NLRB abandons Browning-Ferris Industry joint employer standard

The National Labor Relations Board (NLRB) published a rule today officially withdrawing the Biden NLRB’s 2023 standard for determining joint employer status and reinstating the earlier standard adopted during the first Trump administration.  The action is purely ministerial and creates no practical change, but does provide certainty in this area, particularly for employers that use a franchise model of operations.

During the Biden administration, the NLRB made a push to return to the Browning-Ferris interpretation through rulemaking. That standard is based on whether an entity has the authority to control terms and conditions of employment, either directly or indirectly, even if it does not actively exercise that authority. The 2023 rule was vacated just days before it would have taken effect in March 2024.

Because the Biden-era rule was never implemented, the new rule is more formality than substance, and the current interpretation of joint employment by the NLRB will continue to rely on the 2020 rule. Under that standard, an entity may be considered a joint employer of a separate employer’s employees only if it both possesses and exercises “substantial direct and immediate control” over the employees’ essential terms of employment.

The NLRB’s joint-employer rule does not affect joint-employer tests under other laws, such as the Fair Labor Standards Act.