NLRB Rescinds Biden-Era Rule That Expanded Joint Employer Definition

The National Labor Relations Board (NLRB) has withdrawn its previous rule that expanded the definition of a joint employer, returning to its 2020 direct control standard.

The decision ends more than two years of uncertainty over the joint employer definition. In October 2023, the NLRB, then under the Biden administration, published a final rule that revised the joint employer rule to cover any entity that had the right to exercise control, including indirect control, over an employee. The change was widely opposed by businesses because it significantly increased liability and responsibility for thousands of employers, including requiring them to participate in collective bargaining for employees they may not directly control.

In 2024, a federal district judge vacated the rule and reinstated the 2020 version, which defined a joint employer as only those companies that share or co-determine employees’ essential terms and conditions of employment. By withdrawing the 2023 rule, the NLRB has fully aligned its policies with the district court order.

Congress has also been considering legislation to cement the definition of a joint employer as only those businesses with direct control over an employee. In January, the House was set to vote on the Save Local Business Act, H.R. 4366, however, the bill was tabled over concerns it would not garner enough votes to pass.