Federal Judge Blocks NLRB’s Joint-Employer Rule from Taking Effect

By Drew Hintze posted 03-11-2024 08:30 AM


On Friday, March 8, 2024, in U.S. Chamber of Commerce v. N.L.R.B., Case No. 6:23-cv-00553 (E.D. Tex.), a United States District Court of Texas judge struck down the National Labor Relations Board’s (NLRB’s) joint-employer liability rule that was scheduled to take effect on Monday, March 11, 2024. The NLRB is expected to appeal the decision to the U.S. Court of Appeals for the Fifth Circuit 

The NLRB’s joint-employer rule, which was originally issued on October 26, 2023, would have expanded the legal test for determining whether two organizations jointly employ the same workers. The new rule would have changed the joint-employer standard from direct, exercised control on workers’ job terms to indirect and reserved, unexercised control. The rule would have had a major impact on certain employers, particularly franchisors and those who use contract labor, making the definition of joint employer easier to meet  

In striking down the rule, the district court judge sided with the challengers, which included the U.S. Chamber of Commerce, deeming the new rule overly broad. The Court stated that the rule “would treat virtually every entity that contracts for labor as a joint employer because virtually every contract for third-party labor has terms that impact, at least indirectly, at least one of the specified ‘essential terms and conditions of employment.’” Ultimately, the rule would unlawfully tip the scales to categorize certain companies as joint employers solely because they could exercise indirect control over one essential term and condition of employment, according to the Court 

Employers Council will continue to monitor this case as it traverses the appellate process. If you are a Consulting or Enterprise member and have questions about joint-employer relationships, please contact Employers Council.