The NLRB's Final Joint-Employer Rule
By Shiva Sethi
Last month, the National Labor Relations Board delayed a regulation finalized in October 2023 that would make it easier for employers to be “joint employers” and consequently require more employers to bargain with employees. In some workplaces, such as franchises like Burger King, multiple employers determine employees’ terms and conditions of work. When employers are not joint employers, they have no ‘duty to bargain’ under the National Labor Relations Act. This puts workers in a bind, when an employer who controls significant parts of their employment is absent from the bargaining table.
The 2023 regulation, entitled “The Standard for Determining Joint-Employer Status”, would undo a regulation issued under the Trump Administration. The Trump NLRB’s joint employer regulation made it harder to categorize employers as joint employers. The Trump regulation required substantial direct and immediate control over essential terms or conditions of employment.
In contrast, the 2023 regulation’s test for joint employment would be if the entities (employers) share or codetermine one or more of the employees’ essential terms of employment, even if the control is indirect and even if the control is not exercised, also known as when control is reserved. This 2023 regulation is a return to the NLRB’s Browning Ferris standard, articulated in a 2015 and upheld by the D.C. Circuit in Browning Ferris v. NLRB in 2018.
Critics in Congress, including Senators Manchin (D-WV) and Cassidy (R-LA) have attacked the regulation and they are attempting to reverse it using the Congressional Review Act (CRA). If passed by both the House and Senate such a bill would have to be signed by the President in order to take effect., President Biden could (and likely would) veto it, and it would be challenging for Congress to overturn his veto. While the CRA threat is limited during this Administration, other challenges are more formidable.
The 2023 regulation was delayed because of two dueling legal challenges over the regulation. The Service Employees International Union (SEIU), which is generally supportive of the regulation, filed a petition in the D.C. Circuit to review the regulation, seeking to strengthen it. The earlier Browning Ferris precedent in the D.C. Circuit would likely support the NLRB’s position in that case. However, in a district court in the Eastern District of Texas, where two Trump appointed judges preside, the U.S. Chamber of Commerce and other businesses challenged the rule, arguing that it should be struck down because it is arbitrary and capricious, in violation of the Administrative Procedures Act. It is possible that both cases move forward simultaneously or that one goes in front of the other, but this sequencing and jurisdictional challenge has not yet been resolved.