Posted Wednesday, November 1, 2023
The National Labor Relations Board (NLRB) made a significant announcement on October 27, 2023, by unveiling its final rule for determining joint-employer status, set to come into effect on December 26, 2023. This ruling marks a departure from the NLRB’s 2020 stance and returns to a more traditional approach reminiscent of the Browning-Ferris decision from 2015.
The heart of the matter lies in the identification of seven essential terms and conditions which will serve as the litmus test for establishing joint-employer status. These criteria are deeply rooted in common-law agency principles and encompass various facets of employment relationships, including:
- Hours of work and scheduling
- The assignment of duties to be performed
- Wages, benefits, and other compensation
- Supervision of performance
- The tenure of employment, encompassing hiring and termination
- Working conditions, particularly in relation to employee health and safety
- Work rules and directions governing the manner, means, and methods of job performance, as well as the grounds for discipline or dismissal
The crux of this new rule revolves around an organization’s authority to control at least one of these crucial terms and conditions. It is a notable departure from the previous 2020 rule implemented during the Trump administration, which imposed a higher threshold for determining joint-employer status. Under the previous rule, joint-employer status hinged on an employer having “substantial direct and immediate control” over an employee’s terms of employment. However, the new rule adopts a more inclusive approach, finding joint-employer status if an organization merely holds the authority to control even a single term of employment. Importantly, this determination remains valid regardless of whether the organization exercises this control or whether that control is direct or indirect.
It is imperative to understand the implications of this new rule for businesses and labor relations. Notably, it may impact entities employing subcontracting, temporary labor, and alternative work arrangements, including franchisees.
NAHC’s legal partners are actively engaged in reviewing, analyzing, and synthesizing the implications of this rule change. We encourage you to stay informed as we will be providing more detailed information and a forthcoming webinar to discuss the ramifications of this significant update. The changes introduced by the NLRB’s final rule are poised to have a substantial impact on how joint-employer relationships are defined, with potential implications for businesses across various sectors.
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Source: NAHC Report
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