On October 26, 2023, the National Labor Relations Board (NLRB or Board) issued a new rule, with an effective date of December 26, 2023, establishing the standard for determining joint employer status under the National Labor Relations Act (NLRA). The NLRB’s new rule significantly expands the definition of “joint employment” under the NLRA. A more detailed evaluation of the new joint employer rule is available here.
The NLRB’s new rule poses significant potential joint employer risks to businesses; it also provides corresponding benefits for organized labor. Thus, there was little question that it would be subject to court challenges from both sides. And it was. On November 6, 2023, the Service Employees International Union (SEIU), filed a petition for review filed in the U.S. Circuit Court for the District of Columbia seeking to head off “any effort to nullify or weaken” the new rule. Three days later, the U.S. Chamber of Commerce, and a coalition of business groups, collectively filed suit in U.S. District Court for the Eastern District of Texas, challenging the new joint employer rule as an “arbitrary and capricious” exercise of power by the NLRB.
With the SEIU and U.S. Chamber legal actions pending, things turned even more complicated for the new joint employer rule. Acting on a request by U.S. Senator Bill Cassidy, M.D. of Louisiana, the U.S. Government Accounting Office (GAO) determined that the NLRB had acted prematurely, in violation of the Congressional Review Act (CRA) by designating December 26, 2023, as the effective date for the joint employer rule. The CRA requires a 60-day delay in the effective date of a major rule from the date of publication in the Federal Register or receipt of the rule by Congress, whichever is later. After notice from Senator Cassidy’s office of the GAO’s determination, the NLRB extended the effective date of the new joint employer rule to February 26, 2024, which it said would “facilitate resolution of legal challenges with respect to the rule.”
Thus, the new joint employer rule will only be applied to cases filed after February 26, 2024, extended effective date. Or will it? A group of legislators recently introduced a joint resolution of disapproval under the CRA “to overturn the NLRB’s joint employment rule,” according to the announcement from Senator Cassidy’s office. If a CRA joint resolution of disapproval is approved by both houses of Congress and signed by the President, or if Congress successfully overrides a presidential veto, the rule at issue cannot go into effect or continue in effect.
The NLRB’s joint employer rule faces an unsettled future. The joint resolution of disapproval filed by Senator Cassidy is still pending. So are the legal challenges to the new joint employer rule filed by the U.S. Chamber of Commerce and the SEIU. More legal challenge seems likely to follow and ultimately may require the U.S. Supreme Court to weigh in on the issues. We will be providing updates on the legal and legislative challenges to the new joint employer rule as they work their way through the courts and Congress.
Bean, Kinney & Korman’s labor and employment law practice group works proactively with union and non-union employers of all sizes, to craft a full range of employment policies and documents to meet the compliance challenges of the NLRA and all applicable federal, state, and local laws. If you have questions about the NLRB’s new joint employer rule, or need assistance with your company’s employee policies or forms, please contact Doug Taylor at (703) 525-4000 or firstname.lastname@example.org, or your current Bean, Kinney & Korman attorney.
This article is for informational purposes only and does not contain or convey legal advice. Consult a lawyer. Any views or opinions expressed herein are those of the authors and are not necessarily the views of any client.