Breaking: NLRB Issues New Joint Employer Rule Requiring Direct Control

Big news from the National Labor Relations Board today, as they have announced they will be releasing their final rule on a joint employer standard tomorrow. This is a big step towards settling a thorny issue for many employers, especially in the restaurant and hospitality industries.

The National Labor Relations Board will issue its final rule tomorrow, February 26, 2020, governing joint-employer status under the National Labor Relations Act.  The final rule restores the joint-employer standard that the Board applied for several decades prior to the 2015 decision in Browning-Ferris, but with the greater precision, clarity, and detail that rulemaking allows. The final rule, which can be found here, provides clear guidance in this significant area of the law.

Fact Sheet – Joint Employer Final Rule

Press Release – Joint Employer Final Rule

IMPACT OF THE FINAL RULE 

A joint employer finding has significant implications for rights and obligations under the NLRA relative to collective bargaining, strike activity, and unfair labor practice liability: 

• If the employees are represented by a union, the joint employer must participate in collective bargaining over their terms and conditions of employment. 

• Picketing directed at a joint employer that would otherwise be secondary and unlawful is primary and lawful. 

• Each business comprising the joint employer may be found jointly and severally liable for the other’s unfair labor practices. Because of these important consequences, the purposes of the NLRA are not furthered by drawing into a collective-bargaining relationship or exposing to secondary coercion and joint and several liabilities, a direct employer’s business partner that does not actively participate in decisions setting employees’ wages, benefits, and other essential terms and conditions of employment.

JOINT-EMPLOYER STANDARD OVERVIEW

 The Final Rule:

• Specifies that a business is a joint employer of another employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment;

• Clarifies the list of essential terms and conditions: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction; • Provides that to be a joint employer, a business must possess and exercise such substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees as would warrant a finding that the business meaningfully affects matters relating to the employment relationship;

• Specifies that evidence of indirect and contractually reserved but never exercised control over essential terms and conditions, and of control over mandatory subjects of bargaining other than essential terms and conditions, is probative of joint-employer status, but only to the extent that it supplements and reinforces evidence of direct and immediate control; FACT SHEET Joint Employer Final Rule

 • Defines the key terms used in the final rule, including what does and does not constitute “substantial direct and immediate control” of each essential employment term; • Makes clear that joint-employer status cannot be based solely on indirect influence or a contractual reservation of a right to control that has never been exercised.