A federal judge in Texas has enjoined (that is: blocked) a new rule by the National Labor Relations Board (“NLRB”). The NLRB’s new rule would have made it easier for workers to be considered employees of more than one legal entity for labor-relations purposes, such as union organizing and collective bargaining efforts.
The new NLRB rule, which was set to take effect on March 11, 2024, sought to establish new criteria for determining when two companies should be regarded as “joint employers” in labor negotiations. It aimed to broaden the definition of joint employers, stating that two (or more) companies could be deemed joint employers of a single worker if they possess the ability to control—either directly or indirectly—at least one aspect of a worker’s employment conditions, even if such reserved control had never in fact been exercised.
The NLRB argued that its new rule was necessary to ensure that companies honor their legal obligation to engage in negotiations with workers. However, the Texas judge concluded that the NLRB’s new rule was broad and violated federal labor law.
So, for now, the determination of joint-employer status in the NLRB context will continue to be based on the NLRB’s prior, 2020 Rule. That rule—which is regarded as more business/employer-friendly than the rule that was struck down—states that to be a joint employer, a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees.
We will update you on developments in this matter. Only time will tell if the Texas judge’s ruling will be affirmed or ultimately overturned. Should you have any specific questions, please contact us at info@mnklawyers.com.
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