NLRB Withdraws Joint-Employer Rule Appeal

On July 19, 2024, the National Labor Relations Board (NLRB) voluntarily dismissed its appeal of the U.S. District Court for the Eastern District of Texas decision vacating the NLRB’s 2023 joint-employer rule. Thus, the Eastern District of Texas’s decision will be final.

The rule, which had been set to take effect on March 11, 2024, would have expanded the types of control over job terms and conditions that trigger joint employment. The NLRB stated it would like to consider the issues identified in the Eastern District of Texas’ decision and options for addressing outstanding joint-employer matters. As a result of the Eastern District of Texas’ ruling and the NLRB’s decision to withdraw its appeal, the former 2020 joint-employer rule remains in effect and calls into question the future status of the 2023 rule.

Background on the Joint-employer Standard

Joint employment situations can occur when two or more employers share personnel hiring, supervision, and management practices. When a joint employment status exists, joint employers are equally responsible for compliance with applicable laws and regulations.

The 2023 joint-employer standard sought new criteria for determining joint-employer status as applied to labor issues under the National Labor Relations Act. It would have rescinded the existing 2020 joint-employer standard and replaced it with a more inclusive law, making it easier for employers to be classified as joint employers. The 2020 standard considers the “substantial direct and immediate control” employers have over essential terms and conditions of employment for individuals who are employed by another organization.

Impact on Employers

Employers should ensure they rely on the 2020 joint-employer standard to determine where joint employment exists. Employers should continue to monitor the NLRB’s actions related to the joint-employer standard, as the board indicated it would consider its options for addressing outstanding joint-employer matters after voluntarily dismissing its appeal to the 5th U.S. Court of Appeals.

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