The National Labor Relations Board announced a final rule Thursday withdraw its joint employer rule from the Biden era in favor of a rule he adopted in 2020 during the first Trump administration.
A previously vacant federal judge the now-withdrawn rule — which was published in 2023 — was both “unlawful” and “arbitrary and capricious,” following a challenge brought by business groups. The NLRB said the 2023 rule has never gone into effect and that the 2020 rule was and remains the operative rule for determining joint employer status under the National Labor Relations Act.
The NLRB also said it determined there was good cause to issue Thursday’s rule without notice and opportunity for public comment. The withdrawal of the 2023 rule is effective immediately.
“Our action is ministerial and therefore will have no separate economic effects,” the board wrote.
Joint employer status has had a long history of back and forth between recent presidential administrations. The two major parties have offered divergent perspectives on what the NLRA requires in order to find that two or more employers are co-employers of the same employee.
The 2023 rule, for example, established that such entities are joint employers if they share or codify essential terms and conditions of employment. This occurs, according to the rule, when entities own or exercise direct or indirect control over one or more of these terms.
The NLRB first applied this rule to its 2015 Browning-Ferris Industries decisionwhich was the subject of an attempted repeal during the first Trump administration.
The board’s 2020 rule was intended to reverse the rationale Browning-Ferris. It limited joint employer status under the NLRA to only those entities that possess and exercise direct and immediate substantial control over the essential conditions of an employee’s employment. The 2020 rule also exclusively limited the list of essential terms to factors such as wages, benefits, hours of work, hiring, firing, discipline, supervision and management.
Thursday’s rule retains the language of the 2020 rule, defining “substantial” direct and immediate control as having a regular or continuous effect on an essential employment term or condition, rather than on a “sporadic, isolated, or de minimis basis.”
Unlike the 2023 rule, the 2020 rule specifies that indirect control is evidence of joint venture status, but only to the extent that it supplements and strengthens the evidence of possession or exercise of direct and immediate control.
“Joint employer status must be determined based on the totality of the relevant facts in each particular employment setting,” the NLRB said. “The party asserting that an entity is a joint venturer bears the burden of proof.”
Sen. Patty Murray, D-Washington, criticized the decision in an email to HR Dive, writing that the 2020 rule gives “big corporations cover to deny workers their ability to unionize for better wages and working conditions and leaving millions of workers on the hook, vulnerable to blatant violations of their rights.”
In a U-turn earlier this week, the NLRB said it would reaffirm their 2015 Browning-Ferris decision that the incumbent employer, Browning-Ferris Industries, was a joint employer under the standard described by the Obama-era board. This was done at the direction of a federal court, however, and the agency said Browning-Ferris “had no application to cases arising after the effective date of the Board’s 2020 joint employer rule.”
