Category Archives: NLRB

Court Strikes Down NLRB Joint Employer Rule

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On March 8, 2024, the U.S. District Court for the Eastern District of Texas vacated the National Labor Relations Board’s (NLRB) 2023 joint employer rule. The new rule, which was set to take effect on March 11, 2024, expanded the criteria for determining joint employer status, potentially increasing the number of businesses classified as joint employers. The vacated rule would have placed more employers at risk of being deemed joint employers, affecting their liabilities and responsibilities towards employees. Under the proposed 2023 rule, an entity could be deemed a joint employer under common-law agency principles if it had authority to control essential terms and conditions of one’s employment, even if the the control was indirect. The Court found that the new rule failed to provide a clear standard for employers to follow.

The ruling has significant implications for businesses, particularly those who work with contractors or franchisees. The current ruling leaves the 2020 joint employer rule in place, which requires direct and immediate control over employees to establish a joint employer relationship. However, other U.S. District Courts are certain to consider the issue in their jurisdictions, likely resulting in a final review by the U.S. Supreme Court.

NLRB’s New Joint-Employer Rule

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The National Labor Relations Board (NLRB) is the federal agency that enforces the National Labor Relations Act (NLRA), which protects the rights of workers to organize and bargain collectively with their employers.

On October 27, 2023, the NLRB published a final rule that changes the standard for determining when two or more entities are joint employers of a group of employees under the NLRA. In the modern workforce, it is not uncommon for an employee to be technically hired by one entity while being contracted to provide services to another business that essentially controls their daily work performance. The new rule provides more clarity and guidance to parties covered by the NLRA regarding their rights and responsibilities when more than one statutory employer possesses the authority to control or exercises the power to control particular employees’ essential terms and conditions of employment.

The new rule implements established common-law standards by considering the an employers’ authority to control essential terms and conditions of employment, whether or not such control is exercised, and without regard to whether any such exercise of control is direct or indirect. Essential terms and conditions of employment include: wages, benefits, and other compensation; hours of work and scheduling; the assignment of duties to be performed; the supervision of the performance of duties; work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline; the tenure of employment, including hiring and discharge; and working conditions related to the safety and health of employees.

The effective date of the rule for new cases is February 26, 2024. For more information, you can read the NLRB’s fact sheet.