NLRB Announces Final Joint Employer Rule

The National Labor Relations Board (the “NLRB”) announced yesterday that it will issue its final rule for determining joint-employer status under the National Labor Relations Act (the “NLRA”) today, February 26, 2020. This announcement makes the NLRB the second in a trio of federal agencies who recently declared their intent to clarify and update joint-employer tests under their respective governing laws. Earlier this year, the Department of Labor released its final rule to define joint-employer status under the Fair Labor Standards Act, and the Equal Employment Opportunity Commission has indicated they will soon release guidance on defining joint-employer status under federal anti-discrimination laws.

As anticipated, the final rule will return to the “direct and immediate control” standard which was used prior to the 2015 Browning-Ferris decision. In basic terms, the direct and immediate control standard means that in order to be considered a “joint-employer” under the NLRA, and thus be required to comply with and be liable for any violations of that law, a company must have substantial direct control over the essential terms and conditions of employment of another employer’s employees, and that control must be actually used and not just potential. The essential terms of employment include: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.

This standard narrows the definition of a joint-employer under the NLRA, making it less likely that a company will be found a joint-employer by the NLRB. The NLRB has stated that it intends the new rule to grant employers certainty in structuring their business relationships, and unions clarity in whom they should bargain with regarding terms and conditions of employment. The final rule will go into effect on April 27, 2020. Employers who are potential joint-employers should take the time before then to get familiar with the new rule and how it might affect their business relationships moving forward. Stay tuned for a future post with a more in-depth analysis and examination of the final rule following its issuance tomorrow.

Subscribe To Viewpoints