National Labor Relations Board (NLRB)
Joint Employer Rule
The National Labor Relations Board (NLRB) published a rule at the end of February officially withdrawing the Biden NLRB's 2023 standard for determining joint employer status and reinstating the earlier standard adopted during the first Trump administration. The action is purely ministerial and creates no practical change, but does provide certainty in this area, particularly for employers that use a franchise model of operations.
During the Biden administration, the NLRB made a push to return to the Browning-Ferris interpretation through rulemaking. That standard is based on whether an entity has the authority to control terms and conditions of employment, either directly or indirectly, even if it does not actively exercise that authority. The 2023 rule was vacated just days before it would have taken effect in March 2024.
Because the Biden-era rule was never implemented, the new rule is more formality than substance, and the NLRB's current interpretation of joint employment will continue to rely on the 2020 rule. Under that standard, an entity may be considered a joint employer of a separate employer's employees only if it both possesses and exercises "substantial direct and immediate control" over the employees' essential terms of employment.
The NLRB's joint-employer rule does not affect joint-employer tests under other laws, such as the Fair Labor Standards Act. That said, this month the Department of Labor (DOL) sent a proposed rule on joint-employer classification to the White House, taking the first public step toward replacing the Biden-era rule. The proposed rule is under review by the Office of Management and Budget, but it doesn’t include information about its contents. The department previewed the rule last year as part of its regulatory agenda, stating that the proposal would aim to “promote greater uniformity among court decisions nationwide.” The DOL’s rule is likely to focus on whether a purported joint employer actually exercises direct and immediate control over a worker’s employment terms and conditions, as the NLRB rule does.