A federal district court judge in Texas has invalidated the National Labor Relations Board (NLRB)’s 2023 rule defining when two separate companies are actually joint employers for purposes of compliance with the National Labor Relations Act (NLRA). The judge issued the decision shortly before the rule was scheduled to take effect. The Board is expected to appeal.
The 2023 rule, issued by the Biden-era Board, broadly defined joint-employer status to include situations where one company has “reserved control” (the authority to control any term or condition of employment of another company’s employees, even if it never exercises that authority) or “indirect control” over those terms and conditions of employment. The judge determined that the 2023 rule was confusing, illogical, and unlawfully expansive. The judge then evaluated the Trump-era Board’s 2020 rule on joint employer status and allowed it to remain in place because it was consistent with Supreme Court precedent that endorsed a “common law” understanding (based on judicial rulings) of employment principles under the NLRA (Chamber of Commerce of the United States v. NLRB, ED Texas, March 2024).
Tips: For a summary of the 2020 rule, which remains in effect, see our March 5, 2020, newsletter article. As we explained there, a business is a joint employer if it possesses and exercises “substantial direct and immediate control over one or more essential terms and conditions” of a worker’s employment with the direct employer, including “wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.” Vigilant will keep members informed of any further developments.
