UPDATED: NLRB's Joint Employer Rule Struck Down By Federal Judge For Now
On Friday, a federal judge struck down the National Labor Relations Board's 'joint employer rule.' However, that may not be the end of it.
See the update at the bottom of this post.
The National Labor Relations Board’s (NLRB) “joint employer rule,” which was due to take effect on Monday, was struck down by a federal judge in Texas late Friday.
“The joint employer regulation, which was set to take effect March 11, expanded the types of control over job terms and conditions that can trigger a joint employer finding,” reported Bloomberg on Saturday. “Judge J. Campbell Barker, a Trump appointee to the US District Court for the Eastern District of Texas, vacated the measure in a decision issued late Friday.”
The NLRB’s new joint employer rule was opposed by many businesses, both large and small. The U.S. Chamber of Commerce was the plaintiff in the case.
The joint-employer rule was also seen as an existential threat to the franchise business model.
“This overreaching and unworkable joint employment policy is designed to change the rules in the middle of the game for hundreds of thousands of franchise owners and turn them into middle managers in their own businesses,” the International Franchise Association’s Michael Layman stated last year.
Within Judge Barker’s 31-page decision, Judge Barker gave a historical background to the joint-employer rule, which was originally set to go into effect on February 26, 2024, until Judge Barker delayed it last month.
The NLRB argued that the case, brought by the U.S. Chamber of Commerce, should be heard through the D.C. Circuit Court of Appeals, as opposed to the Fifth Circuit. However, Judge Barker denied the motion.
In his final judgement, Judge Barker stated:
It is declared that enforcement against plaintiffs or their members of the rule issued by the National Labor Relations Board on October 27, 2023, entitled Standard for Determining Joint Employer Status, 88 Fed. Reg. 73,946, would be contrary to law as to the rule’s addition of a new 29 C.F.R. § 103.40 and arbitrary and capricious as to its removal of the existing 29 C.F.R. § 103.40 (2020). In both respects, the rule is hereby vacated.
While many employers will view this as a victory, the joint employer issue may not be over yet.
The NLRB “will almost certainly appeal the decision to the full 5th Circuit and continue to push a companion case in the DC Circuit,” renowned labor attorney Michael Lotito stated on LinkedIn.
“The Service Employees International Union, which is generally supportive of the Biden board’s joint employer rule, filed a petition for review in the D.C. Circuit,” notes Bloomberg. “The jurisdictional dispute is also being litigated there.”
UPDATE:
On Saturday evening, the National Labor Relations Board issued the following statement:
On Friday evening, U.S. District Judge J. Campbell Barker of the Eastern District of Texas vacated the National Labor Relations Board’s recent rule on determining the standard for joint-employer status and the Board’s rescission of the 2020 joint-employer rule. Judge Barker had previously stayed the joint-employer rule until March 11, 2024.
“The District Court’s decision to vacate the Board’s rule is a disappointing setback, but is not the last word on our efforts to return our joint-employer standard to the common law principles that have been endorsed by other courts," said Chairman Lauren McFerran. "The Agency is reviewing the decision and actively considering next steps in this case.”
Read Judge Barker’s entire ruling whole here.