The U.S. federal court of the Eastern District of Texas vacated the National Labor Relations Board’s recent rule on determining the standard for joint-employer status and the Board’s rescission of the 2020 joint-employer rule. Before vacating (i.e., deciding against the NLRB’s controversial new interpretation), the court had previously stayed the joint-employer rule until March 11, 2024.  [For more information, see CIRT’s story on this matter dated: 12/01/2023].  

In sum:

• The U.S. district court ruled that the NLRB’s 2023 “joint employer” regulations—which provided that indirect or reserved control, even if never exercised, could be sufficient to establish joint employment—was defined overbroadly.

• The court restored prior regulations requiring “substantial direct and immediate control” to establish joint employment.
• The court also ruled that challenges to NLRB regulations are properly brought first in federal district court.

The District Court’s decision to vacate the Board’s rule was welcome news to a large cross-section of business organizations and groups, including CIRT, that had supported a ABC / U.S. Chamber of Commerce lawsuit seeking to stop the new standard from taking effect. At this time, the NLRB is still reviewing the decision and actively considering next steps in this case, which may likely mean appealing to the U.S. Circuit Courts.