NLRB’s Joint Employer Rule Delayed to March 11 Amid Legal Challenge
The National Labor Relations Board’s new expansive joint employer rule, that was set to take effect Feb. 26, has now been delayed until March 11. A Texas federal judge ordered a two-week stay as he considers a lawsuit by business groups to block the rule.
Originally set to take effect on Dec. 26, 2023, the rule establishes a much more employee-friendly standard for determining joint employer status. It specifies that an entity may be a joint employer if it has direct or indirect control over the essential terms and conditions of a worker’s employment, regardless of whether such control is ever exercised. The rule was released in late October 2023 and dismantles a 2020 Trump-era standard that exempted large companies from joint-employer status with subcontractors or franchisees, placing the onus on workers to show the companies had "direct and immediate control" over them.
A coalition of business groups led by the U.S. Chamber of Commerce filed a lawsuit against the NLRB over the rule in November 2023 in a Texas federal district court. The groups argue that the rule would destroy the franchise model and challenge the rule on grounds that it is impermissibly vague, and that the NLRB exceeded its authority in promulgating the rule. The lawsuit seeks to permanently block implementation of the rule.
On Feb. 22, 2024, Judge J. Campbell Barker of the U. S. District Court for the Eastern District of Texas ordered the delay of the effective date of the new joint employer rule as he considers his ruling. The new rule also has faced legislative opposition by Republicans in Congress. Regardless of the how the Texas district court rules, the resolution is not likely to proceed quickly and may ultimately require U.S. Supreme Court intervention to resolve.
The joint employer rule is a complex and controversial issue. It is likely to continue to be the subject of legal and legislative debate for some time. Amid the current delay and uncertainty over the rule’s future, employers should take the time to review what control over essential job functions they may exert over their employees, contractors and franchisees.
Please contact Mark Fijman, Stephanie Poucher or any member of the Labor and Employment team if you have questions or need advice or guidance.
