On September 7, 2022, the National Labor Relations Board (“NLRB”) issued a proposed rule on the standard for determining whether an entity is a joint employer under the National Labor Relations Act (“NLRA”).
Under the proposed rule, entities may be deemed joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment.” These terms and conditions include wages, benefits and other compensation, work and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment, and work rules. See Board Public Statement.
The rule specifically states that “Possessing the authority to control is sufficient to establish status as a joint employer regardless of whether control is exercised.” Therefore, any reserved control would be sufficient to establish a joint employer relationship. Further, the proposed rule provides that “exercising the power to control indirectly is sufficient to establish status as joint employers, regardless of whether the power is exercised directly.” Further, “control exercised through an intermediary person or entity is sufficient to establish status as a joint employer.”
The Board will now take into consideration evidence of “reserved” or “indirect” control, provided the elements of control relate to an employees’ essential terms and conditions of employment. As a result, employers could be held as joint employers under the new rule if they “possess the authority to control (whether directly, indirectly, or both), or exercise the power to control (whether directly, indirectly, or both), one or more of the employees’ essential terms and conditions of employment.”
However, an “employer’s control over matters immaterial to the employment relationship” or that “do not bear on the employees’ essential terms and conditions of employment” may not independently establish joint employer status. In addition, in its comments to the new rule, the NLRB noted that “routine components of a company-to-company contract, like a ‘very generalized cap on contract costs,’ or an ‘advance description of the tasks to be performed under the contract,’ will generally not be material to the existence of an employment relationship under common-law agency principles.”
Public comments on the proposed rule can be submitted to the NLRB through November 7, 2022. We will continue to monitor developments and will update you as more information becomes available. Should you have any questions, please contact Ali Law Group.
