The National Labor Relations Board (NLRB) recently issued a new regulation that broadly designates separate companies as joint employers for purposes of having a duty to comply with the National Labor Relations Act (NLRA). The rule affects potential joint employment relationships such as client employers and their staffing agencies, or franchisors and their franchisees, or employees who are improperly classified as independent contractors or subcontractors. An entity that is deemed a joint employer must avoid committing unfair labor practices and must bargain with the union (if any) elected by the workers “with respect to any term and condition of employment that it possesses the authority to control or exercises the power to control….”, same as the workers’ direct employer (88 Fed Reg 73946, Oct. 27, 2023).
As we previously reported, the Board’s former rule (issued under the Trump administration) said a joint employment relationship exists under the NLRA if both entities possess and actually exercise authority over one or more “essential terms and conditions of employment” for a particular group of workers. The new rule (issued under the Biden administration) drops the requirement for the entities to actually exercise such control – simply having the authority to do so (whether direct or indirect) is sufficient for NLRA coverage. This widens the NLRA’s influence so more organizations are subject to the Board’s authority.
The new rule defines “essential terms and conditions of employment” as: “(1) Wages, benefits, and other compensation; (2) Hours of work and scheduling; (3) The assignment of duties to be performed; (4) The supervision of the performance of duties; (5) Work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline; (6) The tenure of employment, including hiring and discharge; and (7) Working conditions related to the safety and health of employees.” For example, if a staffing agency determines the wages of the temporary workers it places with a client employer and the client employer sets their hours of work and schedule, the Board will likely consider both entities to be joint employers under the new rule. If the temporary workers start campaigning to convince coworkers to bring in a union (a protected activity under the NLRA), both employers would be prohibited from taking adverse action against the workers.
Tips: The Board’s new rule is scheduled to take effect on December 26, 2023. However, under the Congressional Review Act, Congress has the right to review and possibly block it, because it is classified as a “major rule” that will affect the economy by more than $100 million during the year it takes effect. Vigilant will keep members informed.
