NLRB Proposes New Joint Employer Standard

Employment Law

As promised earlier this year, on September 6, 2022, the National Labor Relations Board (NLRB or Board) released a notice of proposed rulemaking (NPRM) on the standard for determining joint employer status under the National Labor Relations Act (NLRA or Act).

Under the proposed rule, two or more employers would be considered joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment,” such as wages, benefits and other compensation; hours of work and scheduling; hiring and discharge; discipline; workplace health and safety; supervision; assignment; and work rules and directions governing the manner, means or methods of work performance.

Both direct evidence of control and evidence of reserved and/or indirect control would be considered during the analysis.

“Possessing the authority to control is sufficient to establish status as a joint employer, regardless of whether control is exercised,” according to the NPRM. “

The burden lies on an employee to establish—by a preponderance of evidence—that an employer is a joint employer.

According to the NPRM, the proposal is “intended to explicitly ground the joint employer standard in established common-law agency principles, consistent with Board precedent and guidance that the Board has received from the U.S. Court of Appeals for the D.C. Circuit.”

The NLRB noted that establishing a rule will provide clarity for all parties.

“[T]he Board believes that establishing a definite, readily available standard will assist employers and labor organizations in complying with the Act,” according to the NPRM. “In addition, because the joint employer standard has changed several times in the past decade, the Board sees a heightened need to seek public comment on this important area of labor law.”

For several years, the Board’s standard for joint employers has been in flux. After many decades of following a single standard in evaluating the scope of joint employer liability, the NLRB adopted a controversial new standard in the 2015 decision Browning-Ferris Industries of California, Inc.

In that case, the NLRB held that even when two entities have never exercised joint control over the essential terms and conditions of employment, and even when any joint control is not “direct and immediate,” the two entities will still be joint employers based on the existence of “reserved” joint control or based on indirect control that is “limited and routine.”

The situation became more complicated when, in Hy-Brand Industrial Contractors, Ltd. & Brandt Construction Co., an administrative law judge applied Browning-Ferris to find that two entities were joint employers. When the employers appealed to the NLRB, the Board—with new members courtesy of the change from a Democratic to a Republican administration—took the opportunity to throw out Browning-Ferris and establish a new test.

In 2018, the NLRB decided formal rulemaking would be the best path forward and published an NPRM to establish a new joint employer standard.

Pursuant to the proposal, an employer could be found to be a joint employer 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, the NLRB said.

However, the rulemaking process stalled, as almost 29,000 comments were submitted in response to the NPRM. The Board announced in July plans to take another stab at the issue.

To read the NPRM, click here.

Why it matters: Employers should take note of the proposal and the potential changes to the joint employer standard. Public comments on the NPRM—which divided the Board in a vote of 3-2—are welcome until November 7, 2022.



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