Joint-Employer Definition

On February 26, 2020, the National Labor Relations Board (NLRB) issued its final rule on determining joint-employer status under the National Labor Relations Act (NLRA). The rule goes into effect April 27, 2020.

To be considered a joint employer of another employer’s employees, both entities must “… share or codetermine the employees’ essential terms and conditions of employment. ^{1 ”}

According to the NLRB bulletin sent February 25,² the rule provides clear guidance to employers with definitions of these key terms:

• “Essential terms and conditions of employment”

• “Direct and immediate control” in relation to each of the terms and conditions

• “Substantial” direct and immediate control

It also states that any control exercised sporadically or in an isolated or a de minimis basis is not considered “substantial.”

Why it’s important

Being a joint employer has far-reaching implications. For example, as stated in the NLRB fact sheet,¹ if a business is considered a joint employer of employees directly employed by another business, the joint employer has certain rights and obligations under the NLRA. For example, a joint employer may be found liable for the unfair labor practices of the direct employer.

Clarity for employers, employees, and unions

Quoted in the release, NLRB Chairman John F. Ring said, “This final rule gives our joint-employer standard the clarity, stability, and predictability that is essential to any successful labor-management relationship and is vital to our national economy.” ² He went on to say that the rule will provide certainty to employers as well as give employees and unions a clearer understanding of employment circumstances and collective-bargaining relationships.

Compatible with DOL final rule

Michael Lotito, an attorney with Littler in San Francisco, pointed out that the NLRB final rule is compatible with the U.S. Department of Labor (DOL) joint-employer rule under the Fair Labor Standards Act (FLSA) that was announced in January (See “NLRB Issues New Definition of ‘joint Employer’ by Allen Smith, J.D.³ )That rule will go into effect Mar. 16, 2020. One difference is that the NLRA pre-empts state law. The FLSA does not.

The U.S. Equal Employment Opportunity Commission (EEOC) is also considering a rule that would addresses this issue and has accepted public comment on a proposed amendment⁴ to clarify when an entity is covered under EEO law as a joint employer.

Another point of view

Smith quotes former NLRB Chair Wilma Liebman, who expressed concern with the final rule. It takes the law “in the wrong direction,” she said. “She said the rule was inconsistent with the way business relationships have evolved,”³ he wrote .

As it did when the DOL announced the FLSA final rule for joint employer, the Economic Policy Institute (EPI) issued a statement⁵ criticizing the final rule, saying it reduces workers’ bargaining rights.

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Sources: 

1. Fact Sheet: NLRB Joint Employer Final Rule Nation Labor Relations Board
2. Release – NLRB Issues Joint-Employer Final Rule National Labor Relations Board
3. NLRB Issues New Definition of ‘Joint Employer’ by Allen Smith, J.D.  SHRM
4. Joint Employer Status Under the Federal Equal Employment Opportunity Statutes Office of Information and Regulatory Affairs
5. New joint-employer rule strips workers of bargaining rights  EPI