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The NLRB publishes new “joint-employer” rule

The NLRB publishes new “joint-employer” rule, making it easier for employees to require bargaining or file ULPs with more than one employer.

In its latest rule-making about-face, on October 26 the National Labor Relations Board issued its Final Rule (88 FR 73946, 29 CFR 103) on determining joint-employer status, rescinding the Board’s employer-friendly 2020 rule in favor of new employee-friendly standards to determine whether employee bargaining or ULP processing may be required with two or more employers.

In many businesses, especially in medium and large organizations, the people running around the property are a mix of a company’s direct-hire employees, temp-agency staff, contractors, security staff and perhaps sub-contractors. They are typically hired, laid off, supervised, disciplined and paid within each of their distinct and separate business entities.

But joint-employer allegations may surface when, for example, a contractor’s direct employees feel that some essential working conditions are controlled or influenced by someone outside their own organization, like the business’s owner. If so, they may ask the Board for a bargaining order or to process a ULP with both entities.

Joint-employer status has a long and winding history in the annals of the courts and the NLRB, moving between employer-friendly interpretations recognizing separate and distinct entities; and employee- and union-friendly interpretations that easily create joint employment for purposes of bargaining and ULP considerations.

Welcome to the newest and most employee- and union-friendly version of the Board’s joint-employer rule.

The primary feature of the now-rescinded 2020 rule was a requirement that an entity actually exercise substantial and material control over a working condition, either directly or indirectly, to be considered an employer. The mere reservation of rights to control did not create employer status; nor did the occasional or random act of control. Employers could carefully separate control and likely remain safe from co-employer claims.

The new Final Rule, which will be effective December 26, 2023, removes the control requirement. A determination of employment will now turn on whether a putative joint employer possesses the authority to control or exercises the power to control one or more of certain employees’ essential terms and conditions of employment.

The Board’s new rule does attempt to provide clarity by enumerating exclusive “essential terms and conditions of employment” that it will consider, as: “(1) wages, benefits, and other compensation; (2) hours of work and scheduling; (3) the assignment of duties to be performed; (4) the supervision of the performance of duties; (5) work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline; (6) the tenure of employment, including hiring and discharge, and (7) working conditions related to the safety and health of employees.”

It will be up to the Board and the courts to flesh out what each of the seven categories mean as applied to facts of representation and ULP cases.

If two or more employers meet the Board’s joint-employer standard for a given employee, both may be considered the employer under the NLRA for purposes of bargaining and processing of unfair labor practices (ULPs) – at least regarding the conditions of employment over which an individual employer has authority.

Wise employers will carefully review their contracts with vendors and their relationships with other entities to mitigate risks of joint employer status. No one wants to sit at the bargaining table to discuss conditions of employment over which they exercise no control, like the wages or hours of a contracted janitorial staff. Fine-print boilerplate in standard procurement contracts should receive special attention. Employees or unions may find hidden gems that, although never exercised, express reserved powers of control.

Ever-changing rules and employment laws can tax any business and create risks that can be managed with training and good guidance. Please visit our Services page and see how MARC can provide help in managing issues like these in your organization.


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