NLRB Abandons Its Joint Employer Rule – Now What?

On July 19, 2024, the National Labor Relations Board voluntarily dismissed its appeal of a federal court decision that vacated (i.e. blocked) its final rule for determining whether two entities are joint employers. (Under federal labor law, a joint employer is required to bargain with a union selected by its jointly-employed workers and may be held liable for the unfair labor practices committed by the other employer.)

The final rule would have resulted in more findings that two entities are joint employers. It was immediately challenged in court, and earlier this year, a federal district court in Texas prevented the rule from taking effect, as we discussed in our March 11, 2024 E-lert. In its dismissal motion, the Board asserted that it “would like the opportunity to further consider the issues identified in the district court’s opinion” and “to consider options for addressing the outstanding joint employer matters before it.”

The Board’s action means that, for now, the current Trump Board rule, making joint employer findings less likely, continues to apply. We remind employers, however, that there are many other statutes that apply different standards to a joint-employer analysis. These include the Department of Labor’s rescission of the Trump DOL’s final joint-employer rule under the Fair Labor Standards Act (and consequent lack of clarity as to its approach), which we discussed in our July 2021 E-Update, and the Equal Employment Opportunity Commission’s interpretation of joint employment under anti-discrimination laws, as well as many courts’ interpretations under these laws, which can differ from agency interpretations.

As we have previously warned, companies engaging in contractual relationships with other businesses must remain keenly aware that the potential impact of the joint employer doctrine may differ depending on the context and jurisdiction at issue.  Employers must choose whether to take actions to minimize the likelihood that they will be deemed a joint employer or accept the reality of a joint employment relationship and the resulting obligation to verify compliance with applicable laws.