On July 19, 2024, the National Labor Relations Board (NLRB) voluntarily dismissed its appeal of the U.S. District Court for the Eastern District of Texas decision vacating the NLRB’s 2023 joint-employer rule. As a result, the decision of the Eastern District of Texas will be final.
The rule, which had been set to take effect on March 11, 2024, would have expanded the types of control over job terms and conditions that trigger joint employment. The NLRB stated it would like to consider the issues identified in the Eastern District of Texas’ decision and options for addressing outstanding joint employer matters. As a result of the Eastern District of Texas’ ruling and the NLRB’s decision to withdraw its appeal, the former President Donald Trump-era 2020 joint-employer rule remains in effect and calls into question the future status of the 2023 rule.
Joint-employment situations can happen when two or more employers share personnel hiring, supervision and management practices. When a joint- employment status exists, joint employers are equally responsible for compliance with applicable laws and regulations. The 2023 joint-employer standard sought new criteria for determining joint-employer status as applied to labor issues under the National Labor Relations Act. It would have rescinded the existing 2020 joint-employer standard and replaced it with a more inclusive law, making it easier for employers to be classified as joint employers.
The 2023 rule created a more inclusive standard for determining joint-employer status by removing the requirement that joint employer must “possess and exercise ... substantial direct and immediate control” over essential terms and conditions of employment. Specifically, the rule considered the alleged joint employers’ authority to control essential terms and conditions of employment, regardless of whether such control was exercised.
The 2020 standard considers the “substantial direct and immediate control” employers have over essential terms and conditions of employment for individuals who are employed by another organization. Specifically, the 2020 joint-employer standard indicates that a business is a joint employer of another employer’s employees only if the degree of joint control is of sufficient magnitude to conclude that the joint employer meaningfully affects matters relating to the employment relationship.
Considering the Eastern District of Texas’ ruling and the NLRB’s decision to withdraw its appeal, employers should ensure they rely on the 2020 joint- employer standard to determine where joint employment exists.
Employers should rely on the 2020 joint-employer rule to determine where joint employment exists. Employers should continue to monitor the NLRB’s actions related to the joint- employer standard, as the board indicated that it would consider its options for addressing outstanding joint-employer matters after v sing its appeal to the U.S. Court of Appeals for the 5th Circuit.
On July 2, 2024, the U.S. Department of Labor’s (DOL) Occupational Safety and Health Administration (OSHA) announced an unofficial version of the proposed standard to protect workers from heat injury and illness. If finalized, the new standard would apply to all employers conducting indoor and outdoor work in all general industry, construction, maritime and agricultural sectors where OSHA has jurisdiction, subject to limited exceptions.
According to the Bureau of Labor Statistics, almost 500 workers have died from heat exposure in the United States from 2011- 2022, and there were nearly 34,000 estimated work-related heat injuries and illnesses resulting in days away from work. If finalized, the proposed rule would be the first federal regulation specifically focused on protecting workers from extreme heat. The official version of the proposed rule will soon be published in the Federal Register.
The unofficial version of the proposed rule includes a number of safeguards that employers would be required to implement. For example, the proposed standard includes requirements for:
Once published, the proposed rule will undergo a 120-day comment period and subsequent review before it is finalized. If finalized, employers would be required to comply with its requirements within 150 days of publication. Therefore, even if the rule is finalized, employers would not be subject to its requirements until 2025.
Employers may take steps now to prepare to comply with the standard (such as identifying and addressing heat hazards, preparing and updating policies, and preparing training protocols for employees and supervisors). However, the proposed standard is likely to face pushback, so employers should monitor for updates and potential legal challenges.
Employers may also refer to the following resources for additional information and to learn how to provide comments:
On May 7, 2024, the Federal Trade Commission (FTC) published a final rule prohibiting employers from entering into or enforcing noncompete clauses with most employees, effective Sept. 4, 2024. Employers that use noncompete or similar protective clauses should familiarize themselves with the rule’s requirements and take steps to prepare for its effective date. However, lawsuits have been filed challenging the final rule, which may result in the noncompete ban being modified, delayed or even vacated.
On July 3, 2024, the U.S. District Court for the Northern District of Texas granted the plaintiffs’ motion in Ryan LLC v. FTC for a preliminary injunction to block the Federal Trade Commission’s (FTC) noncompete ban while the court considers the merit of the case. The injunction applies only to the plaintiffs in the case: a Texas employer, the U.S. Chamber of Commerce and other business organizations. The court intends to rule on the merits of the case by Aug. 30, 2024, before the ban’s scheduled effective date of Sept. 4, 2024.
On May 7, 2024, the FTC published a final rule prohibiting employers from entering into or enforcing noncompete clauses with most employees. The final rule is scheduled to take effect on Sept. 4, 2024. Subject to very limited exceptions, the final rule provides that:
Currently, the enforceability of noncompete clauses is determined by state and local legislatures and courts. The FTC rule would instead govern the enforceability of noncompete clauses at the federal level and supersede any less restrictive state laws or judicial interpretations.
In Ryan, the plaintiffs argue that the noncompete ban exceeds the FTC’s statutory authority, is unconstitutional, and is the product of arbitrary and capricious decision-making and, therefore, should be vacated. The plaintiffs also filed a motion for a stay of the effective date and a preliminary injunction to prevent the ban from taking effect before the court issues a final decision.
