On September 6, the National Labor Relations Board (Board) released its highly anticipated proposed rule on joint employment, marking a significant step towards easing the legal standard for deciding when one company jointly employs another firm’s workers. The proposed rule does away with the direct and immediate control standard that was adopted by the Board under the Trump Administration.
The proposed rule largely resurrects the Browning-Ferris decision issued in 2015, which allows a joint employer finding to be based on “indirect” or “reserved” control and provides a “non-exhaustive” list of factors that can be used to establish an overall employment relationship. Under the 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.” However, the proposed rule seems to elevate the importance of the unexercised right of control. If this rule passes, employers should be extremely careful when drafting subcontracting and outsourcing agreements.
As was the case when the Browning-Ferris decision was issued, employers must be weary that they can be found to have a joint employment relationship with workers they do not actually employ and at workplaces they do not directly control. Comments on the proposed rule are due November 7, and it is anticipated that the Board will move quickly to finalize and enforce its new proposed rule. It is virtually certain that there will be significant legal challenges to this new rule.
