With joint employer rule blocked, look for trouble ahead on new contractor rule

by Tammy Binford

Employers worried about the effect of a new joint employer rule are breathing a sigh of relief after a court blocked its implementation, and now employers using independent contractors may also be feeling better.

A new rule from the National Labor Relations Board (NLRB) would have made it harder for employers to avoid joint employment situations had the rule been allowed to go into effect as scheduled on March 11. But a district court in Texas invalidated the rule, restoring the Board’s 2020 rule. That rule, developed by the NLRB when it had a Republican majority, is favored by employers worried about the risks of joint employment.

Under the Board’s new rule, issued in 2023 by a Democratic-majority Board, an employer that has the ability to control—even indirectly—at least one condition of employment could be deemed a joint employer of another employer’s workers.

The 2020 rule requires an employer to have direct and exercised control to be considered a joint employer. Reverting to the 2020 rule means fewer worries for employers concerned about possibly being required to bargain with a union representing jointly employed workers, as well as being vulnerable to unfair labor practices committed by another employer.

Wider effect