NLRB's Proposed Rulemaking Makes It More Likely That Certain Entities Are Considered Joint Employers

Just about gone is the former standard under the whereby the entity in question, such as a staffing agency or franchisor, had to have substantial direct and immediate control over one or more essential terms of employment before the entity in question could be considered a “joint employer” under the National Labor Relations Act (“the Act”). Rather, the NLRB has now proposed revising the standard for determining when two employers, as defined in Section 2(2) of the Act, are joint employers under Section 2(3). In doing so, it has indicated that it intends to revert back to its prior standard for determining whether an entity is a “joint employer,” revising the 2020 NLRB Rule that was based on Browning-Ferris Industries of California v. NLRB, 911 F.3d 1195 (D.C. Cir. 2018). In other words, the NLRB has proposed that indirect control over the other entities employees is enough to suffice for the employer to be considered a “joint employer.”

The dissent in today’s proposed rulemaking noted that the 2020 Rule properly recognized that the “indirect control and a contractually reserved right to control are probative of joint-employer status.” However, allowing one factor or the other to be dispositive of joint-employer status goes against common law and the intent of the Act. Should the NLRB adopt the proposed ruling, a never-exercised contractual reservation of right of control, or indirect control of influence over a single term condition of employment deemed “essential” will be enough to prove “joint employer” status under the Act. Under proposed NLRB Rules and Regulations § 103.40, “wages, benefits, hours of work, scheduling” and “hiring, discharge, discipline, supervision, and direction” are all “essential” terms and conditions of employment, along with “workplace health and safety” in certain industries such as healthcare, mining, and construction industry workplaces.

Based on the above, a number of temporary staffing agencies and franchisors may find themselves liable for unfair labor practices undertaken by the real entity responsible for the terms and conditions of the individual employee’s employment, which they likely did not bargain for (no pun intended).

For more information about how this proposed change may affect your business, contact McKellar Poursine, PLLC at (305) 721-2954.