NLRB pushes joint employer rule effective date to February

UPDATE: Nov. 16, 2023: The National Labor Relations Board pushed its joint employment rule’s effective date to Feb. 26, 2024, “to facilitate resolution of legal challenges with respect to the rule.” The agency said notice of the extension will be published in the Federal Register shortly.

Dive Brief:

  • The National Labor Relations Board published Thursday a rule updating the standard for determining when multiple employers may be considered joint employers under the National Labor Relations Act.
  • NLRB’s new joint employer rule retains much of the same details from its 2022 proposed rule, specifying that an entity may be considered a joint employer of another employer’s employees if the two share or codetermine essential terms and conditions of employment. Per the rule, joint employers may possess or exercise direct or indirect control over one or more essential terms and conditions of employment.
  • Changes from the proposed rule include an exhaustive list of seven categories of employment terms or conditions that the board will consider essential for the purposes of its joint employer analysis, as well as a description of those it will consider “irrelevant” for such analysis. The final rule also addresses joint employers’ bargaining obligations. The rule is scheduled to be published in the Federal Register tomorrow; it will take effect 60 days after that.

Dive Insight:

NLRB’s final rule will essentially reinstate the standard articulated by the 2015 Obama-era board in Browning-Ferris Industries, a case that has been the center of a nearly decade-long employment law saga.

It also supplants NLRB’s recent joint employer rule, issued in 2020 under a Republican-majority board, which limited joint employer responsibilities to employers that possess and exercise direct and immediate control over essential employment terms.

The new final rule specifies that essential terms and conditions of employment include:

  • Wages, benefits and other compensation.
  • Hours of work and scheduling.
  • Assignment of duties.
  • Supervision and performance of duties.
  • Work rules and directions governing the manner, means and methods of performance as well as grounds for discipline.
  • Tenure of employment, including hiring and discharge.
  • Working conditions related to safety and health of employees.

Evidence of an employer’s control over matters that are “immaterial” both to the existence of a common-law employment relationship as well as control over matters that do not bear on essential employment terms and conditions, is not relevant to NLRB’s joint employer inquiry, per the rule.

“The Board’s new joint-employer standard reflects both a legally correct return to common-law principles and a practical approach to ensuring that the entities effectively exercising control over workers’ critical terms of employment respect their bargaining obligations under the NLRA,” NLRB Chairman Lauren McFerran said in a press release. “While the final rule establishes a uniform joint-employer standard, the Board will still conduct a fact-specific analysis on a case-by-case basis to determine whether two or more employers meet the standard.”

Business group reaction to the news was swift — and critical. Evan Armstrong, VP of workforce at the Retail Industry Leaders Association, called the final rule a “vague, unworkable” risk to businesses whose supply chains rely on business-to-business interactions.

“This overreach is disappointing but not surprising given the current actions of the NLRB,” Armstrong said in an email to HR Dive. “Oversight is sorely needed to reign in the NLRB from exceeding its statutory authority, and RILA will assess all available options to limit the Board’s constant attack on workers.”

Meanwhile, Associated Builders and Contractors, a construction industry trade group, said in a press release that the rule may expose contractors to increased liability and risk. The group added that it “will explore all options to push back on this harmful final rule, including possible litigation.”