A federal appeals court ruling Dec. 28 could significantly complicate an ongoing rulemaking by the National Labor Relations Board and constrain the agency to a standard close to the more expansive test for ‘joint employment’ liability that’s currently in place.

The National Labor Relations Board acted properly in 2015 when it adopted a more expansive test for determining when companies in franchise, staffing, and other relationships should be considered joint employers for liability and collective bargaining purposes, the D.C. Circuit Court held Dec. 28. The test has been the subject of heated debate in the business community, courts and Congress,...