National Labor Relations Board withdraws appeal on joint-employer rules

The National Labor Relations Board (NLRB) withdrew its appeal of the Federal District Court decision that nullified an effort to rewrite the joint-employer rules.

The joint-employer rule is used to determine when two or more employers should be considered responsible for an individual employee. It is typically used in franchisor-franchisee relationships, but the latest version of the rule would have been impermissibly vague, possibly covering nearly any contractual relationship between businesses.

A coalition of organizations, including NACS, an association representing convenience stores and fuel retailers, were part of a coalition that successfully sued to nullify the rule. Following that, the National Labor Relations Board (NLRB) filed a motion to dismiss its appeal of the joint employer rule in the Fifth Circuit Court of Appeals.

The U.S. Chamber of Commerce declared it a major legal victory for American businesses, including franchises and contractors, and the workers they employ.

“This is a major legal victory and an important acknowledgment by the NLRB. The agency’s joint employer rule overstepped its constitutional and statutory authority with this unlawful rule,” said U.S. Chamber of Commerce Litigation Center Executive Vice President and Chief Counsel Daryl Joseffer. “While the victory means our lawsuit is over, the U.S. Chamber will remain vigilant in watching whether the NLRB continues to overstep its authority at the expense of American workers and businesses, and we will be ready to take appropriate action if needed.”

For now, with the joint-employer rule permanently nullified, employers are back under the 2020 rule which required direct and immediate control over another employer’s worker in order to be determined a joint employer. This is a standard that NACS supports.

However, in June, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and the Service Employees International Union (SEIU) petitioned the NLRB to move to formally withdraw that 2020 rule. If the NLRB does that, it will mean that determinations of joint-employer status would no longer be governed by a formal rulemaking. Instead, it would be left to the interpretation of the board itself and judges on a case-by-case basis.

NACS believes that businesses need certainty in such determinations and would likely oppose the NLRB withdrawing the 2020 rule, which provides such certainty. When the rules are clearly defined, NACS officials said, businesses are better able to comply, which is preferable for both employers and employees.

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