Judge J. Campbell Barker of the U.S. District Court for the Eastern District of Texas recently overturned the National Labor Relations Board’s (NLRB) updated joint employer rule, which was scheduled to be implemented on Monday. The rule aimed to redefine the criteria under which two businesses could be considered joint employers of the same group of workers. Barker deemed the rule both “contrary to law” and “arbitrary and capricious,” responding to a legal challenge led by the U.S. Chamber of Commerce and other business organizations that was filed in November.
This legal decision arrives amidst anticipation of another ruling concerning the U.S. Department of Labor’s independent contractor rule, which is also expected to come into effect shortly.
The NLRB’s joint employer rule, initially set to take effect in December before being postponed, sought to update how joint employment relationships are assessed. Specifically, the rule detailed that two entities could be recognized as joint employers if they share or jointly determine the essential terms and conditions of employment, including aspects such as wages, benefits, work schedules, job duties, supervision, workplace rules, employment tenure, and health and safety conditions.
The intent behind the NLRB’s rule was to ensure a return to traditional common-law principles, facilitating a more pragmatic approach to uphold employers’ bargaining responsibilities as outlined in the National Labor Relations Act, as articulated by NLRB Chairman Lauren McFerran. However, the recent court ruling vacating this rule underscores the ongoing legal and regulatory debates surrounding employment relationships and labor rights in the United States.
