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Effective Date of Joint Employer Rule Pushed Back

A man using a laptop with the word franchise on it.

​The National Labor Relations Board (NLRB) announced it will extend the effective date of its joint employer rule to Feb. 26, 2024, to facilitate resolution of legal challenges to the rule.

The NLRB released the final rule on Oct. 26 with an implementation date of Dec. 26. The rule was published in the Federal Register on Oct. 27.

U.S. Sen. Bill Cassidy, R-La., sent a letter informing the NLRB that it was out of compliance with the Congressional Review Act's 60-day threshold rule, which mandates that the implementation of all major federal rules must be delayed 60 days from when they are received by Congress.

On Nov. 9, the Government Accountability Office (GAO) determined that the NLRB's effective date was in violation of the Congressional Review Act because the U.S. Senate received the rule on Oct. 30.

Recently, Cassidy joined U.S. Sens. Joe Manchin, D-W.Va., and Mitch McConnell, R-Ky., along with U.S. Reps. Virginia Foxx, R-N.C., John James, R-Mich., and Speaker of the House Mike Johnson, R-La., in introducing a Congressional Review Act resolution of disapproval to overturn the NLRB's joint employer rule.

We've collected a group of articles on the news from SHRM Online and other trusted sources.

Lawsuit Underway

On Nov. 9, a collection of business groups sued the NLRB in federal district court, alleging the joint employer rule is unlawful. The coalition includes the International Franchise Association, the National Retail Federation and the U.S. Chamber of Commerce.

The business groups say the new rule upends years of precedent and could make companies liable for workers they don't employ at workplaces they don't own. But the NLRB says the current rule makes it too easy for companies to avoid their legal responsibility to bargain with workers.

(SHRM Online and The Detroit News)

Change from Old Rule

Under the new rule, each company found to be a joint employer by the NLRB may be held liable for the unfair labor practices of its co-employers. A joint employer determination would require a business to bargain with a union if the co-employer is unionized.

The new rule will replace an older rule that took effect on April 27, 2020. Under the old joint employer rule, a company was a joint employer if it exercised direct control over the terms and conditions of employment, such as hiring, pay and scheduling. Under the new rule, a company could be found to be a joint employer on the basis that it exercises indirect control over those essential terms and conditions, or it has reserved the right to control those terms and conditions, even if it hasn't exercised that control.

(SHRM Online)

Review Agreements with Partners

The joint employer rule poses risks to the franchise business model and to small businesses, which would disproportionately feel the impacts of additional collective bargaining requirements.

Employers should evaluate their agreements with subcontractors, staffing agencies and other entities to determine whether those agreements risk a joint employer determination and could be interpreted as reserving the right to potentially control any essential term or condition of another entity's employees.

(Sheppard Mullin)


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