August 8, 2022

Federal Court Says Biden Administration Can Change Joint Employer Standard

On July 29, the U.S. Court of Appeals for the District of Columbia, the highest federal court in the land, ruled the National Labor Relations Board (NLRB) could write a new test to assess joint-employer status. In a regulation coming later this year, the Biden administration is expected to say that when two or more employers share responsibility for a group of employees, they are considered joint employers — meaning both entities may be required to bargain with a union representing the jointly employed workers and making both liable for each other’s unfair labor practices.

This ruling is the latest in a years-long fight about how to define joint employer status. As a reminder, in August 2015, under the Obama administration, the NLRB abandoned its long-standing test that an entity must possess and exercise direct control over the terms and conditions of an employee’s job in order to be considered a joint employer. The new Obama administration definition allowed “that two or more entities are joint employers of” an employee “if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment.”

Three years later, in December 2018, the D.C. Circuit of Appeals of Appeals remanded the case back to the NLRB for further definition.

Then, in February 2020, the Trump administration NLRB issued a final rule scaling back the rule adopted by the Obama administration. The Trump-era rule said a person or entity will be considered a joint employer only if the person or entity “possess[es] and exercise[s] such substantial direct and immediate control over one or more essential terms or conditions of their employment as would warrant finding that the entity meaningfully affects matters relating to the employment relationship with those employees.” That rule took effect in April 2020.

The Biden administration has promised to reverse that standard, and the most recent federal court ruling would allow them to do so.

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