1 

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

CHAMBER OF COMMERCE OF THE 

UNITED STATES OF AMERICA; 

AMERICAN HOTEL AND LODGING 

ASSOCIATION; ASSOCIATED BUILDERS 

AND CONTRACTORS; ASSOCIATED 

GENERAL CONTRACTORS OF AMERICA; 

COALITION FOR DEMOCRATIC 

WORKPLACE; INTERNATIONAL 

FRANCHISE ASSOCIATION; LONGVIEW 

CHAMBER OF COMMERCE; NATIONAL 

ASSOCIATION OF CONVENIENCE 

STORES; NATIONAL RETAIL 

FEDERATION; RESTAURANT LAW 

CENTER; TEXAS ASSOCIATION OF 

BUSINESS; and TEXAS RESTAURANT 

ASSOCIATION,

Plaintiffs,

v.

NATIONAL LABOR RELATIONS BOARD; 

LAUREN MCFERRAN, Chair; MARVIN 

KAPLAN, Board Member; GWYNNE 

WILCOX, Board Member; and DAVID 

PROUTY, Board Member,

Defendants.

Civil Action No. 6:23-cv-553

PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT AND 

MEMORANDUM OF LAW IN SUPPORT 
2 

TABLE OF CONTENTS

INTRODUCTION ...........................................................................................................................9

STATEMENT OF UNDISPUTED MATERIAL FACTS ............................................................10

I. LEGAL FRAMEWORK .............................................................................................10

II. THE NEW JOINT EMPLOYER RULE ......................................................................13

STATEMENT OF THE ISSUE .....................................................................................................16

LEGAL STANDARDS .................................................................................................................16

ARGUMENT .................................................................................................................................17

I. THE JOINT EMPLOYER RULE IS INCONSISTENT WITH THE NLRA’S 

COMMON-LAW BASED TERMS ............................................................................17

A. The New Rule Conflicts With The NLRA Because It Defines 

“Employers” To Include Entities Without Direct, Immediate, or 

Substantial Control Over The Essential Terms And Conditions Of 

Employment .....................................................................................................17

1. Common-Law Employment Requires Direct and Immediate 

Control, Not Indirect or Reserved Control Alone ................................18

2. The New Rule Permits Employer Status Without Direct and 

Immediate Control ...............................................................................21

3. The New Rule Permits Employer Status Based on De Minimis, 

Sporadic, or Isolated Control ..............................................................24

B. The New Rule Swallows The Common-Law Distinction Between 

Employees And Independent Contractors. ......................................................28

II. THE NEW RULE INDEPENDENTLY VIOLATES THE NLRA BY 

DEFINING EMPLOYERS TO INCLUDE THOSE WHO CANNOT 

ENGAGE IN MEANINGFUL COLLECTIVE BARGAINING ................................31

III. THE NEW RULE IS ARBITRARY AND CAPRICIOUS BECAUSE THE 

BOARD IGNORED ITS DISRUPTIVE IMPACTS AND UNCERTAINTY 

FOR PUTATIVE JOINT EMPLOYERS ....................................................................34

CONCLUSION ..............................................................................................................................38

ADDENDUM

29 C.F.R. § 103.40 (2023) ............................................................................................... Add. 1

29 C.F.R. § 103.40 (2020) ............................................................................................... Add. 3
3 

TABLE OF AUTHORITIES 

CASES: 

ACA Int’l v. FCC, 

885 F.3d 687 (D.C. Cir. 2018) .................................................................................................38 

Adams & Assocs., Inc. v. NLRB, 

871 F.3d 358 (5th Cir. 2017) ...................................................................................................21 

Airborne Freight Co., 

338 NLRB 597 (2002) .............................................................................................................21 

Allied Chem. & Alkali Workers of Am., Local Union No. 1 v. Pittsburgh Plate 

Glass Co., 

404 U.S. 157 (1971) ...........................................................................................................19, 32 

Allied-Signal, Inc. v. U.S. Nuclear Regul. Comm’n, 

988 F.2d 146 (D.C. Cir. 1993) .................................................................................................38 

AM Prop. Holding Corp., 

350 NLRB 998 (2007) .......................................................................................................20, 21 

Arizona v. Evans, 

514 U.S. 1 (1995) .....................................................................................................................23 

Auciello Iron Works, Inc. v. NLRB, 

517 U.S. 781 (1996) ...........................................................................................................10, 32 

Bettis v. Islamic Rep. of Iran, 

315 F.3d 325 (D.C. Cir. 2003) .................................................................................................22 

Browning-Ferris Indus., 

362 NLRB 1599 (2015) ...............................................................................................11, 14, 32 

Browning-Ferris Indus. of Cal., Inc. v. NLRB, 

911 F.3d 1195 (D.C. Cir. 2018) ....................................................................................... passim

Butler v. Drive Auto Indus. Of Am., Inc., 

793 F.3d 404 (4th Cir. 2015) ...................................................................................................19 

Capehardt v. Murta, 

145 S.W. 827 (Mo. Ct. App. 1912) ..........................................................................................18 

Carey Salt Co. v. NLRB, 

736 F.3d 405 (5th Cir. 2013) ...................................................................................................35 

Clackamas Gastroenterology Assocs., P.C. v. Wells, 

538 U.S. 440 (2003) .................................................................................................................24 
4 

CNN Am., Inc., 

361 NLRB 439 (2014) .............................................................................................................11 

Community For Creative Non-Violence v. Reid, 

490 U.S. 730 (1989) ...........................................................................................................11, 29 

Conover v. Board of Equalization, 

112 P.2d 341 (Cal. Dist. Ct. App. 1941) ..................................................................................28 

Constitution Pub. Co. v. Dale, 

164 F.2d 210 (5th Cir. 1947) ...................................................................................................25 

Data Mktg. P’ship, LP v. U.S. Dep’t of Lab., 

45 F.4th 846 (5th Cir. 2022) ....................................................................................................16 

DHS v. Regents of the Univ. of Cal., 

140 S. Ct. 1891 (2020) .............................................................................................................38 

Dimmitt-Rickhoff-Bayer Real Estate Co. v. Finnegan, 

179 F.2d 882 (8th Cir. 1950) ...................................................................................................20 

Doe I v. Wal-Mart Stores, Inc., 

572 F.3d 677 (9th Cir. 2009) ...................................................................................................19 

Dunkin’ Donuts Mid-Atl. Dist. Ctr., Inc. v. NLRB, 

363 F.3d 437 (D.C. Cir. 2004) .................................................................................................25 

E.I. Dupont de Nemours & Co., 

304 NLRB 792 (1991) .............................................................................................................34 

E.I. Du Pont de Nemours & Co. v. NLRB, 

489 F.3d 1310 (D.C. Cir. 2007) ...............................................................................................34 

FCC v. Prometheus Radio Project, 

141 S. Ct. 1150 (2021) .......................................................................................................34, 38 

Field v. Mans, 

516 U.S. 59 (1995) ...................................................................................................................27 

First Nat’l Maint. Corp. v. NLRB, 

452 U.S. 666 (1981) .................................................................................................................32 

Franklin Simon & Co., 

94 NLRB 576 (1951) ...............................................................................................................11 

G Wes Ltd. Co., 

309 NLRB 225 (1992) .............................................................................................................25 
5 

Glenn v. Standard Oil Co., 

148 F.2d 51 (6th Cir. 1945) .....................................................................................................20 

Goodman v. Wilson, 

166 S.W. 752 (Tenn. 1914) ......................................................................................................18 

Gulino v. New York State Educ. Dep’t, 

460 F.3d 361 (2d Cir. 2006).....................................................................................................19 

Herbert Harvey, Inc. v. NLRB, 

424 F.2d 770 (D.C. Cir. 1969) .................................................................................................32 

Hodgson v. Okada, 

326 F. Supp. 514 (D. Colo. 1971) ............................................................................................26 

International Chem. Workers Union Local 483 v. NLRB, 

561 F.2d 253 (D.C. Cir. 1977) .................................................................................................21 

Island Creek Coal Co., 

279 NLRB 858 (1986) .............................................................................................................25 

Knitter v. Corvias Military Living, LLC, 

758 F.3d 1214 (10th Cir. 2014) ...............................................................................................35 

Laerco Transp. & Warehouse, 

269 NLRB 324 (1984) .......................................................................................................11, 21 

Local 254, Serv. Emps. Int’l Union, AFL-CIO, 

324 NLRB 743 (1997) .............................................................................................................26 

Local 777, Dem. Union Organizing Comm. v. NLRB, 

603 F.2d 862 (D.C. Cir. 1978) ...........................................................................................26, 29 

Lowery Trucking Co., 

177 NLRB 13 (1969) ...............................................................................................................23 

McDonald v. Ponderosa Enters., Inc., 

352 P.3d 14 (Mont. 2015) ........................................................................................................20 

Mendoza v. Continental Sales Co., 

140 Cal. App. 4th 1395 (2006) ................................................................................................24 

Michigan v. EPA, 

576 U.S. 743 (2015) .................................................................................................................34 

Morrison v. Magic Carpet Aviation, 

383 F.3d 1253 (11th Cir. 2004) ...............................................................................................20 
6 

Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 

463 U.S. 29 (1983) ...................................................................................................................16 

Nationwide Mort. Ins. Co., v. Darden, 

503 U.S. 318 (1992) ...........................................................................................................25, 29 

New York Indem. Co. v. Industrial Accident Comm’n, 

14 P.2d 160 (Cal. Dist. Ct. App. 1932) ....................................................................................18 

NLRB v. Browning-Ferris Indus. of Pa., Inc., 

691 F.2d 1117 (3d Cir. 1982) (Browning-Ferris I) ...............................................11, 21, 22, 25 

NLRB v. Denver Bldg. & Constr. Trades Council, 

341 U.S. 675 (1951) ...........................................................................................................30, 36 

NLRB v. Hearst Publ’ns, 

322 U.S. 111 (1944) .................................................................................................................29 

NLRB v. Town & Country Elec., Inc., 

516 U.S. 85 (1995) ...................................................................................................................17 

NLRB v. U.S. Postal Serv., 

128 F.3d 280 (5th Cir. 1997) ...................................................................................................17 

NLRB v. United Ins. Co. of Am., 

390 U.S. 254 (1968) ...............................................................................................10, 11, 17, 29 

NLRB v. Zayre Corp., 

424 F.2d 1159 (5th Cir. 1970) .................................................................................................26 

Peter Pan Bus Lines, Inc. v. Federal Motor Carrier Safety Admin., 

471 F.3d 1350 (D.C. Cir. 2006) .........................................................................................17, 37 

Radio City Music Hall Corp. v. United States, 

135 F.2d 715 (2d Cir. 1943).....................................................................................................28 

Rhoades v. Varney, 

39 A. 552 (Me. 1898) ...............................................................................................................18 

S.S. Kresge Co. v. NLRB, 

416 F.2d 1225 (6th Cir. 1969) .................................................................................................26 

SEC v. Chenery Corp., 

318 U.S. 80 (1943) ...................................................................................................................16 

Service Emps. Int’l Union, Local 32BJ v. NLRB, 

647 F.3d 435 (2d Cir. 2011).....................................................................................................25 
7 

Shenker v. Baltimore & O.R. Co.

