Last fall, we updated you on changes the National Labor Relations Board (NLRB) planned for its “joint employer” rule. On March 8, 2024, a Texas judge put the NLRB’s plan on ice. It will not become effective as planned on March 11, 2024, but the NLRB will likely appeal the decision, so the dispute remains alive.

The Proposed Rule

The NLRB’s proposed rule, detailed in a recent Gray Reed Legal Alert, significantly increased the potential liability of businesses by broadening the definition of a joint employer to include those that possess the right to control (whether or not such control is exercised) or indirectly controls (such as through a third-party entity like a staffing or temporary agency) an essential term and condition of employment. The proposed rule also expanded the definition of the terms and conditions of employment by providing a list of categories that qualify as “essential” in the context of determining joint-employer status.

The Rule in Place Now (and Until Something Changes Again)

In stark contrast to the proposed rule, the current rule provides that an employer is only considered a joint employer if it possesses and actually exercises substantial direct and immediate control over another company’s employees’ essential terms and conditions of employment. Even where a company exercises direct control over another employer’s workers, it will not be deemed a joint employer if such control is “limited and routine.” Essential terms and conditions of employment include wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction.

Where are we now?

For now, the joint employer rule has returned to the employer-friendly standard requiring immediate and direct control over one or more of the worker’s essential terms and conditions of employment for an entity to be considered their employer. With an appeal likely on the horizon and legal challenges over the proposed rule brewing in other areas of the country, Gray Reed's Labor and Employment team will continue to monitor the situation. Employers should consult with counsel if there are any questions regarding joint employer status.