such as for certain types of water damage.
“If I’ve got a newer home with no prior claims … for liability losses, it’s going to be easy to write. If I get a home that is built in the 1950s that might still have galvanized pipes … that’s going to be a tough one,” she said.
Attorney Amy Bach, executive director of United Policyholders, a San Francisco consumer group, said the difference-in-conditions, or DIC, market is getting just as problematic for homeowners as the overall market.
“The market is not as strong as it needs to be … given how many people are in the FAIR Plan, and there aren’t as many DIC options — with the DIC companies being just as picky as the primary insurers,” she said.
There is also confusion about the policies, she said. Her group is considering pushing for a law next year that would clearly label the coverage so consumers better understand what they are buying.
The Trump administration will begin to garnish the pay of student loan borrowers in January, the Department of Education said Tuesday, stepping up a repayment enforcement effort that began this year.
Beginning the week of Jan. 7, roughly 1,000 borrowers who are in default will receive notices informing them of their status, according to an email from the department. The number of notices will increase on a monthly basis.
The collection activities are “conducted only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans,” according to the email, which was unsigned.
The announcement comes as many Americans are already struggling financially, and the cost of living is top of mind. The wage garnishing could compound the effects on lower-income families contending with a stressed economy, employment concerns and health care premiums that are set to rise for millions of people.
The email did not contain any details about the nature of the garnishment, such as how much would be deducted from wages, but according to the government’s student aid website, up to 15 percent of a borrower’s take-home pay can be withheld. The government typically directs employers to withhold a certain amount, similar to a payroll tax.
A borrower should be sent a notice of the government’s intent 30 days before the seizure begins, according to the website, StudentAid.gov.
The administration ended a five-year reprieve on student loan repayments in May, paving the way for forced collections — meaning tax refunds and other federal payments, like Social Security, could be withheld and applied toward debt payments.
That move ushered in the end of pandemic-era relief that began in March 2020, when payments were paused. More than 9 percent of total student debt reported between July and September was more than 90 days delinquent or in default, according to the Federal Reserve Bank of New York. In April, only one-third of the 38 million Americans who owed money for college or graduate school and should have been making payments actually were, according to government data.
“It’s going to be more painful as you move down the income distribution,” said Michael Roberts, a professor of finance at the Wharton School at the University of Pennsylvania. But, he added, borrowers have to contend with the fact that they did take out money, even as government policies allowed many to put the loans at the back of their minds.
After several extensions by the Biden administration, payments resumed in October 2023, but borrowers were not penalized for defaulting until last year. About five million borrowers are in default, and millions more are expected to be close to missing payments.
The government had signaled this year that it would send notices that could lead to the garnishing of a portion of a borrower’s paycheck. Being in collections and in default can damage credit scores.
The government garnished wages before the pandemic pause, said Betsy Mayotte, president of the Institute of Student Loan Advisors, which provides free advice for borrowers. But the 2020 collections pause was the first she was aware of, she said, and that may make the deductions more shocking for people who have not had to pay for years.
“There’s a lot of defaulted borrowers that think that there was a mistake made somewhere along the line, or the Department of Education forgot about them,” Ms. Mayotte said. “I think this is going to catch a lot of them off guard.”
The first day after a missed payment, a loan becomes delinquent. After a certain amount of time in delinquency, usually 270 days, the loan is considered in default — the kind of loan determines the time period. If someone defaults on a federal student loan, the entire balance becomes due immediately. Then the loan holder can begin collections, including on wages.
But there are options to reorganize the defaulted loans, including consolidation or rehabilitation, which requires making a certain number of consecutive payments determined by the holder.
Often, people who default on debt owe the smallest amounts, said Constantine Yannelis, an economics professor at the University of Cambridge who researches U.S. student loans.
“They’re often dropouts or they went to two-year, for-profit colleges, and people who spent many, many years in schools, like doctors or lawyers, have very low default rates,” he said.
This year, millions of borrowers saw their credit scores drop after the pause on penalties was lifted. If someone does not earn an income, the government can take the person to court. But, practically speaking, a borrower’s credit score will plummet.
Dr. Yannelis added that a common reason people default was that they were not aware of the repayment options. There are plans that allow borrowers to pay 10 percent of their income rather than having 15 percent garnished, for example.
The whiplash policy changes around the time of the pandemic were “a terrible thing from a borrower-welfare perspective,” Dr. Yannelis said. “Policy uncertainty is really terrible for borrowers.”
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