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NLRB proposes change to joint employer standard

The National Labor Relations Board (NLRB) has issued a notice of proposed rulemaking that would change the joint employer standard.

The joint employer standard defines when two employers who do business together are “joint employers,” making them liable for one another’s unfair labor practices.

The notice of proposed rulemaking issued on Sept. 6 would replace the proposed rule that went into effect on April 27, 2020.

Under the 2020 rule, an employer could be considered a joint employer of another employer if it had direct and immediate control over the essential terms and conditions of employment of the other employer’s workers.

Under the new proposed rule, two or more employers would be considered joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment.”

Comments on the proposed rule are due Nov. 7.

When two employers are defined as joint employers, it affects the rules around their union bargaining.

Joint employers are required to bargain with the union that represents the jointly employed workers, and both could be found liable for unfair labor practices engaged in by the other. Also, in the event of a labor dispute, both are subject to union picketing or other economic pressure.

“In an economy where employment relationships are increasingly complex, the board must ensure that its legal rules for deciding which employers should engage in collective bargaining serve the goals of the NLRA. Part of that task is providing a clear standard for defining joint employment that is consistent with controlling law,” NLRB Chairman Lauren McFerran said in a statement. “Unfortunately, the board’s joint employer standard has been subject to a great deal of uncertainty and litigation in recent years. Rulemaking on this issue allows for valuable input from members of the public that will help the board in its effort to bring clarity and certainty to these significant questions.”

Experts in employment law said the proposed rule could be construed broadly and that all businesses should take note of this rule and think carefully about how it will apply to their workplaces if it goes into effect.

Employers are also advised to review any arrangements with employment staffing agencies, especially if they reserve control over things like wages, benefits, hours, scheduling or employee discipline, even if they don’t act on it.

That’s because reserving control over key elements of employment could make the agency a joint employer under the new proposed rule.

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