Vice President, Labor Policy, U.S. Chamber of Commerce
September 16, 2022
The National Labor Relations Board (NLRB) on September 6 issued a Notice of Proposed Rulemaking (NPRM) proposing to rewrite its standard for determining joint employment under the National Labor Relations Act (NLRA). This proposal would reverse a rulemaking on the same topic promulgated just over two and a half years ago and covers numerous commonplace business relationships that traditionally have not been considered joint employment, a legal situation in which two or more employers control the work or working conditions of the same employees.
More importantly, the NLRB proposal threatens to entangle countless franchise businesses, government contractors, and any companies with significant supply chain relationships if they can exercise some degree of influence over working conditions of another business’s employees. For those employers—not to mention their employees—that could mean negotiating with a labor union to reach a collective bargaining agreement involving multiple entities, which could spell disaster for them and potentially wider economic upheaval.
During the Obama administration, the Democratic majority at the NLRB first attempted to implement this expansive joint employer liability standard in its misguided 2015 Browning-Ferris (BFI) decision, which upended longstanding precedent. Until that decision, the NLRB had held that a putative joint employer must exercise direct and immediate control over the terms and conditions of employment. Under BFI, indirect or reserved control, even if not exercised, between two or more businesses could be enough to create a joint employment relationship.
The Board in 2020 then issued a joint employer final rule that elucidated a more straightforward standard stating that “an entity may be considered a joint employer of a separate employer’s employees only if the two share or codetermine the employees’ essential terms and conditions of employment,” such as wages, benefits, work hours, etc. In other words, control over those terms and conditions had to be exercised, not just held theoretically by a putative joint employer. The current proposal would rescind that 2020 rule and essentially reinstate a standard substantially similar to Browning-Ferris.
While the concept of joint employment is not a new one, the struggle to implement a uniform standard to define it at the NLRB rests on seemingly pedantic differences in legal interpretation. However, depending on what standard prevails, the consequences could be significant for potential joint employers that may be held responsible for employees they don’t employ and for workplaces they do not actually control.
During the Trump administration, the Republican majority on the Board set about trying to rectify many of the policy shifts enacted by their predecessors. Now in the minority, the Republican members of the NLRB dissented from the current NPRM “because the proposed rule is fundamentally flawed and inconsistent with the common law and policies of the [NLRA].”
They further stated that “[t]he proposed rule is sufficiently flawed that a decision to adopt it would be arbitrary and capricious” – an observation that sums things up rather nicely.