Federal Judge Rescinds 2023 Joint Employer Rule

The United States District Court in the Eastern District of Texas handed down a summary judgement decision, vacating the National Labor Relations Board’s 2023 Joint Employer Rule. The decision also denied the defendants’ motion to transfer the case to the D.C. Circuit Court. 

The decision means the Joint Employer Standards reverts to the NLRB’s 2020 Final Rule, which codified a long-established “direct and immediate” joint employer standard and provided clear and stable guidance for foodservice employers and employees.  

The decision means the Joint Employer Standards reverts to the NLRB’s 2020 Final Rule, which codified a long-established “direct and immediate” joint employer standard and provided clear and stable guidance for foodservice employers and employees.  

The franchise industry, along with many members of Congress, pushed back on the Joint Employer Rule. The Restaurant Law Center and the Texas Restaurant Association joined a coalition of business groups, led by the U.S. Chamber of Commerce, to sue the National Labor Relations Board (NLRB) over its new Joint Employer Standard. The lawsuit seeks to have the standard rescinded because the NLRB violated the National Labor Relations Act and acted arbitrarily and capriciously in issuing the new rule.  The National Restaurant Association and the Restaurant Law Center (RLC) strongly opposed the definition of Joint Employer outlined in this final rule and submitted extensive comments opposing proposed changes included in the final rule.

“This decision is a decisive win for franchise operators, the restaurant industry, and the Restaurant Law Center,” said Angelo I. Amador, executive director of the Restaurant Law Center. “By rescinding the 2023 Rule and reinstating the 2020 Rule, the court provides the clarity and certainty on how to determine joint employer status that thousands of small business restaurant owners and their employees need. It also restores the independence of entrepreneurship to thousands of franchisees across the country.”

A separate challenge to the 2023 Joint Employer Rule remains in the D.C. Circuit Court and the Senate continues to consider a Congressional Review Act resolution to overturn the 2023 Standard.