374 U.S. 1 (1963) .....................................................................................................................20 

Singer Mfg. Co. v. Rahn, 

132 U.S. 518 (1889) .................................................................................................................25 

Southern Cal. Gas Co., 

302 NLRB 456 (1991) .......................................................................................................26, 30 

Spillson v. Smith, 

147 F.2d 727 (7th Cir. 1945) ...................................................................................................20 

Taft Broad. Co., 

163 NLRB 475 (1967) .............................................................................................................35 

Tarron v. Bowen Mach. & Fabricating Co., 

213 P.3d 309 (Ariz. Ct. App. 2009) .........................................................................................20 

TLI, Inc., 

271 NLRB 798 (1984) .............................................................................................................21 

Williams v. Shell Oil Co., 

18 F.3d 396 (7th Cir. 1994) .....................................................................................................20 

STATUTES: 

5 U.S.C. 

§ 706(2) ....................................................................................................................................16 

29 U.S.C. 

§ 141(b) ....................................................................................................................................32 

§ 152(2) ..............................................................................................................................11, 32 

§ 152(3) ....................................................................................................................................11 

§ 152(5) ....................................................................................................................................32 

§ 158(a)(5) ...............................................................................................................................10 

§ 158(d) ....................................................................................................................................32 

§ 185.........................................................................................................................................10 

§ 654(a)(1) ...............................................................................................................................35 

Labor Management Relations Act of 1947, Pub. L. No. 80-101, 61 Stat. 136 

(codified at 29 U.S.C. §§ 141-197) ..........................................................................................10 

National Labor Relations Act, 29 U.S.C. §§ 151 et seq. ...............................................................10 

Taft-Hartley Act of 1947 ...............................................................................................................18 
8 

OTHER AUTHORITIES: 

29 C.F.R. (2020) 

§ 103.40....................................................................................................................................12

§ 103.40(a) .........................................................................................................................12, 13

§ 103.40(b)...............................................................................................................................13

§ 103.40(d)...................................................................................................................13, 14, 24

29 C.F.R. (2023) 

§ 103.40....................................................................................................................................14 

§ 103.40(c) .........................................................................................................................14, 22 

§ 103.40(d) .........................................................................................................................14, 37 

§ 103.40(d)(5) ..........................................................................................................................36 

§ 103.40(d)(7) ....................................................................................................................31, 36 

§ 103.40(e)(1) ..........................................................................................................................14 

§ 103.40(e)(2) ..........................................................................................................................14 

§ 103.40(h)(1) ....................................................................................................................15, 33 

§ 103.40(h)(2) ..........................................................................................................................33 

85 Fed. Reg. 11,184 (Feb. 26, 2020) .......................................................................................12, 33 

87 Fed. Reg. 54,641 (Sept. 7, 2022) ..............................................................................................13 

88 Fed. Reg. 73,946 (Oct. 27, 2023) ...................................................................................... passim

30 A.L.R. 1000 (1924) ...................................................................................................................18 

FED. R. CIV. P. 56(a) ......................................................................................................................16 

H.R. Rep. No. 245, 80th Cong., 1st Sess., 18 (1947) ....................................................................19 

RESTATEMENT OF EMPLOYMENT LAW § 1.04(b) ......................................................................26, 27 

RESTATEMENT (SECOND) OF AGENCY

§ 2(1) ........................................................................................................................................23 

§ 220(1) ....................................................................................................................................23 

§ 227 .............................................................................................................................18, 19, 26 
9 

Pursuant to Local Rule CV-56 and Federal Rule of Civil Procedure 56, Plaintiffs move for 

summary judgment on their claims, which arise under the National Labor Relations Act (“NLRA”) 

and Administrative Procedure Act (“APA”).

INTRODUCTION 

The National Labor Relations Board’s new Joint Employer Rule, adopted over a strong 

dissent deeming the Rule “catastrophic,” is as destabilizing as it is unlawful. The Rule displaces 

widely accepted common-law standards governing the scope of employment relationships, 

establishes entirely new tests of employer liability, reconfigures relationships among legally 

separate entities, erases distinctions between contractors and employers, and threatens billions of 

dollars in liability and costs. These sweeping changes were not made in response to any new law 

or judicial decision. Instead, the Board rammed them through because—it says—the 90-year-old 

National Labor Relations Act has been misinterpreted for most of its existence. The newly 

constituted Board’s newfound interpretation, moreover, conveniently “requires” reversal of a rule 

the Board promulgated just three years ago. 

This regulatory alchemy reflects three crucial errors. First, the Rule adopts an overbroad 

interpretation of who is a “joint employer” under the NLRA—imposing joint-and-several liability 

on virtually every entity that hires contractors subject to routine parameters, defines the terms of 

those contracts, or collaborates with a third party of any kind in achieving common goals that have 

an incidental or indirect effect on the third party’s employees. But none of that is permitted—

never mind required—by the common law. Second, the Rule abandons one of the most important 

limiting principles in the NLRA: that to be an employer, let alone a joint employer, one must 

exercise sufficient control over workers’ essential terms and conditions of employment to permit 

meaningful collective bargaining. Finally, the Joint Employer Rule replaces a clear standard, under 

which entities have tailored their business arrangements, with an arbitrary and uncertain one that 
10 

will disrupt those arrangements with untenable consequences for businesses and workers alike 

across many industries—all on the erroneous premise that the NLRA tied the Board’s hands.

To be clear, Plaintiffs and their members do not oppose regulations that require employers 

to meet their collective-bargaining obligations under the NLRA. In fact, Plaintiffs have long 

supported the development of a clear joint-employment standard. But the Board’s new Rule 

jettisons the common-law boundaries that define the NLRA and further its purposes. In short: the 

Joint Employer Rule transgresses the NLRA and is otherwise unlawful under the APA. This Court 

should set aside the new Rule and the Board’s rescission of its previous rule. And as further 

explained in Plaintiffs’ forthcoming motion to expedite, the Court should do so before the new 

Rule’s December 26 effective date. 

STATEMENT OF UNDISPUTED MATERIAL FACTS 

I. LEGAL FRAMEWORK 

Congress enacted the National Labor Relations Act, 29 U.S.C. §§ 151 et seq., to “promot[e] 

stable collective bargaining relationships” by giving employees freedom of association and 

imposing obligations on employers to bargain collectively with employee representatives. 

Auciello Iron Works, Inc. v. NLRB, 517 U.S. 781, 790 (1996). When the NLRA applies, failing to 

bargain can expose an employer to suits for injunctive relief and monetary penalties. See 29 U.S.C. 

§ 158(a)(5). And failing to comply with collective-bargaining agreements can expose an employer 

to costly suits as well. See 29 U.S.C. § 185.

In 1947, Congress amended the NLRA in the Taft-Hartley Act to clarify the meaning of 

“employer” and “employee” in response to Supreme Court precedent that had purported to define 

“employee” based on general “economic and policy considerations within the labor field,” rather 

than common-law principles. NLRB v. United Ins. Co. of Am., 390 U.S. 254, 256 (1968); see 

Labor Management Relations Act of 1947, Pub. L. No. 80-101, 61 Stat. 136 (codified at 29 U.S.C. 
11 

§§ 141-197) (“Taft-Hartley Amendments”). Although the Taft-Hartley Amendments did not define 

“employer” (other than to circularly state that it included “any person acting as an agent of an 

employer, directly or indirectly,” 29 U.S.C. § 152(2)), the Amendments defined “employee” to 

exclude “any individual having the status of an independent contractor,” id. § 152(3). The 

Supreme Court thus understood that the Amendments’ “obvious purpose” was “to have the Board 

and the courts apply general agency principles,” not labor and economic policies, “in 

distinguishing between employees and independent contractors under the Act.” United Ins., 390 

U.S. at 256 (“[T]here is no doubt that we should apply the common law agency test.”). 

The Board also has long recognized that two entities can sometimes be considered “joint 

employers” of particular employees—making each employer obligated to bargain collectively with 

those employees under the NLRA. See, e.g., Franklin Simon & Co., 94 NLRB 576, 579 (1951). 

But the NLRA does not define “joint employer.” Instead, like the definition of “employer” or 

“employee,” Congress expected the Board and the courts to apply common-law agency principles. 

See Community For Creative Non-Violence v. Reid, 490 U.S. 730, 739-740 (1989).

For decades, the Board drew from the common law a straightforward framework: firms 

were “joint employers” if they exercised “direct,” “immediate,” and “substantial” control over the 

same employees’ essential terms of employment. See, e.g., CNN Am., Inc., 361 NLRB 439, 441 

(2014); Laerco Transp. & Warehouse, 269 NLRB 324, 325 (1984); see also NLRB v. BrowningFerris Indus. of Pa., Inc., 691 F.2d 1117 (3d Cir. 1982) (Browning-Ferris I). Not only did that test 

follow the common law, but it also ensured putative joint employers had enough control over the 

essential terms and conditions of employment to permit meaningful collective bargaining. 

Things changed in 2015, however, when the Board decided in Browning-Ferris that 

“compelling policy reasons” warranted a different approach. Browning-Ferris Indus., 362 NLRB 
12 

1599, 1600, 1611 (2015). The Board announced a new test allowing a “joint employer” finding 

whenever a firm exercised “indirect” control over the terms of employment for another firm’s 

employees, or even just a “reserved right” to control the same. And given the parties’ contract for 

reimbursement of labor costs (a frequent feature of third-party contracting relationships), the Board 

concluded that each had exercised sufficient “indirect” control over employees to be considered 

joint employers for purposes of NLRA compliance. 

The D.C. Circuit later reversed in part, holding that the Board (i) “provided no blueprint 

for what counts as ‘indirect’ control,” (ii) “failed to differentiate between those aspects of indirect 

control relevant to status as an employer, and those quotidian aspects of common-law third-party 

contract relationships,” and (iii) “never delineated what terms and conditions” of employment the 

two entities needed to control to make collective bargaining “meaningful.” Browning-Ferris 

Indus. of Cal., Inc. v. NLRB, 911 F.3d 1195, 1220-1222 (D.C. Cir. 2018) (Browning-Ferris II). 

