NLRB Finalizes Joint Employer Rule

Dive brief:

• The National Labor Relations Board released a rule Thursday that updates the standard for determining when multiple employers can be considered co-entrepreneurs in accordance with the National Labor Relations Act.
• The new NLRB joint employer rule retains much of the same detail as his Proposed Rule 2022, which specifies that an entity can be considered a joint employer of the employees of another employer if the two share or codify the essential terms and conditions of employment. According to the rule, co-entrepreneurs may have or exercise direct or indirect control over one or more essential terms and conditions of employment.
• The changes in the proposed rule include a comprehensive list of seven categories of working conditions that the board will consider essential for purposes of its joint employer analysis, as well as a description of those it will consider “irrelevant” to that analysis. The final rule also addresses the collective bargaining obligations of employers. The rule is scheduled to be published in the Federal Register tomorrow; it will take effect 60 days later.

Diving knowledge:

The NLRB’s final rule will essentially remove the standard articulated by the 2015 Obama-era board in Browning-Ferris Industriesa case that has been at the center of a nearly decade-long labor law saga.

It also replaces the NLRB’s recent joint employer rule, issued in 2020 under a Republican-majority board, which limited the joint responsibilities of the employer to employers who possess and exercise direct and immediate control over essential working conditions.

The employer group Associated Builders and Contractors had supported the 2020 joint employer rule and denounced the change Thursday.

“Unfortunately, the Biden NLRB decided to dramatically expand joint employer liability under the National Labor Relations Act, which will disrupt existing contractor-subcontractor relationships throughout the construction industry,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. in a statement.

The new final rule specifies that essential terms and conditions of employment include:

• Wages, benefits and other compensation.
• Working hours and schedule.
• Assignment of functions.
• Supervision and execution of functions.
• Rules and work instructions that regulate the manner, means and methods of action, as well as the bases of the discipline.
• Duration of employment, including hiring and firing.
• Working conditions related to the safety and health of workers.

Evidence of an employer’s control over matters which are “immaterial” both to the existence of a common law employment relationship and of control over matters which do not affect essential terms and conditions of employment are not relevant to to the NLRB’s joint employer inquiry, by rule.

“The Board’s new joint employer rule reflects both a legally sound return to common law principles and a practical approach to ensuring that entities that effectively exercise control over critical conditions of employment of workers respect their bargaining obligations under the NLRA,” said NLRB Chair Lauren. McFerran said in a press release. “Although the final rule establishes a uniform joint employer standard, the Board will still conduct a specific, case-by-case analysis to determine whether two or more employers meet the standard.”