27 February 2020

NLRB Finalizes New Joint Employer Rule

The NLRB recently issued its new and improved version of the Joint Employer rule.  Because this topic has been in the news for seemingly the last several years, it is helpful to trace how we arrived at this point.  For years, the Board used to utilize a more employer-friendly joint employer standard.  In 2015, the Board changed course and adopted an employee-friendly standard, which required an employer to possess only “indirect control” over employees for a finding of joint employer liability.  The NLRB attempted to reverse this new standard just two years later, but the Board ultimately vacated that decision following a potential conflict of interest involving one of the Board members.  Following this series of events, the Board decided instead to change the Joint Employer standard through the rulemaking process.

After several months of tinkering, the Board released its final version of the Joint Employer standard yesterday.  Under the new standard, an employer must have “substantial and direct control” of at least one key component of an employee’s job to be considered an employer for purpose of determining an employer’s liability for unfair labor practices. These key components include things such as wages, benefits, hiring, discharge, and discipline, among other things. Importantly, the NLRB emphasized that sporadic or isolated control over these key components is not sufficient to establish joint employer status. Rather, the control must be regular or continuous.

While not every employer will feel the impact of this new Joint Employer rule, it is a critical rule for franchisors, contractors, staffing agencies, and other businesses that exercise some control over employees that work for another employer. If the Board finds a business is a joint employer, the business will be held jointly liable for unfair labor practices alleged by the employee(s).  This new rule makes it less likely that the Board will impose joint employer liability on your business unless you are directly controlling a key aspect of employees’ employment.

The Board’s rule is set to take effect on April 27. Please contact your Miller Johnson attorney if you have questions about this new rule or any other employment related matter.