NLRB Withdraws from Joint-Employer Rule Appeal
On Friday July 19th, the National Labor Relations Board (NLRB) voluntarily dismissed its appeal of the 5th Circuit’s ruling from the District Court in Texas.
The NLRB was appealing the original District Court’s decision that vacated the NLRB’s joint-employer ruling made a year ago, reversing the NLRB’s rule where two business entities (Franchises, staffing firms, construction contractors) that “indirectly” control or supervise employees via its labor law policies or procedures, can and will be considered joint employers. As a result, this makes it easier for an employee of a franchise to include both the franchisee and the franchisor in its lawsuits that they feel violate employment laws. In the filing that was released, the NLRB stated that, “the Board would like the opportunity to further consider the issues identified in the district court’s opinion in the first instance.”
So, what does this mean for employers?
For now, this means that the standard that was released in 2023 has been abandoned, and that employers should be following the existing 2020 joint-employer standard until further notice. It does not mean the joint employer law was vacated, but an employee suing a franchisee and a franchisor needs to show that both the franchisee and franchisor were sharing control and supervision of the employee’s activity, versus the 2023 NLRB ruling that the NLRB was appealing that must include a showing of the direct influence or control of an employee by two or more business entities.
While the NLRB has withdrawn this appeal, it is expected they will update the vacated standard into a new rule that will replace the existing standard. The new rule will be supportive of employees claiming joint employment, but will not be a ruling that will have the ability to be appealed or reversed as easily as the NLRB’s 2023 rule was.
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