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The New “Joint Employer” Rule Issued by the US National Labor Relations Board

Submitted by Firm:
Cline Williams Wright Johnson & Oldfather, LLP
Firm Contacts:
Tara Stingley
Article Type:
Legal Article
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4 Simple Tips About The New “Joint Employer” Rule Issued by the US National Labor Relations Board:

  1. Understand the Basics of Joint Employer Status: Begin by familiarizing yourself with what joint employer status means. It's a legal concept where two entities are considered the employer of the same group of employees. This can occur in various employment scenarios, such as with temporary staffing agencies, subcontractors, or in franchise relationships.
  2. Explore the Historical Context and Recent Changes: Research the evolution of the joint employer rule, especially the significant changes in recent years. Pay attention to the Browning-Ferris decision in 2015 and its impact, the 2020 rule reversal, and the reinstatement of the broader definition of joint employer status under the NLRB’s 2023 rule.
  3. Examine the Implications of the 2023 Rule: Dive into the specific criteria and conditions listed in the 2023 rule that determine joint employer status. This includes understanding the broader range of factors like indirect or reserved control over employees, which can now lead to a joint employer finding.
  4. Stay Updated on Future Developments: Since labor laws, particularly those regarding joint employer status, are subject to change based on political and legal developments, it's important to stay informed. Follow updates from reliable legal resources, labor law experts, and the National Labor Relations Board's announcements for the latest information.

The New “Joint Employer” Rule Issued by the US National Labor Relations Board

Welcome to our latest blog post on "Employment Matters" – a series brought to you by the Employment Law Alliance, the world's largest network of labor and employment lawyers. I’m Tara Stingley, a partner with Cline Williams in Omaha, Nebraska, and your host for this insightful journey into the evolving landscape of labor law. In today's post, we're delving into the critical issue of the new joint employer rule as issued by the National Labor Relations Board (NLRB).

Understanding Joint Employer Status

What is a joint employer? Joint employer status is a pivotal concept in labor law, essentially meaning that two entities can legally be considered the employer of the same group of employees. This status is crucial under various employment laws, including wage and hour laws, discrimination laws, and notably, the National Labor Relations Act.

Common Situations for Joint Employer Status

Joint employer situations often arise in scenarios involving temporary staffing agency employees, subcontractors at an employer's worksite, or in franchisee-franchisor relationships. Understanding these dynamics is vital for companies to navigate legal responsibilities effectively.

The Significance of Joint Employer Status for Companies 

Employers strive to avoid joint employer status to sidestep liabilities for another employer's legal missteps. This concern is particularly pronounced when dealing with minimum wage violations or potential unionization efforts by employees of temporary labor agencies or subcontractors. The legal interpretation of joint employer status under the National Labor Relations Act has seen considerable shifts over time. Keeping abreast of these changes is essential for companies to remain compliant and minimize legal risks.

The Fluctuating Nature of the Joint Employer Rule

Joint Employer Rule

In 2015, the NLRB's decision in the Browning-Ferris case significantly broadened the definition of a joint employer. This ruling posited that even reserved, indirect, or limited control over employees could render an entity a joint employer under the National Labor Relations Act. This was a departure from the previous standard, which necessitated actual control over employees or their employment terms. Browning-Ferris was partially overturned on appeal, leading to the 2020 rule that demanded substantial, direct, and immediate control over the essential terms and conditions of employment of another company's employees. This reinstated the focus on actual rather than reserved control.

Recent Developments and Political Implications

2023 Rule and the Pendulum Swing: On October 26, 2023, the NLRB scrapped the 2020 rule, adopting yet another definition of joint employer. This recent change reflects the ongoing pendulum swing of decisions influenced by changes in presidential administrations. Typically, Republican administrations favor more employer-friendly policies, while Democratic administrations lean towards employee or labor-friendly decisions.

Legal Whiplash for US Employers: This constant shift in policies has left U.S. employers struggling to keep up, leading to what can be described as legal whiplash. These rapid changes, especially in the joint employer rule, are indicative of the broader instability in labor law under varying political climates.

The Joint Employer Standard Under the Biden Administration

Under the Biden Administration, the NLRB's 2023 rule largely reinstated the Browning-Ferris decision. This move signals a return to a broader definition of joint employer status, emphasizing the potential for indirect control over employees. This shift is likely to have significant implications for businesses, especially those using temporary staffing, subcontractors, or operating in franchise models.

The NLRB's 2023 rule takes a more expansive approach to defining joint employer status. Now, a company may be deemed a joint employer even if its control over the workforce is indirect, reserved, or not exercised — essentially, a form of 'imaginary' control. This represents a significant shift from previous interpretations, where additional factors were required to establish joint employer status.

The Exclusive List of Terms and Conditions 

The 2023 rule specifies an exclusive list of essential terms and conditions of employment. This list includes factors like wages, benefits, hours of work, duty assignments, supervision, work rules, grounds for discipline, hiring and discharge policies, and working conditions related to safety and health. This comprehensive list alters the dynamics significantly for temporary staffing agencies, franchise relationships, and similar arrangements.

Immediate Impacts of the 2023 Rule 

The new rule is expected to accelerate union organizing efforts across the U.S. It increases the likelihood that a group of employees may seek to organize and potentially involve multiple employers in collective bargaining. This could extend to situations involving temporary staffing agency employees, subcontractors, and franchisee employees.There is also a heightened risk of employers facing liability for unfair labor practices committed by other entities. This underscores the need for companies to be more vigilant about their relationships with other businesses and the labor practices of those entities.

Broader Implications for Traditional Employers

Broader Implications for Traditional Employers

With the introduction of the NLRB's 2023 rule, traditional employers are urged to reassess their business relationships, especially those that might lead to joint employer status. It's crucial for companies to understand the nuances of this rule and how it applies to different scenarios, including relationships with temporary staffing agencies, subcontractors, and franchise operations.

Employers need to take proactive steps to protect themselves from potential joint employer findings under the National Labor Relations Act, wage and hour laws, or discrimination laws. Given the groundbreaking changes in U.S. labor law, being prepared and informed is more important than ever to avoid being caught off-guard. The NLRB has been actively revising and updating labor laws, indicating that more developments may be on the horizon. Employers must remain vigilant and adaptable to these changes to ensure compliance and minimize legal risks.

Closing and Additional Resources

We thank Adam Santucci for his insights and for breaking down the complexities of the NLRB's new rule. His expertise sheds light on a topic that is of critical importance to employers across the United States. For our listeners interested in connecting with Adam or exploring more about labor law, we encourage you to visit the ELA website. There, you can find a wealth of resources, including upcoming webinars, white papers, on-demand content, and the ELA's exclusive Global Employer Handbook.

Thank you for joining us on this journey through the evolving landscape of the joint employer rule and its impact on U.S. labor law. The Employment Law Alliance, as the world's largest network of labor and employment lawyers, remains committed to providing timely updates and expert guidance on these critical issues. Stay tuned for more insightful discussions and expert analyses in our "Employment Matters" series. I'm Tara Stingley, and I appreciate you tuning in.

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