NLRB's Joint Employment Rule Delayed

Author: Robert S. Teachout, Brightmine Legal Editor 

February 23, 2024 

Implementation of a rule that would significantly increase the number of employers who would be considered joint employers under the National Labor Relations Act (NLRA) has been pushed back two weeks by a federal district court. The final rule is being challenged by a coalition of business groups. 

The National Labor Relations Board (NLRB) in October 2023 published a final rule on joint employment that was originally scheduled to become effective on December 26, 2023; in November, the agency pushed back the start date to February 26, 2024, to provide time to facilitate legal challenges.  

The final rule makes an employer a joint employer under the NLRA if it controls certain terms and conditions of a third party's employees, even if such authority is merely reserved or only exercised indirectly. Joint employers are required to bargain with a union that represents the shared employees and are jointly liable for any unfair labor practices. 

A coalition of business groups, led by the US Chamber of Commerce, has filed a lawsuit seeking to permanently block the final rule. They claim that the NLRB violated the Administrative Procedures Act by replacing a clear rule with an ambiguous one and that it exceeded its authority under the NLRA by stretching the definition of employment covered by the law.  

The groups also argue that the final rule would negatively affect the franchise model of business and relations between contractors, and create business instability. "It displaces widely accepted common-law standards governing the scope of employment relationships, establishes entirely new tests of employer liability, reconfigures relationships among legally separate entities, erases distinctions between contractors and employers, and threatens billions of dollars in liability and costs," the complaint states.  

A Texas federal district court issued a two-week stay of the regulation yesterday to March 11 pending its final ruling; further delays are possible. The rule is also being challenged in the DC Circuit by the Service Employees International Union, which is arguing that the list of criteria the board will consider in determining whether two or more employers are joint employers is too short.