Michael Carrouth
labor attorney at Fisher Phillips

Changing the definition of joint employer status under the National Labor Relations Act is high on the National Labor Relations Board’s to-do list, according to a list of spring rulemaking priorities released Tuesday. The proposed rule, of interest to long-term care providers that use temporary or contract workers as well as operators that are part of franchises and others, is expected next month, according to the agency.

The Fair Labor Standards Act requires covered employers to pay their employees at least the federal minimum wage for every hour worked as well as overtime for eligible workers for every hour worked over 40 in a work week. The current rule holds that a business is a joint employer of workers directly employed by another employer — and thereby liable for meeting obligations of the NLRA for those workers — only if the two employers share or co-determine the workers’ essential terms and conditions of employment.

The NLRB plans to expand the test for establishing joint employer status, which would mean that “long-term care operators will face increased exposure and liability to the extent they use employees and staff provided by a third party,” Michael Carrouth, a labor relations partner at Fisher Phillips, told the McKnight’s Business Daily. “Basically, host employers using employees provided or compensated through a third party, such as a staffing company, will need to examine their contracts and procedures associated with such arrangements to determine if they face a significant risk of being a joint employer.” 

The test in the current regulation, established during the Trump administration, requires establishing that a business actually exercises direct, immediate and regular control over the essential terms and conditions of employment (wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction) for that business to be considered a joint employer.

The Biden administration’s expected change would “find that a joint employment relationship exists when a business only has the contractual right to control the employees of another business, whether or not such control is exercised or not,” Carrouth said.

“Bottom line, the expanded joint-employer test will give labor organizations more options to consider in their efforts to increase organizing and add more members,” he added.

The change will result in broader application of joint employer status “whenever a business has control over any term or condition of employment and establishing control over essential terms and conditions will be unnecessary,” Carrouth opined.