A federal judge in Texas on March 8 vacated the National Labor Relations Board’s recent rule on joint-employer status, the NLRB announced. US District Judge J. Campbell Barker had previously stayed the joint employer rule until March 11. If the new rule had come into effect, it could have treated all businesses with contingent workers as joint employers when it comes to labor relations.

“The district court’s decision to vacate the board’s rule is a disappointing setback but is not the last word on our efforts to return our joint-employer standard to the common law principles that have been endorsed by other courts,” NLRB Chairman Lauren McFerran said in the press release. “The agency is reviewing the decision and actively considering next steps in this case.”

In the decision, the judge defined the new joint-employment regulation as overbroad, according to a report by law firm Littler Mendelson. For now, joint-employer status will continue to be determined by regulations adopted by the board in 2020.

“If the 2023 rule had come into effect, it would have treated virtually every business that engages contingent temporary staff as a joint employer because the specified ‘essential terms and conditions of employment’ over which the hirer has direct or indirect control was so broad,” said Fiona Coombe, director of legal and regulatory research at SIA.

The new rule could impact companies that use staffing firms and franchisors, SIA has reported. The prior rule was issued during the Trump administration and made it easier for firms to avoid a finding of joint-employer status.

The Associated Press reported the new rule would have made it easier for unions to organize at large firms.