Joint employers

On October 26, the NLRB issued its Final Rule addressing the Standard for Determining Joint-Employer Status under the National Labor Relations Act. The Notice of Proposed Rulemaking was published in the Federal Register on September 6, 2022, and the comment period was open until December 7, 2022.

New(est) standard. As explained by the NLRB in its separate announcement of the publication, under the new standard, an entity may be considered a joint employer of a group of employees if each entity has an employment relationship with the employees and they share or codetermine one or more of the employees’ essential terms and conditions of employment.

Essential terms and conditions are defined as

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.

The joint-employer standard is only implicated where an entity employs the workers at issue and has authority to control at least one of those terms or conditions—authority over other matters is not sufficient.

According to the Board, the new final rule “more faithfully grounds the joint-employer standard in established common-law agency principles.” Specifically, the Board notes, the 2023 rule considers the alleged joint employers’ authority to control essential terms and conditions of employment, whether or not that control is exercised, and without regard to whether any such exercise of control is direct or indirect. The 2020 rule, by contrast, set the higher threshold that a putative joint employer must “possess and exercise... substantial direct and immediate control” over essential terms and conditions.

Browning-Ferris. In a separate fact sheet made available by the Board, it also noted that the 2023 standard significantly resembles the 2015 standard established by the Board’s Browning-Ferris decision, which it explains was endorsed in all major respects by the District of Columbia Circuit.

Collective bargaining. Regarding collective bargaining, once an entity is deemed a joint employer based on its control over one or more essential terms and conditions of employment, it will be required to bargain over those particular terms and conditions as well as all other mandatory subjects of bargaining that it possesses or exercises the authority to control. It will not be required to bargain over subjects it does not have authority to control.

Congressional review. The effective date of the new rule is December 26, 2023, and the new standard will only be applied to cases filed after the effective date. The rule has been classified as a major rule subject to congressional review. At the conclusion of that review, if the effective date has been changed, the Board has indicated it will publish a document in the Federal Register to establish the new effective date or to withdraw the rule.

Dissenting member. Members Prouty and Wilcox joined Chairman McFerran in issuing the Final Rule. Member Kaplan dissented.

“The Board’s new joint-employer standard reflects both a legally correct return to common-law principles and a practical approach to ensuring that the entities effectively exercising control over workers’ critical terms of employment respect their bargaining obligations under the NLRA,” said Chairman McFerran. “While the final rule establishes a uniform joint-employer standard, the Board will still conduct a fact-specific analysis on a case-by-case basis to determine whether two or more employers meet the standard.”

Source: Written by Brandi O. Brown, J.D.

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