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Court Strikes Down NLRB Joint-Employer Rule

Posted on March 18, 2024

A federal judge in Texas recently struck down the National Labor Relations Board’s (NLRB) new joint-employer rule, which was scheduled to take effect March 11.   The same judge had earlier stayed the effective date of the new rule.

The decision is the latest development in a years-long saga for employers, and it will most certainly be appealed.  Meanwhile, the NLRB will continue to analyze issues of joint employment using the rule that was issued in 2020, linked here, which tends to limit instances under which joint employment will be found.

Under the 2020 rule, an employer is considered a joint employer only if it:

  • Shares or co-determines the essential conditions of employment with the other employer, including wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction; and
  • The business possesses and exercises substantial direct and immediate control over the employees’ essential terms and conditions of employment, not in a sporadic manner but on a regular basis.

The new rule would have made it much easier to find a joint employment relationship.  Under the rule vacated by this case, as described in this NLRB Fact Sheet, the NLRB would find joint employment when a business has the right to exert to control over the terms and conditions of another employer’s employees, or when it has reserved, unexercised, or indirect control over any working conditions of the other employer’s employees.

Staffing agencies and employers who rely on employees of a third party such as contractors and temp agencies, should continue to follow the existing 2020 rule.  Contracts should clearly indicate which party has control over the essential terms and conditions of the employees’ employment.

Members with questions about joint employers or any other human resources matter may call the AIM HR Helpline at 800-470-6277.