September 7, 2022<\/p>\n
By: David Keating<\/p>\n
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).<\/p>\n
Under the current analysis of joint-employer status established by the NLRB during the Trump administration in 2020, a company must exercise \u201csubstantial direct and immediate control\u201d over essential terms and conditions of employment to be considered the employer of another company\u2019s employees.\u00a0 \u201cSubstantial direct and immediate control\u201d is defined as \u201cdirect and immediate control that has a regular or continuous consequential effect on an essential term or condition of employment of another employer\u2019s employees.\u201d\u00a0 The NLRB further stated that indirect control or contractually-reserved control that is not exercised would not establish a joint employer relationship.<\/p>\n
By contrast, the proposed rule lessens the standard by which joint employment will be established. Employers would be considered joint employers if they \u201cshare or codetermine those matters governing employees\u2019 essential terms and conditions of employment.\u201d\u00a0 The proposed rule would define \u201cshare and codetermine\u201d to mean \u201cfor 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\u2019 essential terms and conditions of employment.\u201d \u00a0Further, the proposal states that \u201cpossessing the authority to control is sufficient to establish status as a joint employer, regardless of whether control is exercised.\u201d<\/p>\n
The proposed rule expands upon what will be deemed an \u201cessential term and condition of employment.\u201d Under the 2020 rule\u2019s exhaustive list, wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction are essential terms and conditions.\u00a0 The proposed rule adds certain terms and conditions such as \u201ccontrol over workplace health and safety\u201d and \u201crules and directions governing the manner, means, and methods of work performance.\u201d The proposed rule indicates that the list is not exhaustive and requires \u201cflexibility\u201d in the future.<\/p>\n
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.<\/p>\n
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.<\/p>\n
The NLRB will accept public comment on the proposed rulemaking before finalizing the rule on or before November 7, 2022.\u00a0 A reply to those comments received during the initial comment period must be received by the NLRB on or before November 21, 2022.\u00a0 We will monitor this matter closely.<\/p>\n