As discussed in our previous Employment Law Blog, the National Labor Relations Board (the “NLRB”) released a Final Rule (the “2023 Rule”), which set forth a revised standard for joint-employer status. The Final Rule was scheduled to take effect on December 26, 2023. However, the United States District Court for the Eastern District of Texas ruled against implementation of the Rule.
KingSpry’s Employment Law Chair, Avery E. Smith, Esq., provides a recap of the 2023 and 2020 Rules and offers guidance to employers on navigating joint employer standard.
What is a Joint Employer?
A joint employer is an individual or entity who is jointly and severally liable with another employer for an employee’s wages. This joint employer status creates a “primary” and “secondary” employer relationship, under which the primary employer is responsible for the secondary employer’s liabilities. Joint employers bargain with one another regarding essential terms and conditions of employment.
Comparison of Standards
2020 Rule: The 2020 Rule provides that an employer may be considered a joint employer only if the two (2) employers share or codetermine the employees’ essential terms and conditions of employment. The 2020 Rule makes it easier for joint employers to avoid a determination of joint-employer status due to its high threshold. It also provides that wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction were “essential terms and conditions of employment.”
2023 Rule: In determining a joint employer relationship, the 2023 Rule considers (1) the alleged joint employers’ authority to control essential terms and conditions of employment, and (2) whether or not such control is exercised, without consideration of whether control is direct or indirect.
Timeline
The 2023 Rule was set to take effect on December 26, 2023; however, the Rule was challenged by the United States Chamber of Commerce (the “Chamber”). On March 3, 2024, the United States District Court for the Eastern District of Texas granted the Chamber’s motion for summary judgement and vacated the 2023 Rule. The NLRB initially appealed the decision but voluntarily dismissed its appeal on July 19, 2024.
At this time, the 2020 Rule remains in effect.
