The National Labor Relations Board is issuing its “joint employer” final rule today, reverting to the standard that the board used for several decades before the the 2015 decision in the case Browning-Ferris Industries of California v. NLRB but with “clarity, stability and predictability,” NLRB Chairman John F. Ring said.
The rule covers those affected by the National Labor Relations Act and holds that a business is a joint employer of workers directly employed by another employer only if the two employers share or co-determine the workers’ essential terms and conditions of employment.
“With the completion of today’s rule, employers will now have certainty in structuring their business relationships, employees will have a better understanding of their employment circumstances, and unions will have clarity regarding with whom they have a collective-bargaining relationship,” Ring said.
The current standard, established in Browning-Ferris case, holds that a company must exhibit only the potential to exert control over terms and conditions of employment, rather than have “direct and immediate” control as had been the previous standard, to be considered responsible for decisions related to worker wages and working conditions, including labor law violations. Argentum was one of the organizations calling for that rule to be changed, describing it and other NLRB actions as “regulatory overreach” in a 2017 letter sent to be included in the record for a hearing of the House Subcommittee on Health, Employment, Labor, and Pensions.
Under the final rule officially released today, to be a joint employer, a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees. If two entities are joint employers, then both must bargain with the union that represents the jointly employed employees, both are potentially liable for unfair labor practices committed by the other, and both are subject to union picketing or other economic pressure if there is a labor dispute.
The NLRB issued a proposed rule concerning joint-employer status under the NLRA in September 2018 and received almost 29,000 comments in response. The American Seniors Housing Association signed a group letter supporting the proposed rule but asking for “clarifying definitions” to “enhance predictability and stability of the rule’s application and outline essential terms and conditions of employment that allow for meaningful collective bargaining.”
The Department of Labor in January also issued a joint employer final rule, effective March 16. That new rule updates the regulations interpreting joint employer status under the Fair Labor Standards Act, which requires covered employers to pay their employees at least the federal minimum wage for every hour worked and overtime for every hour worked over 40 in a workweek. The Labor Department rule does not address joint employer status under other federal employment laws, such as the National Labor Relations Act, the Employee Retirement Income Security Act of 1974, the Migrant and Seasonal Agricultural Worker Protection Act, or Title VII of the Civil Rights Act.