Update Applicable to:
In adopting this new standard, the final rule rescinds the 2020 final rule that was promulgated by the prior Board.
The new standard will only be applied to cases filed after the effective date, which is February 24, 2024.
What are the details?
NLRB’s final rule will essentially reinstate the standard articulated by the 2015 Obama-era board in Browning-Ferris Industries, which upended years of precedent by dramatically expanding the definition of joint employer and categorizing many more independent companies as joint employers.
In 2020, the NLRB rule changed the previous standard used and made it easier for actual joint employers to avoid a finding of joint-employer status because it set a higher threshold that the employers must “possess and exercise . . . substantial direct and immediate control” over essential terms and conditions of employment.
Under the new standard of 2023, two or more employers may be considered a joint employer of a group of employees if the two share or codetermine one or more essential terms and conditions of employment, which are defined exclusively as:
(1) wages, benefits, and other compensation.
(2) hours of work and scheduling.
(3) the assignment of duties to be performed.
(4) the supervision of the performance of duties.
(5) work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline.
(6) the tenure of employment, including hiring and discharge; and
(7) working conditions related to the safety and health of employees.
Per the rule, joint employers may possess or exercise direct or indirect control over one or more essential terms and conditions of employment.
The new rule restores the indirect or reserved control standard, takes a broad view of the “essential terms and conditions of employment” and a joint employer must bargain collectively over those terms of employment that it controls or has authority to control, even where that term or condition may not be “essential” in determining joint-employer status in the first instance.
The broad definition of joint employment contained in the final rule is in line with the aggressive pro-labor stance the Board has taken throughout the Biden administration.
“The new final rule represents the most extreme shift of the pendulum toward the broadest definition of joint employment that we have seen” as Littler firm concludes.
For more information, please see the links below:
What do employers need to do?
Employers should review the resources provided and consult with their labor attorney regarding how this will impact them, to adjust and review any applicable policy(ies) because this has a profound impact on employer relationships.
It is recommended that employers review the Fisher Phillips 10-Step Guide for further guidance.
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