The National Labor Relations Board’s (the Board) new Final Rule, establishing an expansive new test for determining when an employer is deemed a ‘joint employer,’ is facing legal challenges. A review of the Final Rule’s significant changes can be found here.

Actions brought by the Service Employees International Union and a coalition of business groups led by the U.S. Chamber of Commerce, will see the Final Rule either strengthened or struck down as arbitrary and capricious. Originally set to take effect December 26, 2023, the Final Rule’s effective date has been pushed to February 26, 2024. Given the uncertain outcome of these pending legal challenges, employers should anticipate a February compliance deadline and prepare accordingly.

Before the end of the year employers should begin reviewing third-party contracts to determine if contract terms should be modified considering the expanded definition of joint employer and the seven essential terms and conditions set out in the new Final Rule.

Employers should also keep in mind that the NLRA joint-employer rule is not the same rule applied by the U.S. Department of Labor for purposes of the Federal Labor Standards Act.