National Labor Relations Board issues final joint-employer rule

The National Labor Relations Board (NLRB) issued a final rule on Feb. 26, 2020, governing joint-employer status under the National Labor Relations Act. The new rule addresses joint-employer liability between a general contractor and their subcontractors.

Background

On Sept. 13, 2018, the NLRB published its proposed rule for modifying the existing joint employer standard. An extensive notice and comment period followed, which yielded approximately 29,000 comments before the Jan. 28, 2019, deadline. Now, over a year after the comment period closed, the final rule is ready.

Under the existing standard, the NLRB would find an affiliated company to be a joint employer of another employer’s employees because the affiliated company possessed the authority to control those employees’ terms and conditions of employment, such as hiring, firing, discipline, supervision and direction.

Under the National Labor Relations Act, if two companies are deemed to be joint employers, both are required to bargain with the union that represents the jointly employed employees. They are also both potentially liable for each other’s unfair labor practices and are both subject to union actions, such as picketing in the case of labor disputes.

The new joint-employer rule

Under the final rule, a company is considered a joint employer of another company’s employees only if the two share or co-control the employees’ “essential terms and conditions of employment,” which are defined as wages, benefits, work hours, hiring, termination, discipline, supervision and direction. Unless this substantial, immediate and direct control exists, they are not considered joint employers.

In announcing the final rule, NLRB Chairman John F. Ring stated, “This final rule gives our joint-employer standard the clarity, stability, and predictability that is essential to any successful labor-management relationship and vital to our national economy.” He added, “With the completion of today’s rule, employers will now have certainty in structuring their business relationships, employees will have a better understanding of their employment circumstances, and unions will have clarity regarding with whom they have a collective-bargaining relationship.”

View the full press release: NLRB Issues Joint-Employer Final Rule