Changes to NLRB Joint-Employer Standard

September 19, 2018

On Sept. 14, the National Labor Relations Board (NLRB) published a Notice of Proposed Rulemaking in the Federal Register regarding its joint-employer standard.

Under the proposed rule, an employer may be found to be a joint-employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner that is not limited and routine. Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship. When a company is found to be in a joint-employer relationship, it can be forced to bargain with the jointly employed workers and sued for any unfair labor practices committed by the other employer, NLRB said.

The fight over joint-employer liabilities dates back to 2015 when the NLRB, controlled by Obama Administration appointees, overturned the previous standard in a case involving Browning-Ferris Industries Inc. In that case, the Board issued a more relaxed standard, finding that a company could be considered a joint-employer if it has “indirect” control over the terms and conditions of another employer’s employees or has the “reserved authority to do so.”

As explained in the Notice, rulemaking in this important area of the law would foster predictability, consistency and stability in the determination of joint-employer status. The proposed rule reflects the Board majority’s initial view, subject to potential revision in response to public comments, that the National Labor Relations Act’s intent is best supported by a joint-employer doctrine that does not draw third parties, who have not played an active role in deciding wages, benefits, or other essential terms and conditions of employment, into a collective-bargaining relationship for another employer’s employees.

NLRB Board Chairman John F. Ring said in a release that the new proposal would “promulgate a final rule that clarifies the joint-employer standard in a way that promotes meaningful collective bargaining and advances the purposes of the Act.” The Trump Board had previously tried to overturn Obama’s joint-employer standard in the 2017 Hy-Brand case, but the agency scrapped that decision after an ethics official declared that board member William Emanuel should have recused himself because his former law firm was involved in joint-employer cases.

The agency’s three Republican board members—Chairman Ring, Marvin E. Kaplan, and William J. Emanuel—all of whom are Trump appointees, supported the new proposal, while the board’s lone Democrat—Lauren McFerran—dissented.

Public comments are invited on all aspects of the proposed rule and should be submitted within 60 days of the Notice’s publication in the Federal Register, either electronically to www.regulations.gov, or by mail or hand-delivery to Roxanne Rothschild, Deputy Executive Secretary, National Labor Relations Board, 1015 Half Street S.E., Washington, D.C. 20570-0001.