NLRB Issues New Definition of ‘Joint Employer’

By Allen Smith, J.D.
February 25, 2020 - SHRM

The National Labor Relations Board (NLRB) tightened up the definition of "joint employer" in a final rule announced Feb. 25. The NLRB previously had permitted a company to be deemed a joint employer even if its control over the essential working conditions of another business's employees was indirect, limited or contractually reserved but never exercised under the 2015 decision of Browning-Ferris Industries. The final rule provides that an entity is a joint employer of a separate employer's workers only if the two employers share or codetermine the employees' essential terms or conditions of employment.

If two entities are joint employers under the National Labor Relations Act (NLRA), both must bargain with the union that represents the jointly employed workers, both are potentially liable for unfair labor practices committed by the other and both are subject to union picketing or other economic pressure if there is a labor dispute.

The final rule gives HR professionals a road map that has been missing since Browning-Ferris Industries to look at its employers' relationships with suppliers, including temporary agencies, food service workers in cafeterias, janitorial services and landscaping, said Michael Lotito, an attorney with Littler in San Francisco. After Browning-Ferris Industries, employers may have backed away from these relationships for fear of being viewed as joint employers. Now they might work a little closer with suppliers to ensure there isn't harassment and that supply chains comply with safety standards, for example.

Direct and Immediate Control

The NLRB defined "share or codetermine" as the exercise of direct and immediate control over the essential terms and conditions of employment.

Direct and immediate control excludes:

• Setting minimal hiring standards.
• Setting minimal standards of performance or conduct.
• Bringing misconduct or poor performance to another employer's attention.
• Establishing an enterprise's operating hours.
• Setting deadlines for services.
• Refusing to allow another employer's worker to continue performing work under a contract.
• Maintaining standards that are required by government regulation.

Contractual provisions requiring workplace safety practices and anti-harassment policies and other measures to encourage compliance usually will not make joint-employer status more likely under the act.

From 1984 to 2015, evidence of direct and immediate control was required to prove that an entity was the joint employer of another business's workers. The board rationalized that it was adopting a standard consistent with the law in place prior to Browning-Ferris Industries.

Indirect Control Still Relevant

The NLRB also said it was adopting a standard consistent with the U.S. Circuit Court of Appeals for the District of Columbia's judgment affirming Browning-Ferris Industries in 2018 since the final rule provided that indirect control still can be a relevant consideration in the joint-employer analysis. Indirect control is just not enough alone to show joint-employer status under the final rule.

This story will be updated throughout the day.