NLRB Delays Joint Employer Rule Effective Date to February
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On Nov. 16, 2023, the National Labor Relations Board (NLRB) announced it would push the effective date of the new joint-employer rule to Feb. 26, 2024. The final rule was published in the Federal Register on Oct. 27, 2023, and was initially set to become effective on Dec. 26, 2023. However, the agency has delayed the effective date by two months to facilitate the resolution of legal challenges regarding the new rule. Notice of the extension will be published in the Federal Register.
The New Joint-employer Standard
The 2023 joint-employer standard establishes new criteria for determining joint-employer status as applied to labor issues related to the National Labor Relations Act. It will rescind the existing 2020 joint-employer standard and replace it with a more inclusive law, making it easier for employers to be classified as joint employers. Notable changes to the joint-employer standard include the following:
- Clarification of the definition of “essential terms and conditions of employment”
- Identification of the types of control that are necessary to establish joint-employer status and the types that are irrelevant to the joint-employer inquiry
- Description of the bargaining obligations of joint employers
Legal Challenges
On Nov. 9, 2023, a coalition of businesses sued the NLRB in federal district court, alleging the new joint-employer rule is unlawful, overly broad and contradictory to the common-law definition that limits joint employment to relationships of actual and substantial control of working conditions. The lawsuit further alleges that the NLRB is acting arbitrarily and capriciously in violation of the Administrative Procedure Act. The group of businesses suing the NLRB includes the U.S. Chamber of Commerce, the National Retail Federation, the International Franchise Association, the American Hotel and Lodging Association, Associated Builders and Contractors, Associated General Contractors of America, and the National Association of Convenience Stores. Additionally, Senators Bill Cassidy and Joe Manchin announced they would introduce a Congressional Review Act resolution to overturn the rule.
Conclusion
The new joint-employer standard will only be applied to cases filed after the rule becomes effective on Feb. 26, 2024. Employers can prepare for the new rule by familiarizing themselves with the new standard and determining whether a more inclusive joint-employer standard will reclassify them as joint employers by the amended effective date.
We’ll keep you apprised of any notable updates.
- Published in Blog
U.S. Adds Over 500,000 Jobs in January
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The U.S. Bureau of Labor Statistics (BLS) found in its January jobs report that the United States added an astonishing 517,000 nonfarm jobs in January, indicating that the labor market is not cooling down. January’s added jobs were above December’s gain of 260,000 and the Dow Jones estimate of 187,000 jobs to be added this month. They were also higher than 2022’s average monthly gain of 401,000—a year that had strong job growth—and the largest increase since July 2022. The largest gains were in leisure and hospitality, professional and business services, and health care.
The unemployment rate fell from 3.5% in December to 3.4% in January. This is the lowest rate since May 1969. Experts expected the unemployment rate to increase to 3.6% in January. The labor force participation rate edged up from 62.3% in December to 62.4% in January, the highest rate since March 2022. However, the current labor force participation rate is still well below pre-pandemic levels of 63.4%. A larger labor supply helps ease a tight labor market and puts downward pressure on wages since there’s less competition among employers for candidates.
Despite January’s stronger-than-expected jobs report, wage growth came in as expected at 0.3%. January’s report also revealed that wage growth moderated on an annual basis. Wage growth has now slowed to 4.4% after reaching its peak of 5.9% in March 2022.
In January, individuals worked, on average, 34.7 hours a week, up from 34.4 in December. This is the most since March 2022, signaling that the demand for workers will likely persist for the foreseeable future.
Employer Takeaways
January’s surprising jobs report comes as the Federal Reserve (Fed) continues to increase interest rates in an attempt to fight inflation, cool the labor market and ease pressure on wages. The Fed has raised its benchmark interest rate eight times since March 2022. This month’s report indicates that the job market is currently stronger and more resilient than expected; however, economists think that January’s job gains may be influenced by seasonal factors and the early year job and wage environment.
January’s numbers cast doubt on concerns that the U.S. economy is in a recession or approaching one. While this month’s jobs report indicates that the labor market is stronger than previously believed, wage growth is slowing, potentially easing pressure on employers to increase wages to attract talent. However, since the labor market is still not cooling down, employers’ struggles to attract and retain workers will likely continue for the foreseeable future. As such, employers should continue to monitor employment trends to stay competitive in today’s evolving market.
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- Published in Blog