The National Labor Relations Board (“NLRB”) has proposed a joint employer rule change that would upend a controversial Obama-era decision that drastically expanded who can be subject to liability for unfair labor practices and deemed an essential party for collective bargaining.FN1 The NLRB’s proposed rule reinstates the “traditional test,” whereby an employer may be considered a joint employer of another employer’s employees only if it possesses and actually exercises substantial direct and immediate control over the employees’ essential terms and conditions of employment.
A finding that a business is a joint employer has wide-reaching consequences, including potential liability for unfair labor practices committed by another business and the need to bargain over terms and conditions of employment of another company’s employees.FN2 The proposed rule is good news for businesses with interconnecting operations or those that supply employees to other businesses like staffing agencies, franchises, and companies with subcontractors, because a joint employer finding requires evidence of direct and actual control over essential terms and conditions of employment. FN3
Comments on the NLRB’s proposed rule are due November 13, 2018. Readers are urged to contact one of Campbell Litigation’s attorneys for questions on the possible effects of the rulemaking on their business.
FN1: The Standard for Determining Joint-Employer Status, 83 Fed. Reg. 46681 (proposed September 14, 2018) (to be codified at 29 C.F.R. 179). As background, under the long-standing “traditional test,” businesses were deemed joint employers if they actually exercised direct and immediate control over a group of employees who were formally employed by another. See Hy-Brand Indus. Contractors, Ltd., 365 NLRB No. 156 (Dec. 14, 2017). In the 2015 case Browning-Ferris, the NLRB set aside the traditional test and held that a business could be a joint employer even if it merely had indirect or potential control over workers who were formally employed by another entity. Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015). Although the NLRB attempted to restore the traditional test in the Hy-Brand case, the NLRB later vacated that decision on procedural grounds—namely, a perceived conflict of interest of Board member William J. Emanuel. For further background information, see:
FN2: Additionally, “a finding of joint-employer status may determine whether picketing directed at a particular business is primary and lawful, or secondary and unlawful.” NLRB Fact Sheet: Proposed Rule Regarding the Standard for Determining Joint Employer Status, https://www.nlrb.gov/sites/default/files/attachments/news-story/node-6822/nlrbfactsheetonproposedruleregardingthestandardfordeterminingjoint-employerstatus.pdf
FN3: See Joyce M. Rosenberg, NLRB proposes new joint employer standard, Associated Press (September 17, 2018), https://www.apnews.com/80b2499d51e44318affa6091b2ecfd6b