NLRB Final Rule on Joint-Employer Status Vacated by Federal Court

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On March 8, 2024, Judge J. Campbell Barker made a significant ruling, vacating the National Labor Relations Board’s (NLRB) new joint employer rule and reinstating the 2020 rule in response to a lawsuit filed by a coalition of industry associations led by the U.S. Chamber of Commerce. This decision immediately affects how businesses navigate joint-employer relationships under the National Labor Relations Act (Act).

The 2023 rule, issued by the NLRB in October, redefined the criteria for determining joint-employer status. It broadened the definition, allowing multiple entities to be considered joint employers if they collectively influenced essential terms of employment. This approach, aligning with common-law agency principles, recognized the significance of indirect control in determining joint-employer status.

However, legal challenges prompted the NLRB to delay the implementation of the 2023 rule until February 26, 2024. And now, with Judge Barker’s ruling, the 2020 rule, with its stricter requirement of substantial direct control, takes precedence once again.

The 2020 rule imposes a higher threshold for establishing joint-employer status, focusing on direct and immediate control over essential employment terms. This narrower definition may provide more clarity for businesses and limit liability for labor violations and obligations.

Although the NLRB may appeal Judge Barker’s decision, businesses must currently adhere to the 2020 rule’s standards. This uncertainty underscores the importance of understanding joint-employer relationships, particularly for those involved in contracting, joint ventures, or other collaborative arrangements.