Last Updated on July 23, 2024

Update: On July 12, 2024, the National Labor Relations Board (NLRB) made the decision to abandon the 2023 Joint Employer rule, following a federal district court’s decision. The NLRB filed a motion with the U.S. Court of Appeals for the Fifth Circuit, seeking dismissal of its challenge. While the NLRB still finds this rule to be lawful, they have decided to explore other options for addressing joint employer matters.

On March 8, 2024, U.S. District Judge J. Campbell Barker struck down the National Labor Relations Board’s (NLRB) joint-employer rule published October 2023, significantly impacting how entities define their relationships with workers. The ruling addressed concerns raised by the Chamber of Commerce of the United States of America regarding the broad scope of the new rule and its potential disruptive effects on business operations.

The 2023 NLRB Joint-Employer Rule

Under the 2023 NLRB joint-employer rule, entities could be considered joint employers if they had (1) an employment relationship with those employees under common-law agency principles and (2) share or codetermine those matters governing employees’ essential terms and conditions of employment. Under this ruling “sharing or codetermining” was defined as having control directly, indirectly or both over essential terms and conditions of employment which significantly expanded the criteria set forth in the 2020 rule.

The ruling defined seven specific essential terms and conditions of employment:

• Wages, benefits and other compensation
• Hours of work and scheduling
• Assignment of duties performed
• Supervision of the performance of duties
• Work rules and directions governing the manner, means and methods of performance and the grounds for discipline
• Tenure of employment, including hiring and discharge
• Working conditions related to the safety and health of employees

The new joint-employer rule posed risks for employers, particularly those relying on staffing agencies or subcontractors, as it mandated collective bargaining over terms of employment, even if indirect influence was exerted.

Legal Challenge and Ruling

The Chamber of Commerce and business representatives challenged the 2023 rule, arguing its inconsistency with common law and its arbitrary nature. Judge Barker agreed with the plaintiffs, deeming the second part of the test redundant and criticizing the lack of clarity in the rule’s standards. He ruled that the rescission of the 2020 rule by the NLRB was arbitrary and capricious under the Administrative Procedure Act.

Impact on Businesses

The decision to strike down the 2023 joint-employer rule provides temporary relief for employers, but uncertainties remain regarding future regulations. The ruling highlights the importance of clarity and practicality in labor regulations, particularly for industries with complex employment structures like construction, franchising, staffing agencies, and healthcare.

Key Takeaways

1. The 2023 joint-employer rule expanded the criteria for determining joint employment, posing challenges for businesses.
2. Judge Barker’s ruling invalidated the rule, emphasizing the need for clarity and practicality in labor regulations.
3. Businesses should remain vigilant about potential joint-employer relationships and ensure compliance with existing legal standards.
4. The NLRB is currently contemplating whether to appeal Judge Barker’s ruling

What the Joint-Employer Ruling Means For You

The Chamber of Commerce v. NLRB decision marks a significant development in labor law. It undsersocres the importance of balancing regulatory clarity with the needs of businesses and workers. While the ruling provides temporary relief, it also highlights the ongoing challenges in defining joint-employer relationships and navigating labor regulations in a rapidly evolving business landscape.

Mastering Regulatory Terrain: How MyHRConcierge Empowers Employers Amidst Ever-Changing Landscapes

In response to the recent Chamber of Commerce v. NLRB decision, businesses are compelled to reassess their strategies within the dynamic regulatory environment. MyHRConcierge emerges as a strategic ally, offering tailored solutions to help employers navigate these intricate regulatory landscapes with confidence. Our comprehensive suite of HR services equips businesses to swiftly adapt to regulatory shifts while maintaining operational efficiency. With expert guidance and personalized support, MyHRConcierge empowers employers to address the complexities of joint-employer relationships and other regulatory challenges proactively, safeguarding both compliance and business interests.

Contact us today at 855-538-6947 ext 108, ccooley@myhrconcierge.com or schedule a convenient consultation below to learn more about how your company navigate the ever changing regulatory landscape.