The National Labor Relations Board (NLRB) has recently issued its final rule on the joint-employer standard under the National Labor Relations Act (NLRA). This article provides an in-depth analysis of the changes brought about by the new rule and explores its implications for employers.
Background
Under the previous administration, the NLRB introduced a joint-employer rule in 2020. However, the current NLRB has decided to roll back this rule, citing the need for a more comprehensive evaluation of the standard.
Delayed Effective Date
Initially slated to take effect on December 26, 2023, the NLRB announced a delay in the effective date until February 26, 2024. This delay aims to allow for the resolution of any legal challenges that may arise.
Prospective application
It’s important to note that the new rule will only be applied on a prospective basis to cases filed after its effective date. This means that ongoing cases filed under the previous joint-employer standard will not be affected.
Comparison with the 2020 rule
The 2020 joint-employer rule introduced the concept of “substantial direct and immediate control” over an employee’s essential terms and conditions of employment to determine joint-employer status. This rule emphasized the need for the exercise of control in order to establish a joint-employer relationship.
Alignment with the Browning-Ferris decision
The new rule and its preamble, consisting of nearly 73 pages, largely draws from the 2015 Browning-Ferris decision. This landmark decision expanded the definition of joint employment by considering entities that exert enough indirect control or have the “reserved right” to control essential terms and conditions of employment.
Definition of Essential Terms and Conditions
Essential terms and conditions under the new rule include wages, benefits, hours of work and scheduling, assignment of duties, supervision, work rules, discipline, tenure of employment, and working conditions. This comprehensive list ensures that factors contributing to an employee’s employment experience are adequately covered.
Impact of the Mere Right to Control
A noteworthy departure from the previous rule is the recognition that even the mere right to control or dictate a single essential term or condition, even if not exercised in practice, can create a joint-employer relationship. This lowers the bar for determining joint-employer status, potentially leading to greater liability for employers.
Potential challenges and recommendations
As with any significant change, the new joint-employer rule is expected to face legal challenges. Employers should exercise caution when utilizing staffing agencies or franchise models, as the lowered bar for joint-employer status may expose them to unforeseen liabilities. Consulting legal counsel and reviewing contracts and agreements in light of the new rule is recommended.
The NLRB’s recent rollback of the joint-employer rule has significant implications for employers. The delayed effective date and prospective application provide an opportunity for parties to adapt to the new standard. It is crucial for employers to understand the changes brought about by the new rule and take steps to ensure compliance, mitigate risks, and protect their interests in the evolving landscape of joint employment relationships.