This week, the National Labor Relations Board (“NLRB”) published its long-awaited rule regarding joint-employer status under the National Labor Relations Act.
The final rule provides:
- 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 (“terms and conditions”) of another employer’s employees.
- a business who exercises direct control over another employer’s workers will not be considered a joint employer if such control is only “limited and routine.”
- indirect and contractually reserved control over essential terms and conditions and control over mandatory subjects of bargaining should only be considered to the extent they supplement and reinforce evidence of the business’s exercise of direct and immediate control.
- definitions of key terms. Under the finale rule, terms and conditions are defined as “hiring, firing, discipline, supervise, direction, wages, benefits, and hours of work.” Substantial means that such control is not exercised on a “sporadic, isolated, or de minimis basis.” Substantial direct and immediate control means direct and immediate control that has a regular or continuous consequential effect on an essential term or condition of employment of another employer’s employees.
- what does and does not constitute “direct and immediate” control of terms and conditions.
The final rule reverses the Obama-era standard set forth in the Browning-Ferris decision, which dramatically expanded joint-employer status. The new rule is more employer-friendly and returns to a standard more consistent with the NLRB’s interpretation of joint-employer status prior to Browning-Ferris.
The final rule will take effect on April 27, 2020. We expect that there may be lawsuits challenging this rule and will update you with further developments.