The National Labor Relations Board has withdrawn its appeal of a court decision that vacated the agency’s new joint employer standard, according to court filings.

Business groups had sued to stop the rule, and a federal judge in Texas vacated the rule on March 8. The NLRB filed an appeal but on July 19 asked the court to withdraw the rule.

Concerns surfaced that the rule might make virtually every business that engages with temporary staff a joint employer. The US Chamber of Commerce said the withdrawal was a win.

“This is a major legal victory and an important acknowledgment by the NLRB,” Daryl Joseffer, executive VP and chief counsel of the chamber’s commerce litigation center, said in a press release. “The agency’s joint employer rule overstepped its constitutional and statutory authority with this unlawful rule.”

In its legal filing to withdraw the rule, the NLRB stated it is looking into issues raised by the district court.

“The board remains of the opinion that its 2023 rule meets the procedural and substantive requirements of the Administrative Procedure Act and the National Labor Relations Act,” according to NLRB’s court filing. “Given the litigation posture of the rule, however, the board would like the opportunity to further consider the issues identified in the district court’s opinion in the first instance.”

It continued, “In addition to the district court opinion, the board has several rulemaking petitions on its docket regarding the joint employer issue raising similar issues. Thus, the board seeks voluntary dismissal of its notice of appeal under Federal Rule of Appellate Procedure 42 and Fifth Circuit Rule 42.1, to allow it to consider options for addressing the outstanding joint employer matters before it.”

SIA research covered the rule as legislation of interest to the contingent workforce ecosystem.

“Under the proposed final rule, a business would be a joint employer if it has the right to exercise control over any of seven specified terms or conditions of employment, even if it never exercises such control and even if the only way it could exercise such control would be through an intermediary,” according to SIA’s North America Legal Update Q1 2024 report.