The National Labor Relations Board on Friday withdrew its appeal of a district court ruling that enjoined its “joint employer” final rule.

The board, in its filing in the 5th US Circuit Court of Appeals in the Chamber of Commerce v. NLRB case, said that it “remains of the opinion that its 2023 Rule meets the procedural and substantive requirements of the Administrative Procedure Act and the National Labor Relations Act” but wanted to “further consider the issues identified in the district court’s opinion” and “consider options for addressing the outstanding joint employer matters before it.”

The NLRB issued its final rule in October. After some other deadlines, it ultimately was set to go into effect March 11. The rule would have replaced one put in place in 2020.

Under the newer rule, an entity would have been 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,” the NLRB said in October when it issued the final rule.

Those terms and conditions, according to the board, included:

  • wages, benefits and other compensation;
  • hours of work and scheduling;
  • the assignment of duties to be performed;
  • the supervision of the performance of duties;
  • work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline;
  • the tenure of employment, including hiring and discharge; and
  • working conditions related to the safety and health of employees.

“In particular, the 2023 rule considers the alleged joint employers’ authority to control essential terms and conditions of employment, whether or not such control is exercised, and without regard to whether any such exercise of control is direct or indirect,” the NLRB said in a fact sheet. “By contrast, the 2020 rule made it easier for actual joint employers to avoid a finding of joint-employer status because it set a higher threshold of ‘substantial direct and immediate control’ over essential terms of conditions of employment, which has no foundation in common law.”

March 8, however, US District Judge J. Campbell Barker of the Eastern District of Texas vacated the rule, saying that it “would be contrary to law” and that the rescission of the 2020 standard would be “arbitrary and capricious.”

The US Senate and House of Representatives passed a resolution to repeal the rule, but President Biden on May 3 announced his veto of that resolution. Biden said that “[w]ithout the NLRB’s rule, companies could more easily avoid liability simply by manipulating their corporate structure, like hiding behind subcontractors or staffing agencies.” A few days later, the NLRB appealed the district court ruling.

The resolution had been supported by American Seniors Housing Association, the American Health Care Association/National Center for Assisted Living, the American Seniors Housing Association and Argentum, among other groups, including the US Chamber of Commerce, a plaintiff in the lawsuit against the NLRB over the rule.

Long-term care providers that use temporary or contract workers, as well as operators that are part of franchises, and others, could have been affected by the rule. Senior living and care industry representatives previously told McKnight’s Senior Living that the new rule was “much broader and more vague” than the previous rule and would have presented greater risk for employers that contract with services providers, “creating greater liability for the actions of others.”

Friday, US Chamber of Commerce Litigation Center Executive Vice President and Chief Counsel Daryl Joseffer said that the move by the NLRB to dismiss its challenge to the district court’s ruling was “a major legal victory and an important acknowledgment by the NLRB. The agency’s joint employer rule overstepped its constitutional and statutory authority with this unlawful rule.”

Joseffer noted that the NLRB’s action “means our lawsuit is over.” But he said that the Chamber “will remain vigilant in watching whether the NLRB continues to overstep its authority at the expense of American workers and businesses, and we will be ready to take appropriate action if needed.”

The Competitive Enterprise Institute said in a blog post that the NLRB’s decision “was a win for the business community, which faced a potentially vast expansion of corporate legal liability had the board’s appeal succeeded.” It noted, however, that the NLRB could file another appeal in the future.