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Postponement of Implementation: NLRB’s Joint Employer Rule Extended to March 11, 2024

On October 26, 2023, DC Employment Lawyers highlight that the National Labor Relations Board (NLRB or the “Board”) issued its highly anticipated final rule, commonly referred to as the “New Rule.” This rule addresses the standard for determining joint-employer status under the National Labor Relations Act (NLRA). As previously reported, the New Rule significantly expanded the criteria for establishing a joint-employer relationship under federal labor law.

The New Rule reinstated the Board’s previous employee-friendly standard, articulated in the 2015 Browning-Ferris decision. Moreover, it went a step further by emphasizing that “evidence of the authority or reserved right to control, as well as evidence of the exercise of control (whether direct or indirect, including control through an intermediary…) is probative evidence of the type of control over employees’ essential terms and conditions of employment necessary to establish joint-employer status.”

In broad terms, under the New Rule, businesses now face an increased risk of being deemed a “joint employer” even over individuals they have no direct oversight of. DC Employment Lawyers emphasize that this change can have significant implications for businesses.

The New Rule, originally scheduled to take effect on February 26, 2024, encountered criticism upon publication. A coalition of business organizations, spanning various industries, challenged the new standard in the United States District Court for the Eastern District of Texas. In this case, plaintiff organizations, represented by Employment Lawyers, brought claims for declaratory and injunctive relief under the Administrative Procedure Act (APA). They argued that the New Rule is contrary to law, arbitrary, and capricious. Consequently, they sought to block the implementation of the New Rule entirely.

On February 13, 2024, Judge J. Campbell Barker presided over a two-hour hearing on both parties’ dueling motions for summary judgment regarding the legality of the New Rule. Following the hearing, on February 22, 2024, Judge Barker issued an Order staying the implementation of the New Rule until March 11, 2024. DC Employment Lawyers anticipate that Judge Barker will issue a substantive decision by that date.

While the status of the New Rule remains uncertain, DC Employment Lawyers strongly recommend that businesses continue taking steps to prepare for the new implementation date of March 11, 2024. This is crucial, as the NLRB will commence enforcing the New Rule as soon as it becomes effective. In particular, businesses should use the two-week delay to review their relationships and contracts with subcontractors, staffing and temp agencies, and other third parties whose employees may present a risk of joint employment. While contractual language is not determinative under the New Rule, having strong contractual language that clearly delineates each party’s roles and responsibilities (or lack thereof) with respect to specific workers is a crucial and initial step in defending against a claim of joint employment. Additionally, businesses are advised to critically evaluate whether the control they actually exercise over subcontractors and their employees deviates from an otherwise clear contractual delineation of power.

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