After labor law experienced a frozen 2025, the NLRB and DOL are forging ahead with rolling back Biden-era regulations. Developments are coming quickly, too, including significant shifts in defining two key groups: joint employers under the NLRA and independent contractors under the Fair Labor Standards Act. Employers haven’t seen such consequential shifts in workforce classification in years, so let’s size up these changes.
The NLRB Reinstated the 2020 Joint Employer Standard, But It’s Complicated
The Board officially brought back its 2020 joint employer rule, through which businesses must exercise “substantial direct and immediate” control over core workplace conditions, shared with another business, before they can be classified as a joint employer. This is a higher threshold to meet than the Biden standard that required only that a business potentially be able to influence these conditions, which increased liability for employers, even if they didn’t control wages, scheduling, benefits, etc.
However, there’s a catch. Mere days before the Board’s restoration of that 2020 rule, the D.C. Circuit Court of Appeals ordered the Board to reaffirm Browning-Ferris in regard to one employer. That case had expanded the joint employment definition and was embraced by the Obama-era Board.
This court order demonstrates that an NLRB standard isn’t the last word on liability for potential joint employment. Yet the timing of the NLRB’s movement on the topic shows that the Trump 2.0 Board is not hesitating to roll back Biden-era standards through rulemaking, rather than wait for a third GOP member to join to overturn precedent through decisions.
The DOL Proposed to Rescind the 2024 Independent Contractor Rule
Additionally, the Department of Labor’s Wage and Hour Division unveiled a proposed rule that would roll back the Biden-era 2024 worker classification standard and use a framework similar to the previous Trump-era standard.
The proposed rule, which is subject to a 60-day comment period, relies upon an “economic reality” inquiry to distinguish between independent contractors and employees. In doing so, the rule evaluates whether an individual has control over their work and/or is running an entrepreneurial enterprise. Other factors include permanence of the working relationship and how important the person’s work is to the company’s core operations.
What Should Employers Do Now?
The NLRB and DOL are both signaling that they’re pushing full steam ahead with business-friendly rulemaking that reduces the circumstances under which businesses are held accountable for workers outside their direct payroll. In response, employers should stress-test their staffing and franchise structures against the restored joint employer threshold. They should also examine contractor relationships against the proposed economic reality inquiry and consider submitting a comment to the DOL.
However, that’s not the end of this story. The Browning-Ferris saga is a reminder that federal rules and regulations aren’t always the final say in any area, including labor law. Courts have input on defining classification standards, and the same goes for state law, especially when it comes to New York and California, which both favor more labor-friendly standards.
Employers who treat the NLRB and DOL’s regulatory shifts as settled law will do so at their own risk. Although the Trump administration is making favorable moves toward employers, these should still be viewed as opening moves in the shifting legal landscape of labor law.