Although the court found that indirect and reserved control might be relevant to determining 

joint-employer status, it expressly declined to decide whether such indirect or reserved control 

alone would be sufficient. See id.

In response to the D.C. Circuit’s decision, the Board addressed the court’s admonitions and 

largely reinstated the longstanding joint-employer standard that had been in place for decades until 

2015. See 85 Fed. Reg. 11,184 (Feb. 26, 2020), codified at 29 C.F.R. § 103.40 (“2020 Rule”) (see

Addendum). The 2020 Rule provided that an entity is “a joint employer of a separate employer’s 

employees only if the two employers share or codetermine the employees’ essential terms and 

conditions of employment.” Id. § 103.40(a). And though “[e]vidence of the entity’s indirect

control over essential terms and conditions of employment” was “probative” of joint-employer 

status, it was not sufficient. Id. Rather, “[t]o establish” joint-employer status, the 2020 Rule 
13 

required that “the entity must possess and exercise such substantial direct and immediate control” 

with “a regular or continuous consequential effect on an essential term or condition of 

employment” so as to “meaningfully” permit collective bargaining. Id. § 103.40(a), (d). The word 

“substantial,” moreover, was defined to exclude control that is ‘‘only exercised on a sporadic, 

isolated, or de minimis basis.” See id. § 103.40(d); see also 88 Fed. Reg. 73,946, 73,948 (Oct. 27, 

2023). The 2020 Rule also defined a limited set of discrete “essential terms and conditions of 

employment”—namely, “wages, benefits, hours of work, hiring, discharge, discipline, supervision, 

and direction.” 29 C.F.R. § 103.40(b).

II. THE NEW JOINT EMPLOYER RULE 

The 2020 Rule did not last long. In 2022, a newly constituted Board proposed to rescind 

and replace the 2020 Rule on the ground that the common law purportedly required joint-employer 

status to be determined not only through an employer’s direct, immediate, and substantial control 

over employees, but also through solely indirect and reserved control. See Standard for 

Determining Joint-Employer Status, 87 Fed. Reg. 54,641 (Sept. 7, 2022). The Board received 

nearly 13,000 comments—mostly critical—in response. As the Board acknowledged, many 

commenters (including Plaintiff U.S. Chamber) argued that the proposed rule would make it harder 

to reach agreements in collective bargaining. 88 Fed. Reg. at 73,974 (attached as Exhibit A); see 

also U.S. Chamber of Commerce Comment (“Chamber Comment”) at 31 (attached as Exhibit B) 

(proposed rule would create “unworkable” outcomes for entities “forced to the bargaining table” 

with “only limited rights of control or indirect control”). Commenters posed the problem that a 

broader joint-employer standard would turn routine company-to-company dealing into joint 

employment of their respective employees. 88 Fed. Reg. at 73,970; see also Chamber Comment 

at 16. Other commenters raised industry-specific concerns. For example, they argued that the 

proposed rule would inhibit franchisors from exercising the controls necessary to protect their 
14 

brands, thereby jeopardizing the federal trademark rights of franchisors and the investment of 

franchisees in brand consistency that consumers value. 88 Fed. Reg. at 73,979; see also Chamber 

Comment at 33-34; Comments of International Franchise Association (“IFA Comment”) (attached 

as Exhibit C) at 36-39. Commenters contended that a broader rule would expose contractors on 

multiemployer construction jobs, 88 Fed. Reg. at 73,970; see also Chamber Comment at 34-35, 

and disincentivize hospitals from relying on travel nurses to meet critical care needs. 88 Fed. Reg. 

at 73,960; see also Chamber Comment at 36-37.

Despite this barrage of commentary, on October 27, 2023, the Board published the Joint 

Employer Rule, which largely mirrors the proposed rule, and rescinded the 2020 Rule. See 88 Fed. 

Reg. 73,946, codified at 29 C.F.R. § 103.40 (see Addendum). Specifically, the new Rule provides 

that a firm is a “joint employer” if it “possess[es] the authority to control (whether directly, 

indirectly, or both), or to exercise the power to control (whether directly, indirectly, or both), one 

or more of the employees’ essential terms and conditions of employment.” 29 C.F.R. § 103.40(c). 

The Rule stresses that control need not be “exercised.” Id. § 103.40(e)(1). Indirect control is 

likewise “sufficient.” Id. § 103.40(e)(2). And in place of the 2020 Rule’s discrete list of essential 

terms of employment, the new Rule introduced several new and vague categories, such as “[w]ork 

rules and directions governing the manner, means, and methods of the performance,” and 

“[w]orking conditions related to the safety and health of employees.” Id. § 103.40(d). 

The Rule is also significant for what it does not say. The Board discarded the former 

provision excluding control “exercised on a sporadic, isolated, or de minimis basis.” 29 C.F.R. 

§ 103.40(d) (2020). Also missing is the Board’s former limiting principle that joint-employer 

status requires the putative joint employer to possess “sufficient control over employees’ essential 

terms and conditions of employment to permit meaningful collective bargaining.” Browning 
15 

Ferris, 362 NLRB at 1600. Instead, the Board reasoned that other aspects of the Rule meant that 

all bargaining necessarily will be meaningful. 88 Fed. Reg. at 73,972, 73,982. Yet, once a firm is 

deemed a joint employer, the Rule requires that firm to “bargain collectively . . . with respect to 

any term and condition of employment that it possesses the authority to control or exercises the 

power to control, regardless of whether that term . . . is deemed to be . . . essential.” 29 C.F.R. § 

103.40(h)(1). 

Member Kaplan dissented, deeming the Rule “catastrophic to the statutory goal of 

facilitating effective collective bargaining.” 88 Fed. Reg. at 73,987. He began by explaining the 

Rule’s inconsistency with the common law, as well as the “extreme and troubling changes to Board 

law.” Id. at 73,990. He pointed out the majority’s failure “to cite a single judicial decision” that 

“bases a joint-employer finding solely on a never-exercised contractual reservation of right to 

control or an indirect control.” Id. at 73,992. 

Member Kaplan next detailed the Rule’s many policy flaws—flaws that went largely 

ignored based on the Board’s faulty premise that the common law tied its hands. See, e.g., 88 Fed. 

Reg. 73,978 (Board observing that, “[i]nsofar as the Act itself requires the Board to conform to 

common-law agency principles in adopting a joint-employer standard,” commenters’ policy 

“concerns seem misdirected”). He faulted the Board majority for “fail[ing] to grapple with the 

reality that their joint-employer standard is likely to frustrate collective bargaining and erect 

barriers to reaching collective-bargaining agreements.” 88 Fed. Reg. 73,998. He then detailed 

what that scenario could look like in a variety of industries—ranging from foodservice to 

healthcare—and the practical problems it could create. Id. at 74,000-74,004. Yet the majority 

“brush[es] [these concerns] aside.” Id. at 74,000. 
16 

Finally, Member Kaplan explained that the majority’s claim to provide “a definite and 

readily available standard” that will “reduce uncertainty and litigation” is “simply untrue.” 88 

Fed. Reg. 74,005. The Rule “offers no greater certainty or predictability than adjudication, and it 

will not reduce litigation, because it expressly contemplates that joint employer status will be 

determined through adjudication under the common law, not under the provisions of the final rule, 

in most cases.” Id. The new Rule is thus a “step backward” from the 2020 Rule. Id. The majority 

“fails to acknowledge” that reality and offers no “good reasons” for the change. Id.

For all these reasons, Member Kaplan concluded that the Joint Employer Rule is both 

contrary to law and arbitrary and capricious. 

STATEMENT OF THE ISSUE 

Whether the Board violated the NLRA and APA in promulgating the Joint Employer Rule. 

LEGAL STANDARDS 

A district court should grant a movant summary judgment when “there is no genuine 

dispute as to any material fact.” FED. R. CIV. P. 56(a). Under the APA, a reviewing court must set 

aside agency action that is “arbitrary, capricious, an abuse of discretion, or otherwise not in 

accordance with law,” or “in excess of statutory jurisdiction, authority, or limitations, or short of 

statutory right.” 5 U.S.C. § 706(2). An agency decision is “arbitrary and capricious if the agency 

has relied on factors which Congress has not intended it to consider, entirely failed to consider an 

important aspect of the problem, offered an explanation for its decision that runs counter to the 

evidence before the agency, or is so implausible that it could not be ascribed to a difference in view 

or the product of agency expertise.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. 

Auto. Ins. Co., 463 U.S. 29, 43 (1983). Nor can agency action “stand if the agency has 

misconceived the law.” SEC v. Chenery Corp., 318 U.S. 80, 94 (1943). Agencies must act “within 

a zone of reasonableness and, in particular . . . , reasonably consider[] the relevant issues and 
17 

reasonably explain[] the decision.” Data Mktg. P’ship, LP v. U.S. Dep’t of Lab., 45 F.4th 846, 855

(5th Cir. 2022). 

ARGUMENT 

I. THE JOINT EMPLOYER RULE IS INCONSISTENT WITH THE NLRA’S 

COMMON-LAW BASED TERMS 

The Board’s expansive new interpretation of “joint employer” cannot be reconciled with 

the NLRA. The NLRA does not define the term “joint employer.” But under the common-law 

principles that the NLRA incorporates, a joint-employer relationship has two main requirements: 

(1) the joint employer must exert direct, immediate, and substantial control over the essential terms 

and conditions of employment, and (2) that control must be distinct from and greater than that 

found in common-law independent contractor relationships. The new Rule fails to account for 

either principle and thus is contrary to law. 

A. The New Rule Conflicts With The NLRA Because It Defines “Employers” To 

Include Entities Without Direct, Immediate, or Substantial Control Over The 

Essential Terms And Conditions Of Employment 

As a threshold matter, the Board has no special expertise, and should be afforded no 

deference, in interpreting the common law, including the definition of “employer.” See NLRB v. 

