A Win for Employers:
Federal Judge Says “Joint Employers” Rule a No-Go

By Todd Shadle, Board Certified Labor & Employment Attorney/Shareholder

In a recent ruling, a federal judge in Texas struck down a National Labor Relations Board (NLRB) rule broadening the test for determining when separate businesses could be considered joint employers. The rule, issued in October 2023 had been set to take effect March 11, 2024.

A highly contentious issue across several presidential administrations, the Biden administration and the NLRB sought to make it easier for workers, especially those employed by third parties, franchisees, and subcontractors, to be considered employees of more than one entity and allow for increased union organizing and collective bargaining.

In striking down the rule, U.S. District Judge J. Campbell Barker wrote 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 … essential terms and conditions of employment.”

He agreed with the U.S. Chamber of Commerce, who challenged the joint employer rule, that the new rule was too broad and also found that the NLRB’s rescission of the prior rule was arbitrary and capricious. As a result, the old rule continues to be in effect.

The ruling out of the Eastern District of Texas stops the implementation of the rule on a nationwide basis. The NLRB has stated they intend to appeal and will need to appeal to the Fifth Circuit Court of Appeals.