Long-term care industry advocates are celebrating after a federal judge on Friday vacated the National Labor Relations Board’s joint employer rule, which had been set to go into effect Monday. Attorneys, however, note that the NLRB could appeal the court’s decision, and a union’s lawsuit could result in a contrary order from another federal court.
The rule would have changed the standard used to determine joint-employer status as well as rescinded a 2020 version of the rule, promulgated under the previous board, that some viewed as being more favorable to employers.
Clif Porter, senior vice president of government affairs at the American Health Care Association/National Center for Assisted Living, told the McKnight’s Business Daily that the groups “applauded” the court decision.
“Last month, AHCA/NCAL urged legislators to support a Congressional Review Act resolution to nullify the rule,” he said Monday. “It is no secret that long-term and post-acute care providers are facing a historic workforce shortage and other challenges coming out of the pandemic, and we need smart, thoughtful policies that support our long-term care providers and those that they serve — not rules that threaten progress.”
The NLRB issued the final rule in October after proposing a rule in September 2022.
In addition to AHCA/NCAL, other advocacy groups for senior living and care providers had opposed the new final rule from the start, saying it was “much broader and more vague” than the previous rule and would present greater risk for employers that contract with services providers, “creating greater liability for the actions of others.” Operators that are part of franchises, and others, also could have been affected.
“In particular, the 2023 rule considers the alleged joint employers’ authority to control essential terms and conditions of employment, whether or not such control is exercised, and without regard to whether any such exercise of control is direct or indirect,” the NLRB said in a fact sheet issued in 2023. “By contrast, the 2020 rule made it easier for actual joint employers to avoid a finding of joint-employer status because it set a higher threshold of ‘substantial direct and immediate control’ over essential terms of conditions of employment, which has no foundation in common law.”
Jeanne McGlynn Delgado, vice president of government affairs at the American Seniors Housing Association, said that the joint employer rule “could potentially interpret every third-party contract as establishing a joint employment situation, thus subjecting operators to additional liability as well as obligating them to participate in collective bargaining with the other employer’s unionized employees.”
Jon Lips, vice president of legal affairs at LeadingAge, told the McKnight’s Business Daily that “aging services organizations will benefit from the greater clarity that the 2020 joint employer rule provides.”
“In our 2022 comment letter, we noted that if actual control, reserved control, direct control and indirect control of one or more essential terms and conditions of employment were all sufficient to establish status as a joint employer, it would be very difficult for businesses that contract for services to define a middle ground between arrangements that trigger joint employer status and those that do not, which we felt would create unreasonable risks under the Fair Labor Standards Act,” Lips continued.
A spokesperson for Argentum said, that during the rulemaking process, the organization had “called on NLRB to rescind the proposed rule or leave the 2020 standard in place because of our view that the rule was arbitrary and capricious, ignored federal law, congressional intent, and court precedent, and would undermine collective bargaining. We applaud Judge Barker’s decision to vacate a rule that would have had a particularly negative impact on senior living communities.”
The NLRB is expected to appeal the court’s decision, but for now, according to Lips, providers know where they stand under the previous rule.
Anticipated further legal action
The NLRB has about a month to file an appeal of the court’s decision, according to attorneys at Fisher Phillips. The appeals case would be heard by the 5th Circuit Court of Appeals.
“Given the high-stakes nature of this issue, it is also possible that the entire panel of 5th Circuit judges (an en banc sitting) could decide the case — which could happen as the next step in the process or after a three-judge panel takes the first shot and issues a decision,” the attorneys said.
At the same time, they noted that the SEIU has filed a lawsuit in the Washington, DC, federal court district, asserting that the new joint employer rule didn’t go far enough.
“So we may soon see a contrary order from a federal court clearing the rule for takeoff. Which could lead to the case being consolidated and handed to a separate appeals court via a lottery selection system, and of course the issue could eventually wind its way all the way up to the US Supreme Court,” according to Fisher Phillips.
See previous coverage of the joint employer rule here.
