NLRB's Joint Employer Status

5 months ago

In October of 2023, the National Labor Relations Board (NLRB) issued its final rule for rescinding and replacing the joint employer status under the National Labor Relations Act (NLRA). The NLRB signified that the changes would “more explicitly ground the joint-employer standard in established common-law agency principles and provide guidance” when more than one employer has “authority to control” or “exercises the power to control…essential terms and conditions of employment.”

The NLRB summary of the final rule reads as a legal brief but it states “an entity may be considered a joint employer of another employer’s employees if the two share or codetermine the employees’ essential terms and conditions of employment.”

Per the NLRB, “For all purposes under the Act, two or more employers of the same particular employees are joint employers of those employees if the employers share or codetermine those matters governing employees’ essential terms and conditions of employment.” The final rule also explained that establishing that an entity “shares or codetermines the essential terms and conditions of another employer’s employees” requires showing that the entity “possess[es] and exercise[s] such substantial direct and immediate control over one or more essential terms or conditions of their employment as would warrant finding that the entity meaningfully affects matters relating to the employment relationship with those employees.” “Substantial direct and immediate control” is intended to mean “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” The final rule provides examples and indicates that “wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction” would qualify as essential terms and conditions of employment that would fall under “direct and immediate control.”

The final rule was slated to be effective December 26, 2023, and was later extended until February. The rule was again extended by District Judge J. Campbell Barker (Texas) to March 11, 2024.

Why is this so important? The final rule could affect contracted relationships, including but not limited to, staffing agencies providing employees for clients. If it is determined that there is a joint employer relationship, certain organizations which have not been subject to bargain collectively, may have to do so due to their joint-employer status. This may be one to consult about with your employment law attorneys.

Southwestern HR Consulting (SWHRC) continues to track regulatory changes to ensure you’re in compliance with employment laws.