Federal Judge Weighs Challenges to Joint Employer Rule and Delays Start Date

On February 22, 2024, a Texas federal judge issued an order postponing the effective date for the National Labor Relations Board's (the “Board”) rule on joint employer liability to March 11, 2024. We previously reported on the joint employer rule here. The new deadline marks the second extension, granting additional time to assess the complex legal challenges from business groups led by the U.S. Chamber of Commerce. The judge will be considering the merits of the rule, which will likely turn on whether the expanded joint employer test comports with the common law.

The rule, finalized in October 2023 and previously scheduled to take effect on February 26, 2024, aims to broaden the criteria for determining joint employer status. It expands the circumstances under which franchisors, staffing companies, and other entities with connections to another entity's employees are considered joint employers. According to the new rule, firms can be classified as joint employers if they exercise control over specific job conditions of shared workers, such as pay, work rules, safety, scheduling, assignment of duties, supervision, or hiring and discharge, even through intermediaries or without prior utilization of such power. This regulatory change would replace the previous 2020 rule, which defined joint employers only when direct and immediate control over workers was present.

As the rule is tested in the courts, businesses and stakeholders await further developments that will shape the landscape of joint employer relationships in the United States. For any assistance or further clarification on how to prepare in the meantime, please reach out to one of Honigman’s Labor and Employment Attorneys here.