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JOINT-EMPLOYER STATUS

JOINT-EMPLOYER STATUS

The National Labor Relations Board (NLRB) has published its final rule governing determination of joint-employer status under the National Labor Relations Act (NLRA), restoring the standard that was applied for several decades before the NLRB’s 2015 decision in Browning-Ferris. The final rule will become effective April 27, 2020.

Under the final rule, to be found a joint employer, a business must possess and exercise substantial direct and immediate control over at least one essential term and condition of employment of another employer’s employees.  These essential terms and conditions of employment are:

  1. Wages
  2. Benefits
  3. Hours of work
  4. Hiring
  5. Discharge
  6. Discipline
  7. Supervision
  8. Direction

The final rule defines “substantial” direct control as actions that have “a regular or continuous consequential effect” on one of the eight core aspects of a worker’s job listed above.

Further, the final rule provides that even where an employer exercises direct control over another employer’s workers, it will not be held to be a joint employer if such control is exercised on a sporadic, isolated, or de minimis basis.

In addition, the Board noted that various common elements of third-party contracts would not be enough to substantiate a finding of joint-employer status.  These include, for example, a business “setting minimal standards for hiring, performance, or conduct” for a contractor, a business requiring that a contractor maintain workplace safety or sexual-harassment policies, and a franchisor taking steps to protect its trademark.

Significantly, evidence of indirect or contractually reserved control over essential employment terms may be a consideration for finding joint-employer status under the final rule.  However, it cannot give rise to joint-employer status without substantial direct and immediate control.  Thus, the mere reservation of control over essential employment terms cannot per se establish joint-employer status without evidence of substantial direct and immediate control.  (This is contrary to the NLRB’s finding in Browning-Ferris.)  The final rule also makes clear that the routine elements of an arm’s-length contract cannot turn a contractor into a joint employer.

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