NLRB nears completion of joint employer rule.
By Lowell Randel
In fall 2022, the U.S. National Labor Relations Board (NLRB) released a Notice of Proposed Rulemaking (NPRM) regarding policies for determining joint employer status under the National Labor Relations Act.
The rulemaking is the latest in a series of competing actions taken by recent presidential administrations to clarify the standards for when a company is considered a joint employer. The latest rulemaking would rescind and replace the joint employer regulation finalized during the Trump Administration in 2020, that focused on the standard of “direct and immediate control.”
The NLRB proposal would return to the Obama-era policies for determining joint employment. Under the proposal, one company may be deemed the joint employer of a second company’s employees not only where it directly or immediately exercises control over the second company’s workforce, but where the first company’s putative control is indirect, or even simply reserved but not ever actually exercised.
According to the NLRB, the proposed changes are intended to explicitly ground the joint-employer standard in established common-law agency principles, consistent with Board precedent and guidance that the Board has received from the U.S. Court of Appeals for the DC Circuit. Under the proposed rule, two or more employers would be considered joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment,” such as wages, benefits and other compensation, work and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment and work rules.
The Board proposes to consider both direct evidence of control and evidence of reserved and/or indirect control over these essential terms and conditions of employment when analyzing joint employer status.
Key Provisions of Proposed Rule
- The proposed rule states that “two or more employers of the same particular employees are joint employers of those employees if the employers share or codetermine those matters governing employees’ essential terms and conditions of employment.”
- The proposed rule would define “share or 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.”
- The proposed rule states that “essential terms and conditions of employment” will “generally include, but are not limited to wages, benefits, and other compensation; hours of work and scheduling; hiring and discharge; discipline; workplace health and safety; supervision; assignment; and work rules and directions governing the manner, means, or methods of work performance.”
- To give determinative weight to the existence of a putative joint employer’s authority to control the essential terms and conditions of employment, whether or not such control is exercised, and without regard to whether any exercise of such control is direct or indirect, such as through an intermediary.
- The proposed rule would clarify that evidence of control over matters that are immaterial to the existence of an employment relations or that do not bear on an employee’s essential terms and conditions of employment is not relevant to inquiries into joint employer status.
- The party asserting that an employer is a joint employer of particular employees has the burden of establishing that relationship by a preponderance of the evidence.
The proposed changes have raised concerns across the business community. The regulation would have a significant impact on employers and result in an increase in the number of companies found to be joint employers.
Being found as a joint employer could have a variety of implications. For example, joint employers may be required to bargain with a union representing jointly employed workers. Joint employers may be subject to joint and several liabilities for unfair labor practices committed by the other employer. Joint employers may also be subject to labor picketing that would otherwise be unlawful.
Save Local Business Act
To address concerns with the NRLB proposed rule, Senator Roger Marshall (R-KS) and Representative James Comer (R-KY) have introduced the Save Local Business Act. The legislation would amend the National Labor Relations Act and the Fair Labor Standards Act to make clear that an employer may be considered a joint employer in relation to an employee only if such employer directly, actually and immediately exercises significant control over the essential terms and conditions of employment.
According to Rep. Comer, the Save Local Business Act would:
- Amend the National Labor Relations Act and the FLSA to clarify that two or more employers must have “actual, direct and immediate” control over employees to be considered joint employers.
- Roll back a convoluted joint employer scheme that threatens job creation and undermines the American Dream.
- Restore a commonsense definition of employer to provide certainty and stability for workers and employers.
- Protect workers and local employers from future overreach by unelected bureaucrats and activist judges. GCCA recently joined a diverse group of business and industry organizations in sending a letter of support for the Save Local Business Act to Sen. Marshall and Rep. Comer.
This legislation comes at a critical time as the NLRB plans to finalize its proposed joint employer rule by August 2023. GCCA will keep members updated on the status of both the NLRB rulemaking as well as the Save Local Business Act as the process moves forward.
LOWELL RANDEL is Senior Vice President, Government and Legal Affairs at GCCA. EMAIL: lrandel@gcca.org