NLRB Proposes New Joint Employer Standard

September 9, 2022
Summary
 
On September 6, 2022, the National Labor Relations Board (“NLRB”) released a Notice of Proposed Rulemaking that would rescind and replace the joint-employer rule that took effect in April 2020 (“2020 Rule”).  The proposed rule would change the standard for determining joint-employer status under the National Labor Relations Act (“NLRA”).  Under the 2020 Rule, a putative joint employer must possess and actually exercise “direct and immediate” control over one or more essential terms or conditions of employment, such as wages, hours of work, or discipline.  Under the proposed rule two or more employers would be considered joint employers if they “share or codetermine” essential terms or conditions of employment, even if one of the employers exercises only “indirect” control.  If adopted, the proposal rule would significantly expand the circumstances in which two or more employers may be found to be “joint employers” of workers under the NLRA, given it only requires evidence of indirect control and expands what constitute essential terms or conditions of employment.
 
The Ever-Changing NLRB Standards
 
In a 2015 decision in Browning-Ferris, the NLRB departed from longstanding common law precedent, holding that joint employers need not exercise direct control over terms and conditions of employment.[1]  Our memorandum on that decision can be found here.  The NLRB under the Trump administration sought to reverse the Browning-Ferris standard through adjudication in December 2017, but the decision was reversed in February 2018 due to an ethics controversy.[2]  Our post on the reversal can be found here
 
In February 2020, the Board issued a final rule under which “substantial direct and immediate control” over one or more “essential terms or conditions of employment” was required to establish joint liability.[3]  The 2020 Rule  defined “essential terms or conditions of employment” as “wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.”  Our post on the February 2020 final rule can be found here.
 
The 2022 Proposed Rule 
 
Under the proposed rule, entities would be deemed joint employers if “they possess the authority to control (whether directly, indirectly or both), or . . . exercise the power to control (whether directly, indirectly or both), one or more of the employees’ essential terms and conditions of employment.”[4]  The Board stated that the proposed rule would “incorporate[] the view” of Browning-Ferris that “evidence of the authorized or reserved right to control, as well as evidence of the exercise of control (whether direct or indirect [. . .]) is probative evidence of the type of control over employees’ essential terms and conditions of employment that is necessary to establish joint-employer status.”[5]  The Board additionally stated that this definition “is consistent with common-law agency principles and avoids one of the key errors of the 2020 Rule.”[6]
 
The proposed rule would also broaden the definition of an “essential term and condition.”  Unlike the 2020 Rule, which provided a defined list of essential terms and conditions of employment,[7] the proposed rule would adopt a non-exhaustive list of factors, including “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.”[8]  The Board noted its belief that this definition “is consistent with the broad, inclusive approach to defining the set of essential terms and conditions of employment the Board took prior to the 2020 Rule.”[9]
 
Comments Period
 
Comments on the proposed rule are due on or before November 7, 2022.  Responses to comments are due on or before November 21, 2022.
 
 
 
 
[1]           Browning-Ferris Indus. of Cal., 362 NLRB 1599, 1614 (2015) (the “right to control, in the common-law sense, is probative of joint-employer status, as is the actual exercise of control, whether direct or indirect”).
[2]           Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 66 NLRB No. 26 (2018).
[3]           29 C.F.R. § 103.40.
[4]           Standard for Determining Joint-Employer Status, NLRB (Sept. 7, 2022) (to be codified at 29 C.F.R. Part 103), https://www.federalregister.gov/d/2022-19181, at 23.
[5]           Id. at 6.
[6]             Id.
[7]           29 C.F.R. § 103.40(b).
[8]           Standard for Determining Joint-Employer Status, NLRB (Sept. 7, 2022) (to be codified at 29 C.F.R. Part 103), https://www.federalregister.gov/d/2022-19181, at 23.
[9]           Id. at 6.