NLRB Announces Joint Employer Proposal

Sep 17, 2018 - 9:00am

Executive Director, Labor Policy

The National Labor Relations Board (NLRB) on September 13 announced that it would publish a Notice of Proposed Rulemaking (NPRM) to provide a definition what constitutes a so-called “joint employer.”  The proposed rule was listed on the Federal Register that day for public inspection, and it was formally issued on September 14. 

 As proposed, the NLRB’s definition of joint employment would restore a commonsense standard that had been in place prior to the Board’s errant reasoning in its 2015 Browning-Ferris decision.  That decision established a new precedent for determining joint employment that made employers engaged in numerous common businesses relationships—such as franchising and contracting— potentially liable for employees they did not actually employ and workplaces they did not actually control. 

 Under the NLRB’s proposal, “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.” 

 As the NLRB noted in its explanation of the proposed rule, in the wake of Browning-Ferris “[t]he last three years have seen much volatility in the Board’s law governing joint employer relationships.”  That volatility included the underlying Browning-Ferris decision, which caused all of the hullabaloo in the first place, as well as a December 2017 decision that had restored the pre-Browning-Ferris joint employer standard, followed by a reversal of that reversal—i.e., the unfortunate restoration of the Browning-Ferris standard—in February 2018.  On top of all of that, a court challenge of Browning-Ferris is still pending in the D.C. Circuit Court of Appeals.

 For the business community, such volatility is nearly as unwelcome as the NLRB’s flawed thinking in Browning-Ferris itself.  That decision had already galvanized numerous coalitions of trade groups and other interested parties to pass legislation re-establishing a more sensible joint employer standard relying on direct control of employment conditions.  To that end, the House of Representatives passed the Save Local Businesses Act in late 2017, and the legislation is still pending in the Senate.

 Given the uncertainty of a legislative or judicial solution, the NLRB previously had announced that it would consider reversing the Browning-Ferris standard through a rulemaking, which is a relatively straightforward process.  Publication of the NPRM is the first step in that process, and the public now will have until November 13 to weigh in on the Board’s proposal.

 Following that comment period, a final rule presumably will be issued, and one hopes that the NLRB will use that as a vehicle to fix what the Obama-era Board had broken in its earnest pursuit of its union-friendly agenda.  With such a final rule in place, the Board will finally have put to rest this vexing issue, and it will be more difficult for future Boards to wantonly introduce so much uncertainty and volatility that harms workers and employers alike. 

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Executive Director, Labor Policy