Earlier this year, the NLRB attempted to overturn the Obama-era Browning-Ferris joint employer standard through case law (see our coverage here). That was a dead end so now the Board seeks to return to the pre-2015 standard through rulemaking.
Under the Board’s current iteration of the joint employer standard, a company does not have to exercise direct control over workers to be liable as a joint employer. Instead, any company who indirectly controls another business’s workers, or even simply reserves the right to do so, may be deemed a joint employer. Under this overly broad standard, in some cases, companies may be obliged to collectively bargain with the workers of an erstwhile another company’s employees, or held liable for another company’s unfair labor practices.
The Board’s new proposed rule narrows a company’s liability as a joint employer to only those occasions in which it “possess[es] and actually exercise[s] substantial direct and immediate control over the essential terms and conditions of employment of another employer’s employees in a manner that is not limited and routine.” Requiring “direct and immediate” control returns the legal standard to the pre-Browning Ferris days that are more friendly to franchises, businesses that rely on outsourcing labor, companies using staffing agencies, etc.
The proposed rule is a welcome development because, if successful, it means fewer companies will be at risk for joint employer liability. It is important to note, however, that the proposed rule applies only to labor-related decisions. Courts evaluating joint employer status for other non-labor reasons would still be free to apply their own legal tests.
The rulemaking process can be slow as molasses. We’ll report back when the final rule is made public.