New Joint Employer Rule From the NLRB

On February 26, 2020, the National Labor Relations Board issued a new Joint Employer Rule that takes effect April 27, 2020.

Under the new rule, an employer “must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees” to be considered a joint employer. Luckily, the NLRB broke down these terms for us even further.

• “Substantial” direct and immediate control: control that has a regular or continuous consequential effect on an essential term or condition of employment. If control is only exercised sporadically or minimally, it is not substantial direct and immediate control under the new rule.

• “Essential” terms and conditions of employment: essential terms and conditions of employment includes hiring, firing, discipline, supervision, direction, wages, benefits, and hours. Unlike the previous rule, this is an exhaustive list. However, other employment terms that may be mandatory subjects of bargaining may be probative of joint-employer status, but only if they supplement and reinforce evidence of direct and immediate control over essential terms and conditions of employment.

The new rule is much clearer than that of 2015 Obama-era NLRB. Under the 2015 rule, employers could qualify as a joint employer if they had indirect control over another employer’s employees, or if it reserved the right to exercise direct control over another employer’s employees and applied regardless of whether such control was ever actually exercised.  While the new rule abolishes the 2015 standard, indirect control and the right to exercise direct control may factor into the joint employer analysis.

When working with other employers’ employees, it is important to have a clear understanding as to each employer’s rights and responsibilities, including whether the employers qualify as joint employers. MyHRgenius and Thompson Coe can answer any questions about the new rule or your business’ joint employer status with your call to 651-389-5000 or e-mail to myhrgenius@thompsoncoe.com.

Thompson Coe and myHRgenius Tip of the Week is not intended as a solicitation, does not constitute legal advice, and does not establish an attorney-client relationship.