In its holding on July 3, 2024, the Northern District of Texas granted the plaintiffs’ motion for stay and a preliminary injunction only for plaintiffs (rather than nationwide). Therefore, plaintiffs will not be required to comply with the FTC noncompete ban until a court issues a decision in the case. However, the court indicated that it intends to issue a ruling on the merits by Aug. 30, 2024 (before the ban’s effective date).
Per the court’s decision, the effective date of the noncompete ban is stayed only for the plaintiffs; it does not apply nationwide. Therefore, other employers may still take steps to ensure compliance with the law on the effective date of Sept. 4, 2024.
However, the court indicated its plan to issue a ruling by Aug. 30, 2024. In addition, the U.S. District Court for the Eastern District of Pennsylvania scheduled a hearing in a separate case seeking a preliminary injunction of the noncompete ban on July 10, 2024, and is expected to issue a ruling by July 23, 2024. Therefore, employers should continue to monitor for updates and wait to implement any final changes, as the final ruling in this case or other legal challenges could still result in the ban being modified, delayed or even vacated.
On July 23, 2024, the U.S. District Court for the Eastern District of Pennsylvania denied the plaintiff’s motion in ATS Tree Services LLC v. FTC for a preliminary injunction to block the Federal Trade Commission’s (FTC) noncompete ban. This ruling differs from an early July holding in a similar case in the Northern District of Texas (Ryan LLC v. FTC) that partially blocked the ban with respect to the plaintiffs in that case, but not nationwide. In each case, the ban is still scheduled to take effect for most employers on Sept. 4, 2024.
In ATS, the plaintiff (a small tree-trimming company) filed a motion for a stay of the effective date and a preliminary injunction to prevent the ban from taking effect. The plaintiff argued that the noncompete ban exceeds the FTC’s statutory authority, is unconstitutional, and is arbitrary and capricious.
The Pennsylvania court denied the plaintiff’s motion and rejected its arguments, reasoning that the ban is within the FTC’s rulemaking authority. This holding directly conflicts with the Texas court’s holding in Ryan, which found that the FTC lacks such rulemaking authority.
Per the Pennsylvania court’s ruling, the ban is still set to take effect on Sept. 4, 2024, so employers may take steps now to ensure compliance with the law by this date. However, the Northern District of Texas indicated its plan to issue a final ruling in Ryan by Aug. 30, 2024. Therefore, employers should continue to monitor for updates and wait to implement any final changes, as the final ruling in the Ryan case or other legal challenges could still result in the ban being modified, delayed or even vacated. Employers should also prepare for potential uncertainty in light of conflicting rulings.
On June 28, 2024, the U.S. Supreme Court issued a decision in Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce. The Court overruled its 1984 decision in Chevron, U.S.A. Inc. v. Natural Resources Defense
Council Inc., which held that courts should defer to federal agencies to interpret ambiguities and gaps in the laws that the agencies implement (known as Chevron deference).
Congress has the authority to pass laws that govern employers, and federal agencies have the authority to enforce those laws. To fill in any gaps or to remedy any ambiguities, federal agencies may issue more detailed guidance on how the laws should be interpreted and applied. For example, agencies may publish informal guidance, issue opinions or publish formal regulations. Under the doctrine of Chevron deference, courts are directed to defer to such agency guidance where the statute is ambiguous and the agency’s interpretation is reasonable.
In Loper and Relentless, the plaintiffs argued that Chevron should be overruled. The plaintiffs contended that courts should have the authority to interpret ambiguous laws and should have no obligation to adhere to federal agency guidance.
The Supreme Court overruled Chevron deference in a 6-3 decision. In its opinion, the Supreme Court held that the Administrative Procedure Act requires courts to exercise their independent judgment in interpreting the law, and consequently, “courts may not defer to an agency interpretation of the law simply because the statute is ambiguous.” However, the Supreme Court noted that the holdings of prior cases that relied on Chevron deference remain lawful and may not be overturned solely because they relied on Chevron.
Chevron deference has had a meaningful influence on the interpretation and enforcement of employment laws. Federal employment agencies, including the U.S. Equal Employment Opportunity Commission, the Occupational Health and Safety Administration, the U.S. Department of Labor (DOL) and the National Labor Relations Board, have relied on Chevron deference in issuing and defending agency interpretations.
In light of the Supreme Court’s ruling, federal agencies will not be able to rely on Chevron deference in existing litigation, including lawsuits that have been filed to challenge the DOL’s independent contractor and overtime rules, and may be subject to additional legal challenges regarding existing rules. Federal agencies may also issue fewer regulations and take more moderate positions in regulations they issue, and they may face greater difficulty in addressing any issues.
Nothing to report for now...
8/1 – VETS-4212 Filing Open (federal contractors)
9/30 – Summary Annual Report (SAR) Deadline for Calendar Year Plans
10/1 – QSEHRA Notice Deadline (Calendar Year Plans Only)
10/15 – Medicare Part D Creditable/Non-creditable Coverage Notice
10/31 – Form 941 Filing Deadline(Q3)
Lighthouse HR Support (LHRS) provides practical human resource information and guidance based upon our knowledge and experience in the industry and with our clients. LHRS services are not intended to be a substitute for legal advice. LHRS services are designed to provide general information to human resources and/or business professionals regarding human resource concerns commonly encountered. Given the changing nature of federal, state and local legislation and the changing nature of court decisions, LHRS cannot and will not guarantee that the information is completely current or accurate. LHRS services do not include or constitute legal, business, international, regulatory, insurance, tax or financial advice. Use of our services, whether by phone, email or in person shall indicate your acceptance of this knowledge.
