National Labor Relations Board Issues Final Joint Employer Rule: Addressing Indirect Control and Union Relations

On October 26, the National Labor Relations Board (NLRB) published its long-awaited final joint employer rule after initially publishing the revised rule for public comment in September 2022. This article delves into the key details of the new rule, its implications for employers, and the expected impact on the business landscape.

Explanation of the New Rule

The new rule replaces the regulations issued by the NLRB in 2020. Unlike the previous regulations, the revised rule considers evidence not only of direct control exercised by employers but also indirect control that is reserved by an employer. This shift expands the scope of what qualifies as a joint employer relationship, potentially affecting businesses in various industries.

Implications for Employers

Under this employee- and union-friendly rule, a company now risks being classified as the employer of workers over whom it does not exercise direct control but could theoretically and contractually. Consequently, if these employees unionize, the company may be obligated to engage in collective bargaining. Additionally, a joint employer could face liability for unfair labor practices committed by another business entity.

Historical Shifts in the NLRB’s View

Over the years, the NLRB’s interpretation of joint employer relationships has evolved, with the focus centering around the type and level of control exerted by an employer over another company’s workforce. The new rule draws inspiration from the Board’s Obama-era “Browning Ferris” rule, reversing prior changes and returning to a broader definition of joint employment.

Key Features of the Rule

The revised rule includes an exhaustive list of seven categories of workplace terms and conditions of employment that trigger the joint employer rule. These categories make the employer a party that exercises or has the potential to exercise control over areas such as wages, benefits, hours of work, hiring, and more. The rule places significant emphasis on indirect control and the mere right to control, rather than actual exercise of control.

Expected Impact on Employers

Given that indirect control and the contractual right to control significant working conditions are sufficient for the NLRB to establish a joint employer relationship, the new rule is expected to have wide-ranging implications for employers. Businesses that engage in staffing agreements or other arrangements where one party has rights to assert over the employees of the other party should immediately seek legal review of their agreements to ensure compliance with the revised rule.

Addressing Union Organizing and Employee Relations

In recent times, union organizing has reached historic highs, and NLRB developments have made it easier for unions to be certified without the necessity of winning an election. In light of these shifts, it becomes crucial for employers to work closely with experienced labor counsel to enact proactive employee relations measures. By ensuring employees are satisfied with their working conditions and environment, businesses can minimize the likelihood of their workforce seeking union representation.

The National Labor Relations Board’s final joint employer rule introduces significant changes to the framework governing joint employment relationships. By expanding the definition of joint employers to include those with indirect control and contractual potential, the rule places heightened obligations on businesses and raises potential liability concerns. Companies should prioritize reviewing their agreements and implementing proactive employee relations strategies to navigate these developments successfully and safeguard their operations. With a comprehensive understanding of the new joint employer rule, employers can adapt their practices to maintain compliance and foster positive labor relations in evolving times.

Explore more

Microsoft Dynamics 365 Finance Transforms Retail Operations

In today’s hyper-competitive retail landscape, success hinges on more than just offering standout products or unbeatable prices—it requires flawless operational efficiency and razor-sharp financial oversight to keep pace with ever-shifting consumer demands. Retailers face mounting pressures, from managing multi-channel sales to navigating complex supply chains, all while ensuring profitability remains intact. Enter Microsoft Dynamics 365 Finance (D365 Finance), a cloud-based

How Does Microsoft Dynamics 365 AI Transform Business Systems?

In an era where businesses are grappling with unprecedented volumes of data and the urgent need for real-time decision-making, the integration of Artificial Intelligence (AI) into enterprise systems has become a game-changer. Consider a multinational corporation struggling to predict inventory shortages before they disrupt operations, or a customer service team overwhelmed by repetitive inquiries that slow down their workflow. These

Will AI Replace HR? Exploring Threats and Opportunities

Setting the Stage for AI’s Role in Human Resources The rapid integration of artificial intelligence (AI) into business operations has sparked a critical debate within the human resources (HR) sector: Is AI poised to overhaul the traditional HR landscape, or will it serve as a powerful ally in enhancing workforce management? With over 1 million job cuts reported in a

Trend Analysis: AI in Human Capital Management

Introduction to AI in Human Capital Management A staggering 70% of HR leaders report that artificial intelligence has already transformed their approach to workforce management, according to recent industry surveys, marking a pivotal shift in Human Capital Management (HCM). This rapid integration of AI moves HR from a traditionally administrative function to a strategic cornerstone in today’s fast-paced business environment.

How Can Smart Factories Secure Billions of IoT Devices?

In the rapidly evolving landscape of Industry 4.0, smart factories stand as a testament to the power of interconnected systems, where machines, data, and human expertise converge to redefine manufacturing efficiency. However, with this remarkable integration comes a staggering statistic: the number of IoT devices, a cornerstone of these factories, is projected to grow from 19.8 billion in 2025 to