Town & Country Elec., Inc., 516 U.S. 85, 94-95 (1995) (noting definition of “employer” under 

NLRA is governed by “common-law agency principles”); see also Browning-Ferris II, 911 F.3d 

at 1206-1207 (The NLRA’s “test for joint-employer status is determined by the common law of 

agency.”). Instead, the content and meaning of the common law is a pure question of law that 

courts review de novo without deference to the Board. See United Ins., 390 U.S. at 260 (meaning 

of common law is a “pure” question of law, and its resolution requires “no special administrative 

expertise that a court does not possess”); accord NLRB v. U.S. Postal Serv., 128 F.3d 280, 283 n.3 

(5th Cir. 1997). Moreover, deference is inappropriate when an “agency wrongly believes that 
18 

interpretation is compelled by Congress.” Peter Pan Bus Lines, Inc. v. Federal Motor Carrier 

Safety Admin., 471 F.3d 1350, 1354 (D.C. Cir. 2006) (internal quotation marks omitted). As shown 

below, the meaning of the relevant common law is clear, and the Board’s interpretation is wrong. 

1. Common-Law Employment Requires Direct and Immediate Control, Not 

Indirect or Reserved Control Alone 

When the NLRA was amended in the Taft-Hartley Act of 1947, a “joint employer” was 

widely understood to be a person who exercises direct and immediate control over the work being 

performed in an employment relationship. The common-law consensus required that joint 

employers must “exercise ordinary care in view of the circumstances of the situation, so that the 

servant shall not be exposed to dangers that may be prevented by the exercise of such care.” 

Rhoades v. Varney, 39 A. 552, 553 (Me. 1898); see also 30 A.L.R. 1000 (1924) (defining “joint 

employment” as “relation of master and servant between the injured person and each of the other 

persons from whom he derived income for his services”). And to show that a second employer 

assumed such a duty of care over another firm’s employee, there had to be shared “operation and 

control” over the employee’s work. Capehardt v. Murta, 145 S.W. 827, 828 (Mo. Ct. App. 1912); 

see also New York Indem. Co. v. Industrial Accident Comm’n, 14 P.2d 160, 161-162 (Cal. Dist. Ct. 

App. 1932) (“joint employer” must “superintend” the work of another employer’s employee “even 

to the extent of discharging him”); Goodman v. Wilson, 166 S.W. 752, 753 (Tenn. 1914) (“joint 

employer” is “founded on the superintendence and control which the master is supposed to 

exercise over his servant”). 

The Restatement (Second) of Agency—published about 15 years before the Taft-Hartley 

Amendments—likewise recognizes that direct and immediate control was required to form a 

master-servant relationship. Specifically, the Restatement provides that an employee “can become 

the servant of another only if there are the same elements in his relation to the other as would 
19 

constitute him a servant of the other were he not ordinarily the servant of the first.” RESTATEMENT 

(SECOND) OF AGENCY § 227 (1933). Thus, a relationship between two separate entities—where 

one exercises direct control over working conditions and the other has only an indirect or 

unexercised right of control—would be insufficient. The Restatement’s illustrations show the 

same. See id., illus. 1 (“In the absence of evidence that [the passenger or client] is to control the 

details as to the management of the cab, the driver is [the cab owner’s] servant while driving the 

cab”); id., illus. 5 (worker remains in supplier’s employment only unless user “assumes control 

over the manner of” performing contracted work). 

The requirement of “direct” and immediate control is also how Congress interpreted the 

common law when it enacted the Taft-Hartley Amendments. The accompanying House Report 

emphasized that “[e]mployees work for wages or salaries under direct supervision.” H.R. Rep. 

No. 245, 80th Cong., 1st Sess., 18 (1947) (emphasis added). Citing the same report, the Supreme 

Court later held that employees who have ceased working directly for an employer cannot be 

considered “employees” under the NLRA. Allied Chem. & Alkali Workers of Am., Local Union 

No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 391-392 (1971). 

Modern common-law cases continue down the same path—holding that actual and direct, 

not hypothetical and indirect, control is necessary for finding joint employment. See, e.g., Butler 

v. Drive Auto Indus. Of Am., Inc., 793 F.3d 404, 414 (4th Cir. 2015) (joint employment requires 

“day-to-day supervision of the individual, including employee discipline”); Doe I v. Wal-Mart 

Stores, Inc., 572 F.3d 677, 683 (9th Cir. 2009) (retailer was not the joint employer of supplier’s 

employees because retailer’s control “d[id] not constitute an ‘immediate level of day-to-day’ 

control . . . so as to create an employment relationship”); Gulino v. New York State Educ. Dep’t, 

460 F.3d 361, 379 (2d Cir. 2006) (common-law employment standard “focuses largely on the 
20 

extent to which the alleged master has ‘control’ over the day-to-day activities of the alleged 

‘servant’” and requires “a relationship where the level of control is direct, obvious, and concrete, 

not merely indirect or abstract”); Morrison v. Magic Carpet Aviation, 383 F.3d 1253, 1256 (11th 

Cir. 2004) (no joint employment relationship where there was “no evidence that [the company] 

had direct control over [the employee], rather than the indirect control over a service provider’s 

employees that a customer may obtain by contracting with that service provider”). 

The common-law “loaned servant” doctrine further emphasizes the need for direct control. 

The doctrine addresses the legal status of workers of a “supplier” company (e.g., a staffing agency) 

who are loaned to assist another “user” company, and has long deemed the “immediate control 

and supervision” of workers “critical” in determining “for whom” the workers are performing 

services. Shenker v. Baltimore & O.R. Co. 374 U.S. 1, 6 (1963); see also Glenn v. Standard Oil 

Co., 148 F.2d 51 (6th Cir. 1945) (requiring direct control in finding operators of distribution plants 

were not employees of contractor); Spillson v. Smith, 147 F.2d 727 (7th Cir. 1945) (requiring direct 

control in finding the musicians of an orchestra were the employees of its leader and not the 

restaurant where they played); Dimmitt-Rickhoff-Bayer Real Estate Co. v. Finnegan, 179 F.2d 882 

(8th Cir. 1950) (requiring direct control in finding real estate agents were not employees); Williams 

v. Shell Oil Co., 18 F.3d 396, 399 (7th Cir. 1994) (“[O]ne cannot be considered a loaned servant 

unless the power to control the employee is totally given over to the second employer”); accord 

Tarron v. Bowen Mach. & Fabricating Co., 213 P.3d 309, 316-318 (Ariz. Ct. App. 2009); 

McDonald v. Ponderosa Enters., Inc., 352 P.3d 14, 19 (Mont. 2015). 

For decades, the Board responded to these settled common-law principles with an easily 

applied rule: It required direct and immediate control of employees—not mere indirect or reserved 

(i.e., potential) control—before a company could be deemed a joint employer of another 
21 

company’s employees, including for collective-bargaining purposes. See, e.g., AM Prop. Holding 

Corp., 350 NLRB 998, 999-1002 (2007); Airborne Freight Co., 338 NLRB 597, 597 n.1 (2002); 

TLI, Inc., 271 NLRB 798, 798-799 (1984); Laerco, 269 NLRB at 325-326; see also International 

Chem. Workers Union Local 483 v. NLRB, 561 F.2d 253, 255-257 (D.C. Cir. 1977). 

Importantly, that straightforward rule was upheld time and again by the courts. Most 

notably, the Third Circuit—citing authority from the Supreme Court as well as the Fourth, Fifth, 

Sixth, Seventh, Eighth, and Ninth Circuits—explicitly embraced the Board’s actual “control” test:

We hold therefore that in the context of this case, the Board chose the correct 

standard—the “joint employer” standard—to apply to its analysis of the facts of 

this case: where two or more employers exert significant control over the same 

employees—where from the evidence it can be shown that they share or codetermine those matters governing essential terms and conditions of employment—

they constitute ‘joint employers’ within the meaning of the NLRA.

Browning-Ferris I, 691 F.2d at 1124 (emphasis added) (citing cases). The Fifth Circuit has 

explicitly “endorsed” that test. Adams & Assocs., Inc. v. NLRB, 871 F.3d 358, 377 (5th Cir. 2017) 

(citing Browning-Ferris I and Laerco). Applying that test, the Fifth Circuit held that the 

“reservation of [the] right to discipline [another employer’s] staff for violation of rules and policies 

is insufficient to establish a joint-employer finding, absent evidence that the right was ever 

exercised”; rather, the Board must “look[] to the actual practice of the parties.” Id. (quoting AM 

Prop. Holding Corp., 350 NLRB 998, 1000 (2007)). Against that clear holding, the Joint Employer 

Rule does not cite a single case reversing (or even seriously questioning) the Board’s longstanding 

“direct and immediate control” test as being inconsistent with the common law—powerful 

evidence that that test accurately captures the proper meaning of the term “employee” under the 

NLRA and that the Board misconceived the law.

2. The New Rule Permits Employer Status Without Direct and Immediate 

Control 

The new Joint Employer Rule conflicts with the common law and Fifth Circuit precedent 
22 

by abandoning the longstanding “direct and immediate control” requirement. In fact, the Rule 

mandates a joint-employer finding based on less: merely possessing the “authority” to control a 

single essential term of employment is enough, even without contractually reserved control. 29 

C.F.R. § 103.40(c). And a firm is a “joint employer” whenever it exercises control “indirectly”—

and not just through an intermediary. Id. 

Perhaps the most notable aspect of the Board’s new Rule is the lack of precedent in its 

favor. Indeed, the Board “majority fails to cite a single judicial decision, much less a body of court 

precedent rising to the level of establishing the common law, that bases a joint-employer finding 

solely on a never-exercised contractual reservation of right to control or on indirect control of 

employees’ essential terms and conditions.” 88 Fed. Reg. 73,992 (Kaplan Dissent). That alone is 

sufficient to show that the Rule is inconsistent with the “common law.” See Bettis v. Islamic Rep. 

of Iran, 315 F.3d 325, 333 n.9 (D.C. Cir. 2003) (rejecting interpretation of common law when “no 

case” supported that interpretation). 

The Board insists that the Third Circuit and D.C. Circuit “endorsed” its new test in 

Browning-Ferris I and II. 88 Fed. Reg. at 73,982. But, as Member Kaplan explains in his dissent, 

88 Fed. Reg. at 73,991, 73,994, that is a gross misreading of both opinions. As noted, in BrowningFerris I, the Third Circuit held that two employers are joint employers only if they “exert 

significant control over the same employees.” 691 F.2d at 1124. And the Joint Employer Rule 

discards that test. 

