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NLRB Proposes Joint-Employer Standard Rule

Today, the National Labor Relations Board (Board) published a Notice of Proposed Rulemaking (NPR) to establish the standard for finding that one entity is a joint employer with another entity.  Under the proposed rule, an employer may be a joint-employer of another employer’s employees “only if [1] it possesses and exercises direct and immediate control over the essential terms and conditions of employment and [2] has done so in a manner that is not limited and routine.”  In addition, “indirect influence” and “contractual reservations of authority” would be insufficient to establish joint-employer status.  By establishing this joint-employer rule, the Board makes clear that businesses should not be drawn into collective-bargaining relationships with the employees of other businesses when they have had no part in deciding that other business’s employees’ wages, benefits or other essential terms and conditions of employment.

According to the Board, issuing this rule will promote consistency, stability and predictability in the ability to determine joint-employer status, supposedly moving us away from the apparent ebb and flow of the joint-employer standard that we have seen in recent years.  In 2015, the Board held in Browning-Ferris Industries that as part of the test for joint-employer status, the Board could consider whether an employer has exercised indirect control, or merely reserved the authority to exercise such control, over another entity’s employees’ terms and conditions of employment through an intermediary.  Last year, in Hy-Brand Industrial Contractors, the Board returned to its pre-Browning-Ferris standard, overturning that decision, and holding that joint-employer status will only be established where there is proof that the employer in question directly, immediately and actually exercised control over the other employer’s employees’ essential terms of employment.  Then, in early 2018, the Board vacated Hy-Brand due to ethical concerns having to do with Member Emanuel’s participation in the decision.

The Board also opines that the tightened standard will further the intent of the NLRA.  (Contrast this position with the Board’s position in 2015 that a relaxed standard “is designed to better effectuate the purposes of the [NLRA] in the current economic landscape.”)

The Board welcomes public comments on the proposed rule by November 13, 2018.

 

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