The National Labor Relations Board has dropped its May appeal of a federal judge’s ruling against the agency’s newly broadened joint employer rule, but left the door open for another appeal possibly in the future.
Last fall, the NLRB broadened the scope of the original joint employer rule, which would have made franchisees and franchisors equally liable for labor terms and conditions such as union contracts, pay, scheduling, and more. The rule was particularly unpopular with the restaurant industry and was struck down by multiple branches of government. In May, both houses of Congress overturned the new joint employer rule with a joint resolution, though President Biden immediately vetoed the joint resolution, as he had previously promised.
In March, a U.S. federal judge in Texas blocked the broadened rule just days before it was set to go into effect, calling the expanded joint employer rule “arbitrary and capricious,” and that it would be “contrary to law.”
Two months later, the National Labor Relations Board appealed the judge’s decision, but has now withdrawn its appeal, stating that the agency “would like the opportunity to further consider the issues identified in the district court’s opinion in the first instance,” but still stands behind the legality of the broadened joint employer rule.
The joint employer standard has gone through multiple revisions throughout three presidential administrations. In 2015, during the Obama administration, the Browning-Ferris Industries decision set the standard for holding employers like franchisors legally liable for upholding labor standards and regulations, even if the parent company only had “reserved and indirect control” over the employees.
In 2017, that rule was overturned during the Trump administration, and in 2020, the joint employer rule was replaced by a new one that did not hold franchisors responsible for franchisees’ adherence to labor rules and regulations. The NLRB rule that was struck down is most similar to the 2015 rule, but with more parameters and points of clarification as a response to the criticism against the 2015 rule’s broadly sweeping jurisdiction.
The wording in this withdrawal of the NLRB’s original appeal leaves the door open for another appeal in the future.
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