As for Browning-Ferris II, the D.C. Circuit held that the Board’s joint-employer test 

properly permitted consideration of indirect or reserved control as factors bearing on the 

joint-employer question, but the test nevertheless “overshot the common-law mark” by failing to 

distinguish evidence of control that bears on workers’ essential terms and conditions of 
23 

employment from evidence that simply documents the routine parameters of company-to-company 

contracting. 911 F.3d at 1216. The court certainly did not hold that reserved or indirect control 

alone would be sufficient; it specifically deferred those questions. See id. at 1213, 1218. Simply 

put, nothing in Browning-Ferris II’s approves the Board’s expanded definition of a joint 

employer.1

 The Board also cited two different sections of the Restatement (Second) of Agency to 

support the proposition that either (1) potential or (2) indirect control is sufficient to establish an 

entity as a joint employer. But neither suffices. With respect to reserved control, the Board relied 

on Section 2(1), which defines a “master” as someone who “controls or has the right to control” 

another, and Section 220(1), which defines a servant as someone “subject to [an]other’s control or 

right to control.” RESTATEMENT (SECOND) OF AGENCY §§ 2(1), 220(1). But those Sections address 

whether a worker is an employee in evaluating the vicarious liability of a putative employer—not 

whether there is a second employer in the mix. Sections 2 and 220 of the Restatement recognize 

that if an employer retains its right to control an employee, it cannot sever the employer-employee 

relationship merely by allowing the employee to work autonomously—and thereby protect itself 

from vicarious liability for an employee’s torts. See Arizona v. Evans, 514 U.S. 1, 29 n.5 (1995) 

(explaining that “the risk of respondeat superior liability encourages employers to supervise more 

closely their employees’ conduct”). But that logic does not apply in the context of joint 

employment, where employees are already being directly supervised by at least one employer and 

the question is only whether a second employer should also be held liable. The vicarious liability 

1

 For similar reasons, the Board’s prior decisions finding reserved or indirect control to be “probative” of 

joint employer status do not help it because those employers also exercised direct and immediate control. See, e.g., 

Lowery Trucking Co., 177 NLRB 13, 15 (1969) (finding freight company was joint employer of drivers supplied by 

trucking company based on actual supervision, participation in the hiring process, discharge of two drivers, and 

discipline of a third). 
24 

doctrine is designed to ensure employees are supervised by an employer, not to ensure that 

employees are supervised by multiple employers simultaneously. 

Regarding “indirect” control, the Board relies on Restatement Section 5, which codifies 

the common-law “sub-servant” doctrine, under which a worker’s helper is deemed an agent of 

both the worker and the employer. But that specialized doctrine is not relevant here. It involves 

one linked relationship: both the sub-servant and servant are still servants of a single master. See, 

e.g., Mendoza v. Continental Sales Co., 140 Cal. App. 4th 1395, 1405-1406 (2006) (explaining 

that a subagent is the agent of a principal because of a fiduciary duty that flows from the principal 

to the agent to the subagent). By contrast, in the joint-employer context, one employer is not the 

servant of the other, and it therefore does not implicate concerns unique to the sub-servant context. 

In sum: the common law and Fifth Circuit precedent require “direct and immediate 

control,” the cases the Board cites do not show otherwise, and the new Rule tosses those 

requirements aside. 

3. The New Rule Permits Employer Status Based on De Minimis, Sporadic, or 

Isolated Control

Even if the Board could demonstrate that indirect control alone, or reserved control alone, 

is sufficient to establish joint-employer status, the Rule would fail for another reason: it allows a 

finding of employment based on de minimis, sporadic, or isolated control, without any showing of 

substantial control over the “means and manner” in which the employee works. Although the 

2020 Rule specifically excluded control that was “only exercised on a sporadic, isolated, or de 

minimis basis,” 29 C.F.R. § 103.40(d) (2020), the Joint Employer Rule discards that limitation. 

The “touchstone” at common law is whether the putative employer sufficiently controls 

putative employees. See Clackamas Gastroenterology Assocs., P.C. v. Wells, 538 U.S. 440, 448-

449 (2003). It has long been recognized that for a putative employer’s control to be “sufficient,” 
25 

the employer must control the means and manner in which the employee performs work. See, e.g., 

Singer Mfg. Co. v. Rahn, 132 U.S. 518, 523 (1889) ( “[T]he relation of master and servant exists 

whenever the employer retains the right to direct the manner in which the business shall be done, 

as well as the result to be accomplished, or, in other words, ‘not only what shall be done, but how 

it shall be done.’”). 

Under these conventional limitations, occasional direction or isolated supervision are 

insufficient. An employer must “control the manner and means by which the product is 

accomplished” on a daily basis. Nationwide Mort. Ins. Co. v. Darden, 503 U.S. 318, 323 (1992); 

see also Browning-Ferris I, 691 F.2d at 1123 (asking whether there is “sufficient control of the 

terms and conditions of employment of the employees who are employed by the other employer”); 

accord Dunkin’ Donuts Mid-Atl. Dist. Ctr., Inc. v. NLRB, 363 F.3d 437, 440 (D.C. Cir. 2004). 

Around the same time as the Taft-Hartley Amendments amended the NLRA to include its 

current definitions of “employer” and “employee,” the Fifth Circuit held that a joint employer must 

exercise sufficient “control” of an employee so as to be “an instrumentality or adjunct of” the 

employer. Constitution Pub. Co. v. Dale, 164 F.2d 210, 213 (5th Cir. 1947). Over the next several 

decades, federal courts distinguished examples of “limited and routine supervision” as insufficient 

to establish joint-employer status. See, e.g., Service Emps. Int’l Union, Local 32BJ v. NLRB, 647 

F.3d 435, 443 (2d Cir. 2011) (“limited and routine supervision consisting of directions of where to 

do a job rather than how to do the job and the manner in which to perform the work is typically 

insufficient to create a joint employer relationship” (internal quotation marks and citations 

omitted)); G Wes Ltd. Co., 309 NLRB 225, 226 (1992) (“‘[M]erely routine directions of where to 

do a job rather than how to do the job and the manner in which to perform the work’ are insufficient 

to support a joint employer finding”) (quoting Island Creek Coal Co., 279 NLRB 858, 864 (1986)); 
26 

Local 254, Serv. Emps. Int’l Union, AFL-CIO, 324 NLRB 743, 746-749 (1997) (no joint 

employment where employer regularly directed employees to perform specific tasks at particular 

times but did not instruct employees how to perform work); Southern Cal. Gas Co., 302 NLRB 

456, 461-462 (1991) (direction of workers insufficient to establish joint employment where 

employer did not control wages or benefits, or hire or fire employees). 

Over that same period, courts (including the Fifth Circuit) held that “substantial” or 

“pervasive control” over the essential terms and conditions of employment was required. See, e.g., 

NLRB v. Zayre Corp., 424 F.2d 1159, 1165 (5th Cir. 1970) (noting person who “exercised or had 

the potential to exercise substantial control over the employment practices of [employees] was in 

practical effect a joint-employer”); Hodgson v. Okada, 326 F. Supp. 514, 519 (D. Colo. 1971) 

(“The requisite degree of control” for joint employment includes “exercise of the right to fire an 

employee, plus the right to direct the daily labor.”). And where there was merely shared “general 

control over the operational policies,” and “no common control over the labor relations,” there 

could be no joint-employer relationship. S.S. Kresge Co. v. NLRB, 416 F.2d 1225, 1228 (6th Cir. 

1969); see also Local 777, Dem. Union Organizing Comm. v. NLRB, 603 F.2d 862, 898 (D.C. Cir. 

1978) (requiring “pervasive control”).

The Restatement (Second) of Agency is in accord. It explains that a worker’s decision to 

“obey[] the requests of the temporary employer as to the act does not necessarily cause him to be 

the servant of such employer.” RESTATEMENT (SECOND) OF AGENCY § 227, cmt. D (1933). The 

more recent Restatement of Employment Law, which the Board ignores, likewise requires 

substantial, not de minimis, control to establish joint-employer status. RESTATEMENT OF 

EMPLOYMENT LAW § 1.04(b) (“An individual is an employee of two or more joint employers if . . . 

[the] employer and the other joint employers each control or supervise such rendering of 
27 

services.”). In a section addressing the joint-employer doctrine, the Restatement of Employment 

Law gives the following illustration: 

A is a driver of a large concrete-mixer truck owned and operated by the P 

corporation. The R construction company rents the truck for a particular project. 

P assigns A to operate the truck in accord with P’s mechanical and safety 

specifications while it is used on R’s project. R’s supervisors tell A what work they 

want the truck to accomplish. A’s compensation is set by P and is paid by P. If 

dissatisfied with A, R can request that P assign another driver. Only P can discharge 

A. A is an employee of P but not R. P alone sets the terms of A’s compensation 

and controls the details of how A is to operate the truck in providing service to R.

Id. § 1.04, illus. 5. In this illustration, R’s power to terminate P’s employee, A, is at best indirect: 

“If dissatisfied with A, R can request that P assign another driver. Only P can discharge A.” “R’s 

supervisors tell A what work they want the truck to accomplish,” rather than directing A on how 

to perform the work. Under the 2020 Rule, which requires “substantial” control, the Board could 

not contend that R is a joint employer of A, because R’s direct power was limited and routine. 

Under the new Rule, by contrast, the Board would likely contend that R is a joint employer of A, 

because R can exercise limited, indirect control. 

In short, control (let alone indirect or reserved control standing alone) is insufficient if it is 

merely isolated, sporadic, or de minimis. The 2020 Rule had properly excluded such insubstantial 

control. But the new Rule fails to do so, in direct violation of common-law principles and Fifth 

Circuit precedent. 

*** 

The Board may have thought the new Rule is what the law should be. Indeed, the Board 

said as much. 88 Fed. Reg. at 73,984 n.402 (“the final rule reflects our policy choices”). But there 

is no judicial authority—much less a “judicial consensus” sufficient to establish a common-law 

rule—that joint-employer status can be based on the indirect, reserved, or limited control the Rule 

allows. Field v. Mans, 516 U.S. 59, 70 n.9 (1995). The Rule is thus contrary to law. 
28 

B. The New Rule Swallows The Common-Law Distinction Between Employees 

And Independent Contractors. 

The Joint Employer Rule conflicts with the NLRA another way as well: it swallows the 

common-law distinction between employees and independent contractors. Despite the D.C. 

Circuit’s instruction to the Board to promulgate a rule that distinguishes joint employers from 

common-law independent contractor relationships, the new Rule fails “to hew to the relevant 

common-law boundaries that prevent the Board from trenching on the common and routine 

decisions that employers make when hiring third-party contractors and defining the terms of those 

contracts.” Browning-Ferris II, 911 F.3d at 1219. 

