On September 6, 2022, the National Labor Relations Board (NLRB) issued a Notice of Proposed Rulemaking as to the legal standard for determining joint-employer status under the National Labor Relations Act (NLRA).
Under the current analysis of joint-employer status established by the NLRB during the Trump administration in 2020, a company must exercise “substantial direct and immediate control” over essential terms and conditions of employment to be considered the employer of another company’s employees. “Substantial direct and immediate control” is defined as “direct and immediate control that has a regular or continuous consequential effect on an essential term or condition of employment of another employer’s employees.” The NLRB further stated that indirect control or contractually-reserved control that is not exercised would not establish a joint employer relationship.
By contrast, the proposed rule lessens the standard by which joint employment will be established. Employers would be considered joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment.” The proposed rule would define “share and codetermine” to mean “for an employer to possess the authority to control (whether directly, indirectly, or both), or to exercise the power to control (whether directly, indirectly, or both), one or more of the employees’ essential terms and conditions of employment.” Further, the proposal states that “possessing the authority to control is sufficient to establish status as a joint employer, regardless of whether control is exercised.”
The proposed rule expands upon what will be deemed an “essential term and condition of employment.” Under the 2020 rule’s exhaustive list, wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction are essential terms and conditions. The proposed rule adds certain terms and conditions such as “control over workplace health and safety” and “rules and directions governing the manner, means, and methods of work performance.” The proposed rule indicates that the list is not exhaustive and requires “flexibility” in the future.
If adopted, the impact of the proposed rule on employers that utilize or provide sourced labor will likely be dramatic. More workers will be deemed joint employees of two legally separate entities.
The NLRA provides that joint employers have a duty to bargain with a union and are both subject to unfair labor practice charges and potential liability.
The NLRB will accept public comment on the proposed rulemaking before finalizing the rule on or before November 7, 2022. A reply to those comments received during the initial comment period must be received by the NLRB on or before November 21, 2022. We will monitor this matter closely.
A copy of the Notice can be found here.
Lindner & Marsack, S.C. represents employers in all areas of labor and employment law. If you have any questions about the recent proposed rule by the National Labor Relations Board or any other labor or employment issue involving your business, please contact us at any time.