Pushing Back on Joint Employer Rules: Judge Invalidates Proposed NLRB Rule

By Alan L. Poliner, Esq.

This is a follow-up to my article of February 27, 2024, Pushing Back on Joint Employer Rules: Are Employees of a Franchisee also Employees of the Franchisor?

On March 8, 2024 a U.S. District Court Judge struck down the National Labor Relations Board (NLRB)’s proposed rule establishing a new joint employer standard for determining whether two (2) employers simultaneously employ a particular employee or employees. Under the proposed rule, an entity may be considered a joint employer of another employer’s employees if the two share or codetermine the employees’ essential terms and conditions of employment.

The rule would have had the effect of making a Franchisor and employer of an employee of the Franchisee. Thus, a Franchisor who did not hire, and cannot fire, a person working for a franchisee would have been considered their joint employer and liable for labor code violations.

On November 9, 2023 a group of industry associations led by the United States Chamber of Commerce (USCC) filed a lawsuit against the NLRB, asserting the proposed rule was contrary to law, and that the NLRB actions were arbitrary and capricious.

On March 8, 2024 the District Court agreed, finding the proposed rule to be contrary to law as well as arbitrary and capricious.

See Chamber of Commerce of the United States of America, et al. v. NLRB, et al., docket number 6:23-cv-00553 (E.D.TX. March 8, 2024).