In 2023, the National Labor Relations Board (NLRB) published a final rule updating its joint employer test to be more expansive for applying the National Labor Relations Act (NLRA) to multiple entities employing the same worker where the entity at least indirectly exercised control over the terms and conditions of the worker’s employment. A business group coalition filed a lawsuit to prevent the rule’s enforcement, calling the rule arbitrary and capricious, and on March 8, 2024, a federal judge in Texas agreed with them and issued an order vacating the rule altogether. With no new rule to enforce, the NLRB has chosen to rescind the new rule and reinstate the previous regulatory text.
Issued without notice or opportunity for public comment due to the administerial nature of complying with the 2024 court order, the NLRB has now officially reinstated the joint employer test first published in 2020, which has been in effect since the court order invalidating the 2023 rule.
Unlike the 2023 rule that focused on the potential or indirect control over a broad set of terms and conditions of the worker’s employment, the 2020 rule requires a finding that both employers evaluated for joint employment exercised direct control over one or more specific terms before they can be considered the worker’s “employer” for NLRA purposes. The specific terms and conditions of employment under the 2020 rule are:
- Wages;
- Benefits;
- Hours of work;
- Hiring;
- Discharge;
- Supervision; and
- Direction of work.
As demonstrated above, joint employer status for NLRA purposes has recently been subject to years of different rulemaking and litigation. This is because the finding of joint employer status creates significant obligations under the NLRA, including a requirement for all joint employers to bargain with union representation of the jointly employed workers and liability for unfair labor practice claims.
Although the 2020 rule may lead to fewer findings of joint employment than the 2023 rule, employers that contract for labor still need to consider this rule and whether NLRA application to the contracted workers will impact operations.
Further, the rescission of the 2023 rule also highlights how priorities and legal interpretations at the NLRB change as presidential administrations change. Employers may now expect more changes to the application of the NLRA to their workforce over the coming years and should continue to stay up to date on current developments.
Matthew J. Roberts, Associate General Counsel, Labor and Employment
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