Federal Judge Strikes Down NLRB 'Joint-Employer' Rule

Decision is a victory for construction contractor groups and a defeat for the NLRB and organized labor.

Graphic by ENR Art Dept.

A federal judge has invalidated a key Biden administration labor rule that broadened the definition of “joint employer” from an earlier standard issued by the Trump administration. The Biden rule also rescinded the Trump version.

The March 8 ruling by U.S. District Judge J. Campbell Barker of the Eastern District of Texas is a defeat for the National Labor Relations Board, which last October issued the standard in question, and organized labor, which supported it.

It also is a victory for construction contractor groups and other business organizations, which on Nov. 9 had filed the challenge to the Biden rule.

“We are pleased the court has blocked the NLRB’s radical and overbroad joint-employer standard, which would have disrupted long-established, efficient operational processes that are followed by construction service providers who work together to build America,” Ben Brubeck, Associated Builders and Contractors vice president of regulatory, labor and state affairs, said in a statement after Barker issued the opinion and order.

ABC and the Associated General Contractors of America are members of a business coalition that filed the challenge to the Biden NLRB standard.

In his ruling, Barker said that the rescission of the Trump-era standard was “arbitrary and capricious” and said that the 2020 version would go back into effect after he issues a final judgment in the case.

But there are indications that further developments in the case are coming.

NLRB Chairman Lauren McFerran called the ruling “a disappointing setback." But McFerran added that “it is not the last word on our efforts to return our joint-employer standard to the common-law principles that have been endorsed by other courts.

“The agency is reviewing the decision and actively considering next steps in this case,” she said.

The Biden rule, which NLRB issued last Oct. 26, provided a more expansive definition of joint employer than its predecessor, which was issued in 2020.

NLRB said the 2023 Biden standard defines an entity as a joint employer if it has an "employment relationship" with workers and it shares or co-determines at least one of a list of several "essential terms and conditions of employment," including wages, benefits or other compensation, hours of work and assignment of duties to be performed.

In a key point, under the Biden standard, an entity could qualify as a joint employer whether or not it actually exercises the authority over essential terms and conditions of employment. Possessing that authority would be enough to meet a joint-employer definition.

Under the Trump standard an employer had to both "possess and exercise substantial direct and immediate control" over one of the several employment terms and condition.

The Biden regulation was to take effect on Dec. 26, 2023, but the NLRB extended its effective date to Feb. 26.

On Feb. 23, Barker issued a stay of the Biden standard, extending it until March 11.

Tom Ichniowski has been writing about the federal government as ENR’s Washington Bureau Chief since the George H.W. Bush administration, and he has covered at least five major highway bills. A recognized expert on government policy on infrastructure and regulation, Tom is also a Baltimore native and Orioles fan who grew up rooting for Brooks and Frank Robinson. He is a graduate of Columbia College and Columbia’s graduate school of journalism, where he once used “unrelentless” in a headline.

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