Earlier this week, the National Labor Relations Board (NLRB) issued its final rule governing joint employment status under the National Labor Relations Act (NLRA). The final rule restores the joint employer standard the NLRB applied for several decades before its 2015 decision in Browning-Ferris. The NLRB says Browning-Ferris unsettled the law in this significant area of the law by holding that a company could be deemed a joint employer if its control over the essential terms and conditions of another business’s employees was merely indirect, limited and routine, or contractually reserved but never exercised. The final rule is intended to provide clarity, stability, and predictability.
To be a joint employer under the final rule, a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees. As defined in the final rule, “essential terms and conditions of employment” are wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. “Substantial direct and immediate control” means regular or continuous consequential effect on an essential term or condition of employment of another employer’s employees. Control is not “substantial” if it is only exercised on a sporadic, isolated, or de minimis basis.
According to the NLRB, if two entities are joint employers, both must bargain with the union that represents the jointly employed employees, both are subject to union picketing or other economic pressure in a labor dispute, and both can be found jointly and severally liable for unfair labor practices committed by the other.
The final rule will go into effect on April 27, 2020.
This blog article is intended for general informational purposes only and should not be construed as legal advice or opinion. Contact myHRcounsel with questions concerning specific facts and circumstances.