Anyone who contracts for services—such as plumbing or painting—inevitably exercises 

(or at least reserves) some measure of control over the contractors by defining the parameters of 

the desired result. Accordingly, courts have long recognized the need to distinguish between a true 

employment relationship and a contractual one. For example, in a case applying common-law 

principles to decide that a production company did not employ certain vaudeville entertainers, 

Judge Learned Hand wrote that the company “did intervene to some degree” but like “a general 

building contractor intervene[s] in the work of his subcontractors.” Radio City Music Hall Corp. 

v. United States, 135 F.2d 715, 717-718 (2d Cir. 1943). Like a general contractor, the company 

“decide[d] how the different parts of the work must be timed, and how they shall be fitted 

together,” because “[s]ome such supervision is inherent in any joint undertaking, and does not 

make the contributing contractors employees.” Id.; see also Conover v. Board of Equalization, 

112 P.2d 341 (Cal. Dist. Ct. App. 1941) (quotidian details defining job duties are irrelevant to 

employee versus independent contractor status). 

In the Taft-Hartley Amendments, Congress wrote that distinction between employees and 

independent contractors directly into the NLRA, in response to a Supreme Court decision holding 
29 

“newsboys”—adults who distributed newspapers on street corners—were “employees” of the 

newspaper publishers. NLRB v. Hearst Publ’ns, 322 U.S. 111, 113-114 (1944). “Congress was so 

incensed with the fanciful construction of its legislative intention in Hearst that in 1947 it 

specifically excluded ‘independent contractors’ from the coverage of the Act and condemned the 

Court’s rationale in Hearst Publications as giving ‘far-fetched meanings’ to the words that 

Congress had used.” Local 777, Democratic Union Org. Comm., 603 F.2d at 905. 

The Supreme Court later recognized that, under the NLRA, the Board must “apply the 

common law agency test . . . in distinguishing an employee from an independent contractor.” 

United Ins. Co., 390 U.S. at 256; see id. (one purpose of the Taft-Hartley Amendments “was to 

have the . . . courts apply general agency principles in distinguishing between employees and 

independent contractors under the Act”). The Court held that distinguishing contractors from 

employees requires considering the hiring party’s control over “the manner and means by which 

the product is accomplished,” which depends on such relevant factors as 

the skill required; the source of the instrumentalities and tools; the location of the 

work; the duration of the relationship between the parties; whether the hiring party 

has the right to assign additional projects to the hired party; the extent of the hired 

party’s discretion over when and how long to work; the method of payment; the 

hired party’s role in hiring and paying assistants; whether the work is part of the 

regular business of the hiring party; whether the hiring party is in business; the 

provision of employee benefits; and the tax treatment of the hired party.

Darden, 503 U.S. at 323-324 (quoting Community for Creative Non-Violence v. Reid, 490 U.S. 

730, 751-752 (1989)). 

Citing these common-law principles, the D.C. Circuit in Browning-Ferris II recognized 

that any “joint employer” rule promulgated by the Board must respect the distinction between 

independent contracting and joint-employment relationships—i.e., differentiate between those 

aspects of control relevant to status as an employer versus those “quotidian aspects of common-law 
30 

third-party contractual relationships.” Browning-Ferris II, 911 F.3d at 1220. Specifically, any test 

must recognize that “[s]ome such supervision is inherent in any joint undertaking, and does not 

make the contributing contractors employees.” Id. (alteration in original). 

The Board’s 2020 Rule did just that by requiring joint employers to exercise direct, 

immediate, and substantial control over a discrete and defined list of essential terms and conditions 

of employment. And that rule was consistent with longstanding Board and judicial precedent. See, 

e.g., Southern Cal. Gas Co., 302 NLRB at 461 (Although “[a]n employer receiving contracted 

labor services will of necessity exercise” a certain amount of control over the contractor, that “is 

not in and of itself, sufficient justification for . . . a joint employer finding.”); NLRB v. Denver 

Bldg. & Constr. Trades Council, 341 U.S. 675, 689-690 (1951) (contractor’s mere exercise of 

supervision over a subcontractor’s work does “not eliminate the status of each as an independent 

contractor”). 

But the new Joint Employer Rule jettisons those requirements. The Rule provides no rubric 

for distinguishing between the sort of “indirect” and “reserved” control a putative employer might 

exercise over a true employee versus a mere contractor. As the dissent explained, the Rule “does 

not adequately distinguish” evidence of indirect or reserved control “that bears on workers’ 

essential terms and conditions of employment from evidence that simply documents the routine 

parameters of company-to-company contracting.” 88 Fed. Reg. at 79,991, 73,995-73,996 (internal 

quotation marks omitted). According to the Board majority, “limiting the list of essential terms 

and conditions of employment is responsive” to the D.C. Circuit’s admonition in Browning-Ferris 

II that “the Board incorporate a limiting principle” within “common-law boundaries.” 88 Fed. 

Reg. at 73,991. But, as the dissent correctly concluded, “closing the list of essential terms and 

conditions is not enough because routine components of company-to-company contracts may 
31 

indirectly impact essential terms.” 88 Fed. Reg. at 73,991. For example, a contract for services 

may make the general contractor “responsible for initiating, maintaining, and supervising all safety 

precautions and programs in connection with the performance of the [c]ontract.” Id. (alteration in 

original). That clause is “a routine component of company-to-company contracting.” Id. But 

under the Rule, it also “evidences the general contractor’s indirect control (at least) of working 

conditions related to the safety and health of employees” of its subcontractors. Id. (internal 

quotation marks omitted). The contractor’s limited control via this routine contract clause—also 

an “essential” term of employment under the Rule—would render it a joint employer. 29 C.F.R. 

§ 103.40(d)(7).

Far from providing “legal scaffolding” that keeps the inquiry within the common-law 

bounds, see Browning-Ferris II, 911 F.3d at 1220, the new Rule thus rides roughshod over Supreme 

Court precedent that recognized contracting enterprises often have some influence over the work 

performed by each other’s workers without destroying their status as independent employers. By 

allowing entities to be considered joint employers of their independent contractors’ employees, the 

Rule swallows the common-law distinction that Congress incorporated into the NLRA.

II. THE NEW RULE INDEPENDENTLY VIOLATES THE NLRA BY DEFINING 

EMPLOYERS TO INCLUDE THOSE WHO CANNOT ENGAGE IN MEANINGFUL 

COLLECTIVE BARGAINING 

Beyond conflicting with the key common-law terms in the NLRA, the Rule violates the 

NLRA by permitting the “joint employer” definition to sweep in putative employers who have no 

meaningful ability to bargain with employees over essential terms and conditions of employment.

In Browning-Ferris II, the D.C. Circuit observed that the Board’s prior joint-employer test 

had two steps: first, whether there was a common-law joint employment relationship; and second, 

“whether the putative joint employer possesses sufficient control over employees’ essential terms 

and conditions of employment to permit meaningful collective bargaining.” 911 F.3d at 1221. “In 
32 

other words, according to the Board, the existence of a common-law employment relationship is 

necessary, but not sufficient, to find joint-employer status [under the Act].” Id. (internal quotation 

marks omitted) (alteration in original).

The “vital second step” of the test, Browning-Ferris II, 911 F.3d at 1215, was necessary 

due to the structure and purpose of the NLRA. The NLRA’s declared purpose is to achieve 

“industrial peace and stability, fostered by collective-bargaining agreements.” Auciello, 517 U.S. 

at 790 (citing 29 U.S.C. § 141(b)). Congress imposed obligations on “employers” and “labor 

organizations” to “bargain collectively” “with respect to wages, hours, and other terms and 

conditions of employment.” 29 U.S.C. § 158(d); id. §§ 152(2), (5). Some management decisions, 

such as layoffs and recalls, are almost exclusively “an aspect of the relationship” between 

employer and employee, and plainly must be bargained. Pittsburgh Plate Glass Co., 404 U.S. at 

178. But “in establishing what issues must be submitted to the process of bargaining,” Congress 

imposed “an undeniable limit”—namely, that management decisions with “only an indirect and 

attenuated impact on the employment relationship” need not be bargained. First Nat’l Maint. 

Corp. v. NLRB, 452 U.S. 666, 676-677 (1981). 

For that reason, it would be incongruous to interpret “employer” under the NLRA, as the 

new Rule does, to require bargaining with an entity that has limited control over only one essential 

term or condition, and to require that entity to bargain over all other non-essential terms and 

conditions over which it has control (even if only reserved or indirect). To the contrary, courts 

have long held that the only reasonable reading of the NLRA’s coverage provisions is one that 

recognizes that an employer must have “sufficient control over the working conditions” of 

employees “to enable it to bargain effectively.” Herbert Harvey, Inc. v. NLRB, 424 F.2d 770, 772 

(D.C. Cir. 1969). Indeed, as noted, that was the Board’s own prior rule. See Browning-Ferris, 362 
33 

NLRB at 1600 (even if common law would deem a business to be a joint employer, the Board will 

also ask “whether the putative joint employer possesses sufficient control over employees’ 

essential terms and conditions of employment to permit meaningful collective bargaining”); see 

also 2020 Rule, 85 Fed. Reg. at 11,235 (control must be sufficient to “meaningfully affect[ ] 

matters relating to the employment relationship”).

The new Rule inexplicably abandons the requirement of “meaningful collective 

bargaining.” It does not require putative joint employers to have sufficient control over all or most 

traditional mandatory subjects of bargaining—e.g., wages, benefits hours of work, hiring, and 

discharge. Collective bargaining involves negotiating tradeoffs among competing employer and 

employee interests. Yet under the Rule, firms with no meaningful interest and no real leverage 

will find themselves at the bargaining table. That is because the Rule makes irrelevant the extent 

of control necessary to make informed decisions and tradeoffs at the bargaining table. What’s 

more, the Rule mandates collective bargaining “with respect to any term and condition of 

employment” that a putative joint employer has “the authority to control or exercises the power to 

control” indirectly, “regardless of whether that term or condition is deemed to be an essential term 

and condition of employment.” 29 C.F.R. § 103.40(h)(1). The Rule thus imposes 

collective-bargaining obligations upon entities that lack sufficient control over such essential terms 

as wages, hours, and other terms and conditions of employment to bargain a comprehensive 

collective-bargaining agreement. 

