The NLRB’s Proposed Rule

On September 13, 2018, the National Labor Relations Board (“NLRB” or “Board”) announced that, the next day, it would publish a proposed rule (“the proposed rule”) governing how the term “joint employer” is defined in connection with the National Labor Relations Act (“NLRA”). As promised, the NLRB published the proposed rule on September 14, 2018.

Under the proposed rule:

“an employer may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction.

More specifically, to be deemed a joint employer under the proposed regulation, an employer must possess and actually exercise 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.”

All Board members except for one – Lauren McFerran – support the rule change, and the 60-day comment period ends on November 13, 2018.

Background

While the term “joint employer” does not appear in the NLRA, “[w]hether one business is the joint employer of another business’s employees is one of the most important issues in labor law today.”

The proposed rule, by regulation, overturns the Obama administration decision in Browning-Ferris, which relaxed the evidentiary standard used to determine whether employers have a joint-employer relationship. In that decision, a divided Board stated that “it would no longer require proof that a putative joint employer has exercised any ‘direct and immediate’ control over the essential working conditions of another company’s workers.”

Under the Browning-Ferris rule, which overturned the longstanding, more restrictive standard embodied by the proposed rule, a company could be deemed a joint employer “even if its ‘control’ over the essential working conditions of another business’s employees was indirect, limited and routine, or contractually reserved but never exercised.”

After various changes of the Board’s composition, the Board legislatively overturned Browning-Ferris in Hy-Brand Industrial Contractors, Ltd., which was discussed in our February 2018 Client Alert. In short, Hy-Brand (decided while Browning-Ferris was still on appeal) “restored the preexisting standard that required proof that a joint employer actually exercised direct and immediate control in a manner that was neither limited nor routine.”

The proposed rule, if passed, will mirror the Hy-Brand decision.

Additional Assistance

Should you have any questions regarding the proposed rule, please contact any of the attorneys on our Labor & Employment Practice Team.