On October 27, 2023, the National Labor Relations Board, (NLRB), published a final rule addressing the standard for determining joint-employer status.

The final rule establishes that, under the National Labor Relations Act (NLRA), two or more entities may be considered joint employers of a group of employees if each entity has an employment relationship with the employees, and if the entities share or co-determine one or more of the employees’ essential terms and conditions of employment.

How does the 2023 standard differ from the 2020 standard?

The final rule rescinds and replaces the 2020 final rule that was promulgated by the prior Board, and which took effect on April 27, 2020.

The 2023 rule lowers the joint-employer standard in establishing whether an entity may be considered jointly liable under the NLRA. In particular, the 2023 rule considers the alleged joint employers’ authority to control essential terms and conditions of employment, whether or not such control is exercised, and without regard to whether any such exercise of control is direct or indirect. The new rule clearly recognizes that reserved control and indirect control are relevant to the analysis.

What are essential terms & conditions of employment under the final rule?

The NLRB has determined that the essential terms and conditions of employment are defined 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.

The NLRB has stated that the joint-employer standard is implicated if an entity employs the workers at issue and has authority to control at least one of the above terms or conditions. This new rule will have an impact on contractors and their subcontractors, franchisors and their franchisees and staffing agencies and their clients. This new rule can have substantial consequences to businesses deemed to be joint employees, including being liable for another entities unfair labor practices or collective bargaining obligations.

When does the new standard take effect?

            The effective date is December 26, 2023. The new standard will only be applied to cases filed after the effective date.  

Questions? Contact Attorney Joseph Laverty in our Davenport office by email or by phone at (563)333-9102