The Board attempted to sidestep this problem by limiting the bargaining obligations of a 

joint employer under the Rule to the terms over which it “possesses the authority to control or 

exercises the power to control.” 29 C.F.R. § 103.40(h)(1), (2). But, in doing so, the Board 

effectively concedes that a joint employer under the Rule could only engage in piecemeal 
34 

bargaining. The Board and courts have recognized that the fundamental “statutory purpose of 

requiring good-faith bargaining would be frustrated if parties were permitted, or indeed required, 

to engage in piecemeal bargaining.” E.I. Du Pont de Nemours & Co. v. NLRB, 489 F.3d 1310, 

1317 (D.C. Cir. 2007) (quoting E.I. Dupont de Nemours & Co., 304 NLRB 792, 792 n.1 (1991)); 

see id. (a party has a “right to insist on negotiating an entire contract rather than engaging in 

piecemeal negotiation over particular issues”). Indeed, as the dissent explains, such bargaining 

will create labor instability, not fix it: “It is difficult to imagine a better recipe than today’s final 

rule for injecting chaos into the practice and procedure of collective bargaining that the majority 

claims to promote.” 88 Fed. at Reg. 73,999. The Rule is thus contrary to law. 

III. THE NEW RULE IS ARBITRARY AND CAPRICIOUS BECAUSE THE BOARD 

IGNORED ITS DISRUPTIVE IMPACTS AND UNCERTAINTY FOR PUTATIVE 

JOINT EMPLOYERS 

The APA “requires that agency action be reasonable and reasonably explained.” FCC v. 

Prometheus Radio Project, 141 S. Ct. 1150, 1158 (2021). “[R]easonable regulation ordinarily 

requires paying attention to the advantages and the disadvantages of agency decisions.” Michigan 

v. EPA, 576 U.S. 743, 753 (2015). As the dissent recognized, the “majority’s final rule is neither 

reasonable nor reasonably explained” for multiple reasons, 88 Fed. Reg. at 74,005, including 

because (1) it ignores the serious practical problems it creates on the premise that the common law 

tied the Board’s hands, and (2) it fails to articulate a comprehensible standard with meaningful 

guidance to regulated parties. 

1. By claiming that the common law compelled the Board to act, the Rule largely 

backhands the many real-world problems created by the Joint Employer Rule, including the Rule’s 

practical effect on collective bargaining and the unworkable consequences it would produce. The 

dissent gave the following illustration:
35 

CleanCo is in the business of supplying maintenance employees to clients to clean 

their offices. . . . CleanCo supplies employees to one hundred clients, and . . . each 

CleanCo-client contract contains a provision that gives the client the right to 

prohibit, on health and safety grounds, CleanCo’s employees from using particular 

cleaning supplies. Because the clients possess a contractually reserved authority to 

control “working conditions related to the safety and health of employees”—an 

essential employment term newly invented by my colleagues—each of those one 

hundred clients would be a joint employer of CleanCo’s employees. 

88 Fed. Reg. at 73,987. That result could mean that all one hundred CleanCo clients would be 

compelled to participate in collective bargaining with CleanCo’s employees. But so large a 

bargaining table would “frustrate rather than facilitate reaching agreements.” 88 Fed. Reg. at 

73,999. The competing interests of all one hundred joint employers “might well be in conflict,” 

88 Fed. Reg. at 73,999, and the parties may quickly conclude they have “exhausted the prospects 

of concluding an agreement” and declare an impasse. Carey Salt Co. v. NLRB, 736 F.3d 405, 417 

(5th Cir. 2013) (emphasis omitted) (quoting Taft Broad. Co., 163 NLRB 475, 478 (1967)).

This illustration also highlights the dilemma that the Rule creates for employers who adopt 

general safety protocols on their property. Courts have acknowledged that employers “naturally 

would be concerned about [their vendor’s employees’] safety, even if only for liability purposes, 

just as they would for any employee or non-employee on premises.” Knitter v. Corvias Military 

Living, LLC, 758 F.3d 1214, 1230 (10th Cir. 2014). And for good reason, as the Occupational 

Safety and Health Act imposes a general duty to ensure that “a place of employment” is “free from 

recognized hazards.” 29 U.S.C. § 654(a)(1). But, because the rule makes “working conditions 

related to the safety and health of employees” an essential term of employment, an entity 

responding to a hazardous condition could become a joint employer of every worker employed by 

another entity on its property (e.g., vendors and contractors). The dissent was right to point out 

that this result “creates a perverse incentive for companies to avoid protecting the employees of 
36 

other employers or to avoid maintaining safety standards or applying safety measures that are any 

more protective than legally-mandated minimums.” 88 Fed. at Reg. 74,004.

The Board further ignored the disruptive impact of the Rule on various industries. Take 

the franchise industry first. As the dissent explained, “countless” franchise systems require 

“monitoring of franchisees’ cleanliness and hygiene protocols to protect brand standards.” 88 Fed. 

Reg. at 74,001; IFA Decl. ¶ 9; RLC Decl. ¶ 17; AHLA Decl. ¶ 13. Many franchisors also include 

clauses in their franchising agreements that allow them to maintain control over the use of their 

marks. See, e.g., RLC Decl. ¶ 17. Yet it is entirely foreseeable that these long-accepted practices 

would make franchisors joint employers of their franchisees’ employees under either or both of 

two newly adopted (yet capacious and vague) terms that the Board deems “essential”: “[w]ork 

rules and directions governing the manner, means, and methods of the performance” or “[w]orking 

conditions related to the safety and health of employees.” 29 C.F.R. § 103.40(d)(5), (7); IFA Decl. 

¶ 9; RLC Decl. ¶ 17; AHLA Decl. ¶ 13; see also NRF Decl. ¶ 9. It is equally foreseeable, as the 

dissent recognized, that the Rule would displace the franchise model altogether by requiring 

franchisors to “distance their franchisees” or by “turning previously independent owners of 

franchisees into glorified managers.” 88 Fed. Reg. at 74,001.

The new Rule poses similar concerns for the construction industry. The Supreme Court 

recognized that a construction contractor may have “some supervision over the subcontractor’s 

work” without making “the employees of one the employees of the other.” Denver Bldg. & Constr. 

Trades Council, 341 U.S. at 689-690. And, as the dissent explained, general contractors are usually 

responsible for correcting “hazardous conditions” on job sites and “ultimately determine[] the 

duration of each part of the construction project.” 88 Fed. Reg. at 74,004; ABC Decl. ¶¶ 8-9; AGC 

Decl. ¶ 8. The Rule ignores these realities by expanding the list of “essential” terms to include 
37 

“tenure of employment,” “safety and health,” and “[w]ork rules.” 29 C.F.R. § 103.40(d). The 

dissent correctly concluded that indirect or potential control of these ill-defined categories will 

almost certainly “be used to make general contractors in the construction industry joint employers 

per se.” 88 Fed. Reg. at 74,004. 

That conclusion applies equally to other contractor relationships that “necessarily involve 

exercise of control” over another employer’s workers. 88 Fed. Reg. at 73,995 n.452. For example, 

hospitals use contracted labor to fill staffing gaps in nurses and other critical care workers. The 

2020 Rule removed from the joint-employer question decisions concerning necessary “staffing 

levels to accomplish tasks” or “minimal hiring standards,” but the new Rule provides no exceptions 

for routine contractor decisions. 88 Fed. Reg. at 73,990. The dissent was correct to warn that the 

resulting uncertainty would force many industries that provide critical services to choose between 

bringing “their contracted-out work in-house” (and “incur unexpected costs”) or forgoing their 

services through “reduced headcount or other cost-saving measures that could impact workers.” 

88 Fed. Reg. at 74,002.

Faced with all these problems, the Board’s primary response is that its newfound reading 

of the NLRA ties its hands—and that the many substantive concerns expressed by commenters 

thus “seem misdirected.” 88 Fed. Reg. at 73,978; see id. at 73,984 n.402 (“[T]he 2020 rule’s 

actual-exercise requirement is impermissible under the Act as contrary to common law agency 

principles.”). But where, as here, an agency asserts that its action is legally compelled, and that 

legal premise turns out to be incorrect, the action must be set aside. See, e.g., Peter Pan Bus Lines, 

471 F.3d at 1354. Even putting aside the Board’s incorrect legal interpretation, “the courts have 

made clear that the Board may adopt a joint-employer standard under the NLRA that does not 

extend to the outermost limits of the common law.” 88 Fed. Reg. at 73,987 (Kaplan Dissent); see, 
38 

e.g., DHS v. Regents of the Univ. of Cal., 140 S. Ct. 1891, 1910-1915 (2020) (holding agency acted 

arbitrarily and capriciously in rescinding prior policy, regardless of whether policy was unlawful).

Thus, the Board’s failure to “reasonably explain[]” its decision in light of the significant public 

comments is a separate and independent APA violation. Prometheus Radio, 141 S. Ct. at 1158. 

2. The Rule exacerbates those problems by creating more uncertainty, not less, for putative 

employers. “If a purported standard is indiscriminate and offers no meaningful guidance to 

affected parties, it will fail the requirement of reasoned decisionmaking.” ACA Int’l v. FCC, 885 

F.3d 687, 700 (D.C. Cir. 2018) (internal quotation marks omitted). That describes this Rule 

perfectly. The Board justified the new Rule by claiming it would establish “a definite, readily 

available standard” and “reduce uncertainty and litigation.” 88 Fed. Reg. at 73,957. But beyond 

providing a nebulous and uncertain standard (under which indirect, reserved control over a single 

employment term can suffice for joint-employer status), the Rule “expressly contemplates that 

joint-employer status will be determined through adjudication under the common law, not under 

the provisions” of the Rule. 88 Fed. Reg. at 74,005 (Kaplan Dissent). The Board’s approach thus 

defeats the purpose of rulemaking: the Board does not dispute that “[a]bsent any rule whatsoever, 

joint-employer status would be determined through case-by-case adjudication applying the 

common law of agency.” Id. The Rule is thus arbitrary and capricious for that reason as well. See 

Allied-Signal, Inc. v. U.S. Nuclear Regul. Comm’n, 988 F.2d 146, 152-153 (D.C. Cir. 1993) 

(agency’s rationale for regulatory action failed to support mechanism chosen in final rule). 

