Good News On NLRB’s Joint Employer Rule

It’s one-big-step-back for the National Labor Relations Board (NLRB or Board) on its new joint employer rule. The Board has dropped its appeal of the federal court decision vacating the rule. 

Issued in October 2023, the new joint employer rule changed the standard for determining when two or more separate companies are a joint employer of employees under the National Labor Relations Act (NLRA). It replaced a business-friendly rule adopted during the Trump administration in 2020. The new rule was quickly challenged, however, and on March 8, 2024, a Texas federal court vacated it, finding, in part, that the Board’s rescission of the 2020 rule was arbitrary and capricious under the Administrative Procedure Act. 

The Board appealed this decision to the Fifth Circuit Court of Appeals but has now asked the court to dismiss its appeal. The Board will likely try a different avenue for changing the law on joint employers, perhaps via a pending case. Whether it will be successful remains to be seen and depends very much on politics and timing. 

In the meantime, the 2020 rule continues to govern the joint employer analysis under the NLRA, which is good news for employers. As always, we will keep you posted of developments in this area.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.