Facing legal challenges, the National Labor Relations Board (NLRB) has pushed out the effective date of its new joint employer rule.

Originally set to take effect on December 26, the new rule establishes that an entity may be considered a joint employer of a group of employees if each entity has an employment relationship with the employees and they share or co-determine one or more of the employees’ essential terms and conditions of employment.

Essential terms and conditions of employment are defined exclusively as (1) wages, benefits and other compensation; (2) hours of work and scheduling; (3) the assignment of duties to be performed; (4) the supervision of the performance of duties; (5) work rules and directions governing the manner, means and methods of the performance of duties and the grounds for discipline; (6) the tenure of employment, including hiring and discharge; and (7) working conditions related to the safety and health of employees.

The new rule, which was announced after several years and a Notice of Proposed Rulemaking that drew more than 13,000 comments, will now take effect on February 26, 2024, the NLRB said, in order to “facilitate resolution of legal challenges with respect to the rule.”

Those challenges include a petition for review filed by the Service Employees International Union in the U.S. District Court for the D.C. Circuit, requesting that the NLRB expand the essential job terms that a company could control for it to be classified as a joint employer.

In addition, a coalition of business advocacy groups led by the U.S. Chamber of Commerce filed a facial challenge to the rule in Texas federal court. The plaintiffs allege that the new rule is overly broad and that it is arbitrary and capricious in violation of administrative law.

Not to be outdone, lawmakers and administrative agencies also entered the battle. A group of Republican legislators introduced a Congressional Review Act (CRA) resolution to overturn the final rule, and the Government Accountability Office notified the NLRB that it ran afoul of the CRA timeline mandates, which require a 60-day waiting period for the implementation of all major federal rules after they are received by Congress.

To read the NLRB’s announcement, click here.

Why it matters

The NLRB faces several hurdles to put the new joint employer rule into effect, ranging from lawmakers to business groups. Employers should keep a close eye on the proceedings and be prepared in the event the new rule does take effect on February 26.