On August 27, 2015, the National Labor Relations Board (Board) changed the standard that has existed for many years for determining whether two or more entities are “joint employers” of the same employees.
The Old Standard
Up until today, the standard has been that in order to find a joint employer relationship, it must be demonstrated that the various “employing” entities have “direct and immediate control over the employees’ essential terms and conditions of employment.”1
The New Standard
Under the new standard adopted by the Board, the putative employer(s) will now be “joint employer(s)” if it possesses sufficient control over the employees essential terms and conditions of employment, irrespective of whether such control is exercised directly or indirectly - such as through an intermediary - and irrespective of whether the control is even exercised in any way. Possession of the control over employees’ essential terms and conditions of employment is now, under Board law, sufficient to find that a joint employer relationship exists.2
“Essential Terms and Conditions”
With respect to what constitute “essential terms and conditions of employment,” the Board will adhere to the “inclusive approach.” Thus, any “matters relating to the employment relationship such as hiring, firing, discipline, supervision and direction” will be considered “essential terms and conditions.” Examples include, in addition to wages and hours, “dictating the number or workers, controlling scheduling, seniority, overtime and assigning work and determining the manner and method of work performance.”
Conclusion
Clearly, the new joint employer standard will have far-reaching implications, with respect to liability for unfair labor practices and the obligation to engage in collective bargaining, for a multitude of relationships including, but not limited to, those of franchisor/franchisee in the retail and service industry and of general/subcontractor in the construction industry.
Notes:
[1] TLI Inc. 271 NLRB 798 (1984), enfd. 772 F.2d 894 (3d Cir. 1985), Laerco Transportation 269 NLRB 324 (1984)
[2] Brownin-Ferris 362 NLRB No. 186 (August 27, 2015)
