Understanding the NLRB’s 2023 Rule: A Deep Dive into Joint Employer Status Changes and Their Impact on Businesses

In the ever-evolving landscape of labor relations, the concept of joint employment holds significant implications for entities involved in employer-employee relationships. Joint employment involves attributing employer status to an entity that exercises a certain degree of control over the employees of another organization. Recognizing the need for clarity in defining joint employer status, the National Labor Relations Board (NLRB) issued its most recent standard, known as the 2023 Rule, on October 26, 2023. This article aims to provide a comprehensive understanding of the 2023 Rule and its impact on the determination of joint employer status.

Date of Issuance

The NLRB released the 2023 Rule on October 26, 2023, which replaced the previous standard for determining joint employer status. The 2023 Rule sought to establish clear guidelines for when two or more entities should be considered joint employers under the National Labor Relations Act (NLRA), addressing potential ambiguities and uncertainties within the previous standard.

Essential Terms and Conditions under the 2023 Rule

Under the 2023 Rule, joint employer status is determined by the sharing or co-determination of one or more essential terms and conditions of employment. Essential terms encompass factors such as wages, benefits, hours of work, hiring decisions, and discipline procedures.

Lowered Bar for Establishing Joint Employer Status

The 2023 Rule lowers the threshold for establishing joint employer status. Previously, an entity needed to possess and exercise “substantial direct and immediate control” over essential terms or conditions. However, the 2023 Rule eliminates this requirement, making it easier to establish joint employer status.

Abolition of the “Substantial Direct and Immediate Control” Requirement

With the removal of the “substantial direct and immediate control” requirement, joint employer status is now met if an entity has indirect control or simply reserves authority to control an essential term or condition.

Indirect Control and Authority to Control as Criteria

Under the 2023 Rule, entities may be viewed as joint employers if they exercise indirect control over essential terms or if they possess the authority to control these conditions.

Inclusion of Safety and Health-Related Conditions

The 2023 Rule expressly identifies safety and health-related conditions as essential terms. This inclusion reinforces the responsibility of joint employers to ensure compliance with workplace safety regulations.

Obligation to Bargain Collectively

Under the 2023 Rule, joint employers are required to engage in collective bargaining with employee representatives regarding any term or condition that they have or exercise control over. This obligation applies to both essential and non-essential terms.

Scope of Bargaining with Employee Representatives

The 2023 Rule emphasizes that joint employers must negotiate with employee representatives on all terms and conditions of employment within their control. This includes matters such as wages, benefits, and workplace policies.

Applicability to Essential and Non-Essential Terms

Unlike past requirements, which focused solely on essential terms and conditions, the 2023 Rule broadens the scope of bargaining to include non-essential terms. This ensures that joint employers address a wide range of employment-related matters during the negotiation process.

Review and Update of Contracts with Third-Party Vendors or Staffing Agencies

In light of the 2023 Rule, employers should take proactive steps to review and, if necessary, revise their contracts with third-party vendors or staffing agencies. It is crucial to assess whether these agreements could potentially establish joint employer status based on the updated criteria.

Importance of Understanding the Potential for Joint Employer Status

Employers should prioritize understanding the implications of joint employment, particularly in cases involving relationships with subcontractors, franchisors, or other affiliated entities. Awareness of the 2023 Rule’s standards will help mitigate potential risks and ensure compliance with labor regulations.

The National Labor Relations Board’s 2023 Rule significantly alters the principles surrounding joint employment. By redefining the criteria for establishing joint employer status, the 2023 Rule lowers the bar and introduces broader considerations in terms of control and authority. Employers must familiarize themselves with this updated standard, review contracts with third-party vendors, and take proactive measures to ensure compliance. Adhering to these guidelines will help navigate the complex landscape of joint employment and foster harmonious employer-employee relationships within the framework of the NLRA.

Explore more

Your CRM Knows More Than Your Buyer Personas

The immense organizational effort poured into developing a new messaging framework often unfolds in a vacuum, completely disconnected from the verbatim customer insights already being collected across multiple internal departments. A marketing team can dedicate an entire quarter to surveys, audits, and strategic workshops, culminating in a set of polished buyer personas. Simultaneously, the customer success team’s internal communication channels

Embedded Finance Transforms SME Banking in Europe

The financial management of a small European business, once a fragmented process of logging into separate banking portals and filling out cumbersome loan applications, is undergoing a quiet but powerful revolution from within the very software used to run daily operations. This integration of financial services directly into non-financial business platforms is no longer a futuristic concept but a widespread

How Does Embedded Finance Reshape Client Wealth?

The financial health of an entrepreneur is often misunderstood, measured not by the promising numbers on a balance sheet but by the agonizingly long days between issuing an invoice and seeing the cash actually arrive in the bank. For countless small- and medium-sized enterprise (SME) owners, this gap represents the most immediate and significant threat to both their business stability

Tech Solves the Achilles Heel of B2B Attribution

A single B2B transaction often begins its life as a winding, intricate journey encompassing hundreds of digital interactions before culminating in a deal, yet for decades, marketing teams have awarded the entire victory to the final click of a mouse. This oversimplification has created a distorted reality where the true drivers of revenue remain invisible, hidden behind a metric that

Is the Modern Frontend Role a Trojan Horse?

The modern frontend developer job posting has quietly become a Trojan horse, smuggling in a full-stack engineer’s responsibilities under a familiar title and a less-than-commensurate salary. What used to be a clearly defined role centered on user interface and client-side logic has expanded at an astonishing pace, absorbing duties that once belonged squarely to backend and DevOps teams. This is