A federal judge has struck down a key Biden administration labor rule that expanded the definition of “joint employer” from an earlier rule issued by the Trump administration. Biden’s rule also rescinded Trump’s version.
The March 8 ruling by U.S. District Judge J. Campbell Barker of the Eastern District of Texas is a defeat for the National Labor Relations Board, which issued the rule in question last October, and organized labor , who supported her.
It’s also a victory for construction contractor groups and other business organizations, which on Nov. 9 had filed a challenge to the Biden rule in Texas court.
Ben Brubeck, vice president of regulatory, labor and state affairs for Associated Builders and Contractors, said in a statement after the judge’s opinion and order was issued: “We are pleased that the court has blocked the NLRB’s radical and overbroad joint employer standard, which would have disrupted long-established, efficient operating processes followed by construction service providers working together to build America.”
ABC and the Associated General Contractors of America are members of a business coalition that filed the challenge to the Biden NLRB standard.
In his ruling, Barker called the repeal of the Trump-era standard “arbitrary and capricious” and said the 2020 version would go back into effect after he issues a final ruling on the case.
But there are signs that new developments in the case are coming.
NLRB Chairwoman Lauren McFerran called the ruling “a disappointing setback.” But McFerran added that it is “not the final word on our efforts to return our joint employer standard to common law principles that have been endorsed by other courts.”
He said: “The agency is reviewing the decision and actively considering next steps in this case.”
The Biden rule, which the NLRB issued last October 26, provided a broader definition of joint employer than its predecessor, which was issued in 2020.
The NLRB said the 2023 Biden standard defines an entity as a joint employer if it has an “employment relationship” with workers and shares or co-determines at least one of a list of several “essential terms and conditions of employment,” including wages benefits or other compensation, working hours and assignment of tasks to be performed.
At a key point, under the Biden standard, an entity could qualify as a joint employer whether or not it actually exercises authority over the essential terms and conditions of the employment. Possessing such authority would be sufficient to meet a definition of a joint employer.
Under Trump’s standard, an employer had to “possess and exercise direct and immediate substantial control” over one of several terms and conditions of employment.
The Biden regulation was supposed to take effect on December 26, 2023, but the NLRB extended its effective date to February 26.
On February 23rd, Barker issued a suspension of the Biden standard, which was extended until March 11th.
