An article by Alan L. Poliner, Esq.
On July 19, 2024, the National Labor Relation Board (NLRB) voluntarily dismissed its appeal of a case vacating a final rule issued by the NLRB on October 27, 2023, entitled Standard for Determining Joint Employer Status. See 29 C.F.R. §103.40. This Rule expanded who can be considered a joint employer.
Critics were concerned the expansion was overbroad. It would have treated companies as “joint employers” of contract and franchise workers when they have control over key working conditions such as pay, scheduling, discipline, and supervision, even if that control is indirect or not exercised.
The Chamber of Commerce of the United Stated of America, and others, challenged the expanded Rule in a lawsuit. Chamber of Commerce of the United States of America et al., v. NLRB, et al. U.S. Dist. Ct., E.D.Tx., No. 6:23-cv-0553. In a March 8, 2024, opinion and order, the Court vacated the Rule, finding subsection (e) arbitrary and capricious. The Court found that the NLRB had not independently justified within its severability analysis its decision to repeal the prior, extant joint employer rule.
The NLRB filed an appeal to the 5th Circuit Court of Appeals on May 7, 2024. However, on July 19, 2024, the NLRB filed an Unopposed Motion For Voluntary Dismissal of the appeal. In the motion, the NLRB maintained its opinion that its 2023 Rule meets the procedural and substantive requirements of the Administrative Procedure Act and the National Labor Relations Act. Further, in the motion, the NLRB stated that would like the opportunity to further consider the issues identified in the district court’s opinion in the first instance.
The law firm of Davison Eastman Munoz Paone, P.A. is monitoring the situation to assist clients and stakeholders in the franchise arena.
