NLRB Publishes Final Joint Employer Rule: What Does This Mean for the Staffing Industry?

TechServe Alliance is providing this update to keep you informed about changes to labor and employment regulations that have received a lot of attention in the press; the new Joint Employer Rule is expected to have minimal, if any, impact on our industry. We expect litigation and possibly Congressional action to block the Rule. We will continue to keep you posted, and please contact us if you have any questions.

The National Labor Relations Board (NLRB), on October 27, 2023, published the Final Rule on the Joint Employer Status. As expected, the new rule, effective in 60 days on December 26, 2023, restores the Obama Administration framework established in the NLRB’s 2015 Browning Ferris Industries decision. TechServe’s HR Compliance Bulletin provides more information.

TechServe Alliance, HR Compliance Bulletin

TechServe members as IT/engineering staffing firms should consult with their own legal counsel to determine if or how the Rule itself impacts them—the general staffing industry model contemplates shared control of essential terms and conditions of employment. The new Rule, however, adds two changes that could impact a particular staffing firm’s client arrangement: (1) joint-employer status is established when the right to control exists, regardless of whether that right is exercised, and (2) indirect control is sufficient to establish joint-employer status.

While staffing industry representatives are not overly concerned about the new Rule, major law firms alerted their business clients that their relationships with staffing firms and outsourcing companies could now present significant legal risk. Hunton Andrews Kurth warns, “As a result [of the new Rule], businesses that rely on staffing companies and outsourcing arrangements should examine their contracts and relationships with service providers to ensure they understand their joint employer risks and consider changes that may reduce those risks under the new joint employer rule.” TechServe member end-client firms may want to revisit contract terms following this advice.

While the Rule is scheduled to go into effect on December 26, 2023, we will continue to monitor the status. The International Franchise Association, with the support of many in the business community, has already launched a campaign to overturn the Rule. IFA asked Congress to set aside the Rule under the Congressional Review Act, and they are expected to file a lawsuit.

American Staffing Agency, “Statement on NLRB Final Rule on Joint Employer Status,” October 27, 2023

HR Drive, “Who’s most affected by NLRB’s joint employer final rule?” October 30, 2023

Hunton Andrews Kurth, “NLRB’s Expanded Joint-Employer Rule Could Impact Third-Party Staffing and Outsourcing,” October 30, 2023

Franchise Wire, “IFA Urges Congress to Undo Revised Joint Employer Rule,” October 27, 2023