The National Labor Relations Board announced a final rule Thursday to withdraw its Biden-era joint employer rule in favor of a standard it adopted in 2020 during the first Trump administration.
A federal judge previously vacated the now-withdrawn rule — which was published in 2023 — because it was both “contrary to law” and “arbitrary and capricious,” following a challenge filed by business groups. NLRB said the 2023 rule has never taken effect and that the 2020 rule was and remains the operative rule for determining joint employer status under the National Labor Relations Act.
NLRB also said it determined that good cause existed for issuing Thursday’s rule without prior 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 effect,” the board wrote.
Joint employer status has had a long, back-and-forth history 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 joint employers of the same employee.
The 2023 rule, for instance, stated that such entities are joint employers if they share or codetermine essential terms and conditions of employment. This occurs, per the rule, when the entities possess or exercise either direct or indirect control over one or more such terms.
NLRB first applied that standard in its 2015 Browning-Ferris Industries decision, which was itself subject to an attempted reversal during the first Trump administration.
The board’s 2020 rule was meant to overturn the rationale behind Browning-Ferris. It limited joint employer status under the NLRA only to those entities that possess and exercise substantial direct and immediate control over an employee’s essential terms of employment. The 2020 rule also exclusively limited the list of essential terms to factors such as wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction.
Thursday’s rule retains the 2020 rule’s language, defining “substantial” direct and immediate control to mean that which has 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 probative of joint employer status, but only to the extent that it supplements and reinforces evidence of possession or exercise of direct and immediate control.
“Joint-employer status must be determined on the totality of the relevant facts in each particular employment setting,” NLRB said. “The party asserting that an entity is a joint employer has the burden of proof.”
Sen. Patty Murray, D-Wash., criticized the decision in an email to HR Dive, writing that the 2020 rule gives “the biggest corporations cover to deny workers their ability to band together for better wages and working conditions and leaving millions of workers in the lurch, vulnerable to egregious violations of their rights.”
In a twist earlier this week, NLRB said it would reaffirm its 2015 Browning-Ferris decision that the titular employer, Browning-Ferris Industries, was a joint employer under the standard outlined 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.”