December 26, 2023
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On October 26, 2023, the National Labor Relations Board (NLRB) issued its final rule on definition joint employer relationships. The final rule will be effective on December 26, 2023.
The new joint employer rule repeals and replaces the 2020 NLRB joint employer rule. The 2020 rule said that joint-employer status exists where a company exercises “substantial direct and immediate control” over the essential terms and conditions of another company’s employees. The 2020 rule was a rejection of the previous line of Browning-Ferris cases that indicated a joint employer relationship could be possible where a company had the authority to control another company’s employees, even where they did not exercise that authority.
The current 2023 joint employer final rule returns to the Browning-Ferris standard with some expansion. Specifically, joint employer status occurs:
- Where one company directly exercises control over the second company’s employees’ essential terms and conditions of employment, OR
- Where the first company’s control is indirect (even through an intermediary), OR
- Where the first company’s control is reserved (i.e., authorized) but not ever actually exercised.
“Essential terms and conditions” of employment are defined to include wages, benefits, and other compensation; hours of work and scheduling; assignment of duties to be performed; supervision of the performance of duties; rules for performance and discipline; hiring and termination; and health and safety work conditions. The final rule notes that an entity’s control over matters that are not material to an employment relationship and that do not apply to the employees’ essential terms and conditions of employment is not relevant to the determination of whether the entity is a joint employer.
Joint employers of particular employees subject to a collective bargaining agreement must bargain collectively for the terms of employment that it controls or has authority to control, even where not “essential” to its joint-employer status. Those joint employers are not required to bargain with respect to any term and condition of employment that they do not possess the authority to control or exercise the power to control.
Joint employer status typically means joint and several liability for labor violations of those areas that the joint employer controls or has authority to control. Employers should have workforce and vendor agreements reviewed by legal counsel to assess and minimize potential exposure.
- Review the final rule here.
- Have joint employer relationships reviewed by legal counsel.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase