NLRB Withdraws Joint-Employer Appeal

The National Labor Relations Board (NLRB) officially dismissed its appeal of the Eastern District of Texas decision vacating the 2023 Joint Employer Rule. The 2020 Final Rule, which requires direct and immediate control to establish a joint employer relationship, remains in effect.

Background  
In October 2023, the NLRB released a final rule that, starting on March 11, would have changed the standard the federal government uses to determine when two or more employers are jointly responsible for a shared group of workers’ terms and conditions of employment. The rule would have made it easier for the NLRB to declare joint-employment status in business relationships, and enabled unions to organize by company rather than property by property.
 
The rule was designed to force franchisors to the negotiating table with workers they do not actually employ to increase unionization. It would have complicated relationships among hotel owners, brands, and employees, limiting opportunities for franchisees and workers along the way.
 
In November 2023, the American Hotel & Lodging Association (AHLA), the Restaurant Law Center (RLC), the U.S. Chamber of Commerce, and other leading business associations filed a lawsuit in the U.S. District Court for the Eastern District of Texas challenging the rule’s legality. The court’s March 8 decision overturned the new rule and reinstated a 2020 NLRB rule that protects businesses from undue liability for employees over whom they do not have direct control. Under that policy, which the Biden Administration had rescinded in 2021, companies will be seen as a joint employer only if they maintain “substantial direct and immediate control” over workers’ terms and conditions of employment.