CONCLUSION 

The Court should set aside the Joint Employer Rule, enjoin its application, and vacate the 

Board’s rescission of the 2020 Rule (before the new Rule’s December 26 effective date). 
39 

Dated: November 13, 2023 Respectfully submitted,

 /s/ Pratik A. Shah 

Stephanie A. Maloney 

 D.C. Bar No. 1044276 (pro hac vice to be filed)

Jordan L. Von Bokern 

 D.C. Bar No. 1032962 (pro hac vice to be filed)

U.S. Chamber Litigation Center

1615 H Street, N.W.

Washington, DC 20062-2000

Telephone: (202) 463-5337

smaloney@uschamber.com

jvonbokern@uschamber.com

Attorneys for the Chamber of Commerce of the 

United States of America

Maury Baskin

 D.C. Bar No. 248898 (pro hac vice to be filed)

Littler Mendelson

815 Connecticut Avenue, N.W.

Suite 400

Washington, D.C. 20006

Telephone: (202) 842-3400

Facsimile: (202) 842-0011

mbaskin@littler.com

Counsel to Associated Builders and Contractors 

and International Franchise Association

Angelo I. Amador

 D.C. Bar No. 480031 (pro hac vice to be filed)

Restaurant Law Center

2055 L Street, N.W.

Suite 700

Washington, D.C. 20036

Telephone: (202) 331-5913

Counsel for the Restaurant Law Center

Pratik A. Shah (Lead Attorney)

 D.C. Bar No. 497108 (pro hac vice)

James E. Tysse 

 D.C. Bar No. 9787522 (pro hac vice)

James C. Crowley

 D.C. Bar No. 208946 (pro hac vice)

Margaret O. Rusconi

 D.C. Bar No. 1719371 (pro hac vice)

Akin Gump Strauss Hauer & Feld LLP

2001 K Street, N.W.

Washington, D.C. 20006

Telephone: (202) 887-4000

Facsimile: (202) 887-4288

pshah@akingump.com

jtysse@akingump.com

jcrowley@akingump.com

mrusconi@akingump.com

Laura P. Warrick

 Texas Bar No. 24079546

Akin Gump Strauss Hauer & Feld LLP

2300 N. Field Street, Suite 1800

Dallas, TX 75201

Telephone: (214) 969-4770

Facsimile: (214) 969-4343

lwarrick@akingump.com

Counsel to Plaintiffs Chamber of Commerce of the 

United States of America, American Hotel and 

Lodging Association; Associated Builders and 

Contractors; Associated General Contractors of 

America; Coalition for a Democratic Workplace; 

International Franchise Association; Longview 

Chamber of Commerce; National Association of 

Convenience Stores; National Retail Federation; 

Restaurant Law Center; Texas Association of 

Business; and Texas Restaurant Association
CERTIFICATE OF SERVICE 

The undersigned certifies that on November 13, 2023, the foregoing document was 

electronically submitted with the clerk of the court for the United States District Court, Eastern 

District of Texas, using the electronic case file system of the court. I hereby certify that I have 

served all counsel of record electronically or by another manner authorized by Federal Rule of 

Civil Procedure 5(b)(2). 

/s/ Pratik A. Shah

Pratik A. Shah 
ADDENDUM

TABLE OF CONTENTS

29 C.F.R. § 103.40 (2023) ....................................................................................................... Add. 1

29 C.F.R. § 103.40 (2020) ....................................................................................................... Add. 3
Add. 1 

Code of Federal Regulations 

Title 29. Labor 

Subtitle B. Regulations Relating to Labor 

Chapter I. National Labor Relations Board 

Part 103. Other Rules 

Subpart E. Joint Employers 

§ 103.40 Joint Employers (2023) 

(a) An employer, as defined by section 2(2) of the National Labor Relations Act (the Act), is 

an employer of particular employees, as defined by section 2(3) of the Act, if the employer 

has an employment relationship with those employees under common-law agency 

principles. 

(b) For all purposes under the Act, two or more employers of the same particular employees 

are joint employers of those employees if the employers share or codetermine those matters 

governing employees’ essential terms and conditions of employment.

(c) To “share or codetermine those matters governing employees’ essential terms and 

conditions of employment” means for an employer to possess the authority to control 

(whether directly, indirectly, or both), or to exercise the power to control (whether directly, 

indirectly, or both), one or more of the employees’ essential terms and conditions of 

employment.

(d) “Essential terms and conditions of employment” are

(1) Wages, benefits, and other compensation; 

(2) Hours of work and scheduling;

(3) The assignment of duties to be performed;

(4) The supervision of the performance of duties;

(5) Work rules and directions governing the manner, means, and methods of the 

performance of duties and the grounds for discipline;

(6) The tenure of employment, including hiring and discharge; and

(7) Working conditions related to the safety and health of employees.

(e) Whether an employer possesses the authority to control or exercises the power to control 

one or more of the employees’ essential terms and conditions of employment is determined 

under common-law agency principles. For the purposes of this section: 
Add. 2 

(1) Possessing the authority to control one or more essential terms and conditions of 

employment is sufficient to establish status as a joint employer, regardless of 

whether control is exercised. 

(2) Exercising the power to control indirectly (including through an intermediary) one 

or more essential terms and conditions of employment is sufficient to establish 

status as a joint employer, regardless of whether the power is exercised directly.

(f) Evidence of an entity’s control over matters that are immaterial to the existence of an 

employment relationship under common-law agency principles and that do not bear on the 

employees’ essential terms and conditions of employment is not relevant to the 

determination of whether the entity is a joint employer. 

(g) A party asserting that an employer is a joint employer of particular employees has the 

burden of establishing, by a preponderance of the evidence, that the entity meets the 

requirements set forth in paragraphs (a) through (f) of this section.

(h) A joint employer of particular employees

(1) Must bargain collectively with the representative of those employees with respect 

to any term and condition of employment that it possesses the authority to control 

or exercises the power to control, regardless of whether that term or condition is 

deemed to be an essential term and condition of employment under this section for 

the purposes of establishing joint-employer status; but 

(2) Is not required to bargain with respect to any term and condition of employment 

that it does not possess the authority to control or exercise the power to control.

(i) The provisions of this section are intended to be severable. If any paragraph of this section 

is held to be unlawful, the remaining paragraphs of this section not deemed unlawful are 

intended to remain in effect to the fullest extent permitted by law.
Add. 3 

Code of Federal Regulations 

Title 29. Labor 

Subtitle B. Regulations Relating to Labor 

Chapter I. National Labor Relations Board 

Part 103. Other Rules 

Subpart E. Joint Employers 

§ 103.40 Joint Employers (2020) 

(a) An employer, as defined by Section 2(2) of the National Labor Relations Act (the Act), 

may be considered a joint employer of a separate employer’s employees only if the two 

employers share or codetermine the employees’ essential terms and conditions of 

employment. To establish that an entity shares or codetermines the essential terms and 

conditions of another employer’s employees, the entity must possess and exercise such 

substantial direct and immediate control over one or more essential terms or conditions of 

their employment as would warrant finding that the entity meaningfully affects matters 

relating to the employment relationship with those employees. Evidence of the entity’s 

indirect control over essential terms and conditions of employment of another employer's 

employees, the entity’s contractually reserved but never exercised authority over the 

essential terms and conditions of employment of another employer’s employees, or the 

entity's control over mandatory subjects of bargaining other than the essential terms and 

conditions of employment is probative of joint-employer status, but only to the extent it 

supplements and reinforces evidence of the entity’s possession or exercise of direct and 

immediate control over a particular essential term and condition of employment. 

Joint-employer status must be determined on the totality of the relevant facts in each 

particular employment setting. The party asserting that an entity is a joint employer has the 

burden of proof. 

(b) “Essential terms and conditions of employment” means wages, benefits, hours of work, 

hiring, discharge, discipline, supervision, and direction.

(c) “Direct and Immediate Control” means the following with respect to each respective 

essential employment term or condition:

(1) Wages. An entity exercises direct and immediate control over wages if it actually 

determines the wage rates, salary or other rate of pay that is paid to another 

employer’s individual employees or job classifications. An entity does not exercise 

direct and immediate control over wages by entering into a cost-plus contract (with 

or without a maximum reimbursable wage rate). 

(2) Benefits. An entity exercises direct and immediate control over benefits if it 

actually determines the fringe benefits to be provided or offered to another 

employer’s employees. This would include selecting the benefit plans (such as 
Add. 4 

health insurance plans and pension plans) and/or level of benefits provided to 

another employer’s employees. An entity does not exercise direct and immediate 

control over benefits by permitting another employer, under an arm’s-length 

contract, to participate in its benefit plans.

(3) Hours of work. An entity exercises direct and immediate control over hours of work 

if it actually determines work schedules or the work hours, including overtime, of 

another employer’s employees. An entity does not exercise direct and immediate 

control over hours of work by establishing an enterprise’s operating hours or when 

it needs the services provided by another employer.

(4) Hiring. An entity exercises direct and immediate control over hiring if it actually 

determines which particular employees will be hired and which employees will not. 

An entity does not exercise direct and immediate control over hiring by requesting 

changes in staffing levels to accomplish tasks or by setting minimal hiring standards 

such as those required by government regulation.

(5) Discharge. An entity exercises direct and immediate control over discharge if it 

actually decides to terminate the employment of another employer’s employee. An 

entity does not exercise direct and immediate control over discharge by bringing 

misconduct or poor performance to the attention of another employer that makes 

the actual discharge decision, by expressing a negative opinion of another 

employer’s employee, by refusing to allow another employer’s employee to 

continue performing work under a contract, or by setting minimal standards of 

performance or conduct, such as those required by government regulation.

(6) Discipline. An entity exercises direct and immediate control over discipline if it 

actually decides to suspend or otherwise discipline another employer’s employee. 

An entity does not exercise direct and immediate control over discipline by bringing 

misconduct or poor performance to the attention of another employer that makes 

the actual disciplinary decision, by expressing a negative opinion of another 

employer’s employee, or by refusing to allow another employer’s employee to 

access its premises or perform work under a contract.

(7) Supervision. An entity exercises direct and immediate control over supervision by 

actually instructing another employer’s employees how to perform their work or by 

actually issuing employee performance appraisals. An entity does not exercise 

direct and immediate control over supervision when its instructions are limited and 

routine and consist primarily of telling another employer’s employees what work 

to perform, or where and when to perform the work, but not how to perform it.

(8) Direction. An entity exercises direct and immediate control over direction by 

assigning particular employees their individual work schedules, positions, and 

tasks. An entity does not exercise direct and immediate control over direction by 

setting schedules for completion of a project or by describing the work to be 

accomplished on a project.
Add. 5 

(d) “Substantial direct and immediate control” means direct and immediate control that has a 

regular or continuous consequential effect on an essential term or condition of employment 

of another employer’s employees. Such control is not “substantial” if only exercised on a 

sporadic, isolated, or de minimis basis. 

(e) “Indirect control” means indirect control over essential terms and conditions of 

employment of another employer’s employees but not control or influence over setting the 

objectives, basic ground rules, or expectations for another entity’s performance under a 

contract.

(f) “Contractually reserved authority over essential terms and conditions of employment” 

means the authority that an entity reserves to itself, under the terms of a contract with 

another employer, over the essential terms and conditions of employment of that other 

employer’s employees, but that has never been exercised.