After notice of proposed rulemaking and request for comments, the NLRB released its final rule for governing joint employer status under the NLRA—which takes effect on April 27, 2020. Per the NLRB’s press release, “[t]he final rule restores the joint-employer standard that the Board applied for several decades prior to the 2015 [NLRB] decision in Browning-Ferris, but with the greater precisions, clarity, and detail that rulemaking allows.” In Browning-Ferris, the NLRB held that a company could be deemed a joint employer even if its control over the essential working conditions of another business’s employees was indirect, limited and routine, or contractually reserved but never exercised. Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery, 362 NLRB 1599, 1600 (2015) (Browning-Ferris), affd. in part, reversed in part and remanded 911 F.3d 1195 (D.C. Cir. 2018). 

With the new rule, to be considered a joint-employer, a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees. The rule defines “essential terms and conditions of employment” as wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. The rule also provides specific examples of what “direct and immediate control” of essential employment terms looks like:

• "Wages. An entity exercises direct and immediate control over wages if it actually determines the wage rates, salary or other rate of pay that is paid to another employer’s individual employee or job classification. An entity does not exercise direct and immediate control over wages by entering into a cost-plus contract . . . .
• "Benefits. An entity exercises direct and immediate control over benefits if it actually determines the fringe benefits to be provided or offered to another employer’s employees. This would include selecting the benefit plans . . . and/or level of benefits provided to another employer’s employees. An entity does not exercise direct and immediate control over benefits by permitting another employer, under an arm’s-length contract, to participate in its benefit plans.
• "Hours of work. An entity exercises direct and immediate control over hours of work if it actually determines work schedules or the work hours, including overtime, of another employer’s employees. An entity does not exercise direct and immediate control over hours of work by establishing an enterprise’s operating hours or when it needs the services provided by another employer.
• "Hiring. An entity exercises direct and immediate control over hiring if it actually determines which particular employees will be hired and which employees will not. An entity does not exercise direct and immediate control over hiring by requesting changes in staffing levels to accomplish tasks or by setting minimal hiring standards such as those required by government regulation.
• "Discharge. An entity exercises direct and immediate control over discharge if it actually decides to terminate the employment of another employer’s employee. An entity does not exercise direct and immediate control over discharge by bringing misconduct or poor performance to the attention of another employer that makes the actual discharge decision, by expressing a negative opinion of another employer’s employee, by refusing to allow another employer’s employee to continue performing work under a contract, or by setting minimal standards of performance or conduct, such as those required by government regulation. 
• "Discipline. An entity exercises direct and immediate control over discipline if it actually decides to suspend or otherwise discipline another employer’s employee. An entity does not exercise direct and immediate control over discipline by bringing misconduct or poor performance to the attention of another employer that makes the actual disciplinary decision, by expressing a negative opinion of another employer’s employee, or by refusing to allow another employer’s employee to access its premises or perform work under a contract.
• "Supervision. An entity exercises direct and immediate control over supervision by actually instructing another employer’s employees how to perform their work or by actually issuing employee performance appraisals. An entity does not exercise direct and immediate control over supervision when its instructions are limited and routine and consist primarily of telling another employer’s employees what work to perform, or where and when to perform the work, but not how to perform it.
• "Direction. An entity exercises direct and immediate control over direction by assigning particular employees their individual work schedules, positions, and tasks. An entity does not exercise direct and immediate control over direction by setting schedules for completion of a project or by describing the work to be accomplished on a project.”

Evidence of indirect control (as articulated in Browning-Ferris) can still be considered in determining joint employer status; however, it cannot alone be used for joint-employer status without a finding of direct and immediate control. Moreover, the party asserting that an entity is a joint employer has the burden of proof. 

The NLRB’s new joint employer rule comes on the heels of a similar rule regarding joint employer status under the Fair Labor Standards Act issued by the Department of Labor in January 2020. Like the DOL’s joint employer rule, the NLRB’s new rule is significant because it greatly impacts a business’s obligations under the NLRA. An entity who is a joint employer must bargain with the union, can be potentially liable for unfair labor practices, and can be subject to union picketing. Because the new rule limits who can be found to be a joint employer, many companies will be relieved of the obligations discussed above. Therefore, companies should review their joint employer status in light of the new standard. 

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