U.S. Court Suspends NLRB Joint Employer Rule Indefinitely

Implementation of the National Labor Relations Board’s (NLRB) joint employer regulation has been suspended indefinitely after a U.S. federal judge in Texas ruled that the regulation is invalid because it is too broad and violates federal law. In his decision, Judge J. Campbell Barker said 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.”

As experts at one law firm explained,  with the judge’s ruling, the NLRB will be required to return to its previous standard. That prior test required that the board find that joint employer status exists only when a company exercises “direct” and “immediate” control over another employer’s employees when it comes to at least one of the following working conditions:

• Wages;
• Benefits;
• Hours of work;
• Hiring;
• Discharge;
• Discipline;
• Supervision; and
• Direction of work.

The Metals Service Center Institute and dozens of business groups had opposed the attempted new standard.

Unfortunately, the Texas judge’s ruling does not conclud this matter since the Biden administration is expected to appeal the ruling. Indeed, NLRB Chair Lauren McFerran said the board “is reviewing the decision and actively considering next steps” and that while Judge Barker’s decision “is a disappointing setback,” it “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.”