Delay in Effective Date of the NLRB’s Joint Employer Rule

As we reported in our October 26, 2023 E-lert, the National Labor Relations Board has issued a final rule that rescinds and replaces the Trump Administration’s 2020 rule for determining whether two entities are joint employers. A controversial topic, the new rule was subjected to immediate legal challenge, and the NLRB postponed the original effective date from December 26, 2023 until February 26, 2024. A federal district judge has further stayed that until March 11, 2024.

Under the new rule, two companies will be joint employers of workers if they “possess the authority to control (whether directly, indirectly, or both), or to exercise the power to control (whether directly, indirectly, or both) one or more of the employees’ essential terms and conditions of employment.” The old rule, in contrast, required actual and direct control. A joint employer must bargain collectively with employees’ representative with respect to any term or condition of employment that it possess the authority to control or exercises the power to control – and according to the new rule, even for non-essential terms or conditions of employment.

The new standard will be applied only prospectively, meaning that the old standard will continue to apply to cases filed before March 11, 2024. As we warned previously, however, any arrangements that rely on the old standard may fall afoul of the new standard – and be subject to an unfair labor practice charge – once it takes effect.