NLRB Withdraws Appeal Challenging the Decision to Vacate the Joint Employer Rule

As employers may recall, on October 27, 2023, the National Labor Relations Board (“NLRB” or “Board”) published a Final Rule (“New Rule”) concerning the joint-employer standard. The New Rule would expand the joint-employer standard issued in 2020 by allowing for a finding of joint-employer status if an entity simply possessed the authority to control at least one of the essential terms and conditions of employment of another company’s employees, instead of requiring that such control be actually exercised.

The New Rule was delayed more than once due to legal challenges and on March 8, 2024, a federal court in Texas vacated the New Rule. On May 7, 2024, the NLRB filed an appeal to the Fifth Circuit seeking to reverse the Texas court’s decision. However, on July 19, 2024, the NLRB voluntarily dismissed this appeal. It is currently unclear whether there will be further efforts from the NLRB to revive the New Rule in some form. In its Motion for Voluntary Dismissal the Board stated that it remained of the opinion that the New Rule meets the requirements of the National Labor Relations and Administrative Procedure Acts, but that it wanted “to consider options” for addressing the outstanding joint employer matters before the Board. While two actions concerning the New Rule remain in the D.C. District Court, one was stayed and the other was held abeyance pending the Fifth Circuit Appeal. It is unclear how the dismissal of the Fifth Circuit appeal will impact those cases. The NLRB could also return to the drawing board and start a new rulemaking process for the joint-employer rule.

As of now, the joint employer rule issued in 2020 remains in effect. As a reminder, under that rule, a joint-employer relationship exists for the purposes of the NLRA where a company exercises substantial direct and immediate control over the essential terms and conditions of another company’s employees.

The Firm will continue to monitor these cases and any actions taken by the Board related to this rule. Employers with questions about the current rule, the New Rule, or joint employment should contact Caroline Secola at csecola@fglawllc.com or any attorney at the firm.

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