NLRB Expands Definition of "Joint Employer" Yet Again

The National Labor Relations Board (“Board”) published its final rule in the Federal Register, which has the effect of greatly expanding who may be considered a “joint employer” under the National Labor Relations Act (“Act”). Under the final rule published Oct. 27, 2023, two or more companies are considered “joint employers” of particular employees if they “share or codetermine those matters governing employees’ essential terms and conditions of employment,” such as wages, benefits, and other compensation, work and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment, and work rules. Critically, the Board will now consider both direct evidence of control as well as evidence of reserved and indirect control (even if unexercised) over these essential terms and conditions of employment under its new rule.
 
Under the Act, two or more separate business entities are joint employers of a single workforce if “they share or co-determine those matters governing the essential terms and conditions of employment.”  While the Board has long recognized the concept of joint employer in determining liability, the standard for determining joint-employer status has repeatedly changed over the last decade. From 1984 until 2015, the Board focused on whether a putative joint employer actually exercised “direct and immediate control” over the essential terms and conditions of the relevant worker’s employment, such as hiring, firing, discipline, supervision, and direction. Although a fact-specific inquiry, this standard was widely seen as creating a fairly predictable legal regime for most businesses.
 
Source: NAHC