NLRB Joint Employer Rule Struck Down
By Storm Larson, Brian P. Goodman & Mai Chao Chang
Last October, the National Labor Relations Board (NLRB) issued a new rule that would make it easier for the NLRB to determine that entities were joint employers under the National Labor Relations Act. This in turn, would make it easier for employees to join labor unions and engage in collective bargaining. However, before the new rules could take effect, a federal judge struck them down on March 9 for being “arbitrary and capricious” and excessively broad. The judge was concerned that the new rule would treat virtually every entity that contracts for labor as a joint employer of those workers. The rule on joint employment from 2020 will remain in effect while the NLRB contemplates its next step.
For now, employers should review their relationship with workers using the legal standard established in the 2020 rule. That rule stated that an employer had to “possess and exercise substantial direct and immediate control” over the essential terms and conditions of an employee’s employment in order for that employer to be considered a joint employer of a worker. Employer groups especially in the construction and franchise believe that this version of the rule provides more stability for employers.
Employers should continue to monitor further legal developments in this area. Over the years, the law has shifted back and forth. It is anticipated that there will be further attempts by the NLRB to modify the joint employer rule starting with the NLRB appealing this decision.
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